Why A Poor Customer Experience Is Penny Wise and Pound Foolish

Lora Kolodny  highlights on TechCrunch a new report from RightNow and Harris Interactive showing how much brands stand to lose from poor customer service, and how much they stand to make if they can deliver a superior experience. The study, titled The Customer Experience Impact 2010 report tells an interesting story about how important a value proposition customer service is to consumers, and just out of touch U.S. brands can be:

  • 82% of US consumers said they’ve stopped doing business with a company due to a poor customer service experience.
  • 73% cited rude staff as the primary reason,
  • 55% cited failure to resolve their problems in a timely manner.
  • 95%, said after a bad customer experience they would “take action.”
  • 79% said they complained about their negative customer experiences in public and amongst friends.
  • 58% who publicly aired a complaint on social media sites expected a response from the company.
  • 42% of them expected a response from a company within a day.
  • ]Yet only 22% said they’d actually gotten a response as a result of griping there.

Consumers Increasingly Demand A Personal Response

Survey data from 2007 vs. today show changing dissatisfied customer’ expectations.  When trying to resolve a problem, here are their contact preferences:

In 2007:

  • 60% of U.S. consumers said when they had a negative customer experience, they wanted to speak to a live agent about it.
  • 26% preferred email
  • 5% prefered chat (although Facebook and Twitter weren’t used by corporations to handle complaints and resolve problems.)

In 2012:

  • 83% of U.S. consumers said they wanted to speak to a live agent.
  • 66% prefer email
  • 12% prefer chat.
  • 7% choose social networking sites.

The more digital communication options that consumers have, apparently, the more they crave human interaction in real time, apparently.

What Can You Do About a Noisy Complaint?

My recent post on Progressive Insurance shows that customer dissent online is difficult to quell. Kolodny highlights some other notable cases:

Do Brands Have Customer Service Backwards?

Considering all the effort to generate positive associations through advertising, it’s more than a little ironic that one account of bad customer experience has the potential to offset all that investment. Companies facing a bad customer service  comment should work to improve the customer experience they provide, internally and develop a systematic way of focusing on customer responsiveness, while continuing to generate positive word of mouth, positive reviews and online feedback. Friends’ and colleagues’ endorsements, discussed in real life or through Twitter and Facebook updates, are more likely to drive sales than even a positive online user review.

In an era when customer service is largely viewed as a cost center, RightNow’s study strongly suggests companies now invest more time and money in customer service as a leading revenue generator, and not just an operational function. The study highlights why customer service is a bottom line revenue generator:

  • 85% of U.S. consumers say they would pay 5% to 25% more to ensure a superior customer experience.

Snap! principle of Customer Service Marketing:

Customer Service is no longer an operational necessity: it’s your biggest market differentiator.