European businesses admit to customer service failingsby
Fresh from the news that customers are increasingly turning their backs on brands that deliver poor customer service, a new report by the Economist Intelligence Unit (EIU) has revealed that European businesses acknowledge that their customer service failings are having a significant impact on financial performance.
The survey of more than 400 senior business leaders across the continent revealed that nearly two-thirds of European companies feel their bottom lines are being “significantly hit by poor service”.
The report also reveals that over a quarter of businesses admit to having lost customers as a result of poor customer service, with one in seven companies also confirming that specific service failings have had a direct impact on their share price.
Despite this, one in four companies state they have failed to invest in customer service in the past 24 months. In addition, less than a third of companies (29%) have a designated head of customer service on their board.
The negative impact of poor service is the subject of regular customer studies, with the Institute of Customer Service one of a number of industry bodies tracking business performance from the perspective of the consumer.
However, this latest EIU report shows a clear acceptance among business leaders that their customer service practices could be better, as well as an understanding of the financial repercussions bad service can foster.
Yet. only a quarter (28%) of business leaders said their company aims to exceed the expectations of their customers in the things that matter most to them, with employee and other internal issues taking precedence over customer concerns in nine of ten organisations.
The report also finds that for many companies, customer engagement and experience is still low on their list of priorities. 35% of companies use social media to engage customers and just 14% believe social media will become the most important method of engaging with customers – a quarter (29%) believe its importance in 2020 will be the same as it is now.
"It’s clear many businesses find themselves in a service catch 22 situation,” says Monica Woodley, the EIU’s managing editor.
“Companies intuitively seem to understand customer service impacts financial performance, but they are unsure how to make a clear link with the bottom line. So they don’t prioritise service at a board level because they don’t fully understand it and they don’t fully understand it, because they don’t prioritise it. More businesses need to take action now to break this service cycle or risk losing out to competitors.”
Jo Causon, chief executive of the Institute of Customer Service, adds: “Financials tell the CEO where the organisation has been, but customer satisfaction data gives good indications of where it is going. Today’s findings confirm that companies must be vigilant about regularly reviewing the metrics they use to measure customer service. If they don’t, it is impossible for Boards to measure the impact that service makes to bottom line and ultimately take action. A genuinely aligned, joined-up organisation sees customer service as a key part of its strategy and sees service, and the delivery of service, in every aspect of its business.”
Chris is Editor of MyCustomer. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News. He joined MyCustomer in 2014.