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Billions of dollars lost to poor customer service

18th Nov 2009
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New research reveals the shocking cost of poor customer service. So who are the main offenders, and what are they doing wrong?

How much does poor customer service cost you? A lot is the answer. In fact a survey of organisations across 16 countries puts the figure at in the region of $338.5 billion per year in lost business.

This survey is claimed to be the first large-scale attempt to place an economic value on the lost revenue from customer service across all channels when businesses do not measure up to consumer expectations. The 28-question survey of consumers was conducted by Greenfield Online. The survey was sponsored by Genesys Telecommunications Laboratories, Inc. in collaboration with industry analysts at Datamonitor/Ovum. The survey group represented virtually every age and income bracket of consumers in the 16 countries surveyed.

That startling $338.5 billion figure is racked up when customers decide enough is enough and abandon their purchases as a direct result of poor customer experiences. The average value of each lost relationship across all countries surveyed is $243 per year. Losses were defined as transactions taken to a competitor (63% of the total) and transactions abandoned entirely (37% of the total).

In terms of customer sentiment, financial services companies were viewed more positively than negatively, while other industries, such as telecommunications, were not as fortunate: negative sentiment outweighed positive sentiment by a two-to-one ratio. The most negative ratings are for telecommunications and government.

The hardest hit industries across all countries surveyed are financial services, cable and satellite TV providers, and a variety of telecommunications companies. Over a 12 month period, financial services firms saw more than $44 billion in lost revenue. Cable and satellite TV providers suffered more than $37 billion of losses while wireless carriers and Internet service providers each had $36 billion in lost revenue. Landline carriers also lost $33 billion.

Common problems

The biggest problems that customers experience and which undermines the customer satisfaction levels are familiar ones. They include being trapped in automated self-service, having to wait too long for server, having to repeat themselves and having to talk to company representative who lack the skill to deal with their problems. On the other hand, most consumers surveyed argued that they would be most satisfied when dealing with a competent, live customer service rep.

According to the data, consumer satisfaction increases when companies meet four key needs of competency, convenience. proactive engagement and personalisation. More than 86% of consumers defined proactive engagement as a "strong benefit" or would "welcome proactive assistance" when stuck on the web or in some form of self-service.

When asked what they would most like to see companies deploy to improve service, 40% chose human service, but more than half of consumers chose at least one new communication channel among their top choices. Over 18% selected as their first choice better integration of communication channels, 16% chose enriched content such as video, and 16% chose Web assistants or avatars.

According to the study, consumers are also demanding better integration between self-service and assisted service, including voice self-service and eServices. They want to be able to start in voice self-service or the web and get live assistance from an agent, or to start in email and have better integration with agent-assisted service. This ties in with the dislike to having to repeat information with different agents.

"With the rise of social media and increased consumer awareness the cost of customer frustration continues to grow," said Daniel Hong, lead analyst of customer interaction at Ovum. "We're advising enterprise businesses to develop cohesive strategies that straddle all channels of customer communication. The difference between delivering exceptional customer service and merely providing acceptable service is pronounced. Differentiating on service, especially in service-centric industries, such as finance and telecommunications, is how enterprises can retain customers in today's challenging business climate."



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By eguilloteau
19th Nov 2009 17:23

Delivering a positive customer experience, enabling customers to engage with a competent, live customer service rep is actually very difficult. It requires providing the agent with systems that not just deliver the right information at the right time but also guides him or her through the steps needed to resolve the customer query. This is the only way to allow the agent to focus on the customer interaction and ensure satisfaction. The most critical aspect is an effective user interface that prompts the agent in an intuitive way through each step required to complete the task and resolve the query. What is the main obstacle to achieve this? The multiplicity and complexity of systems that agents are forced to use. 

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By Neil Davey
20th Nov 2009 13:41

Thanks for your comments Eric.

You're correct that technology will play an important role, but that's not to underestimate the importance of the agents themselves. Customers don't want to deal with an agent completely dictated by scripts and prompts - otherwise they may as well have opted for the IVR route.

Agent behaviours (which can be trained) and intuitions (intuitive and resourceful staff can be identified during the recruitment process) need to have at least as much emphasis as the just-in-time systems, user interfaces and the like.

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