Report reveals the true cost of poor customer service

8th Jan 2010

A new report has revealed the shocking cost of poor customer service - and the demographic most likely to desert you due to bad service.

Poor customer service is costing UK plc about £15.3 billion in lost business per annum, but younger consumers are less likely to put up with poor treatment than older ones.

According to a survey undertaken by Greenfield Online among 514 consumers, 73% had terminated a relationship in the past because of bad experiences, with the average value of lost sales being £248 per year.

But the report entitled ‘The Cost of Poor Customer Service: The Economic Impact of the Customer Experience’ also found that younger customers aged between 27 and 43 were 60% more likely to go elsewhere than older ones if dissatisfied with the level of service they received.

Daniel Hong, lead analyst of customer interaction at researcher Ovum, which jointly commissioned the study with Alcatel-Lucent’s Genesys Telecommunications Laboratories CRM software arm, said: "With the rise of social media and increased consumer awareness, the cost of customer frustration continues to grow. We’re advising enterprise businesses in the UK to develop cohesive strategies that straddle all channels of customer communication."

He added that in the current economic climate, it was becoming increasingly crucial for organisations, particularly in service industries such as finance, to ensure they retained customers by providing "exceptional" customer service.

As to what poor customer service actually meant to respondents, the study found that problems could be broken down into several categories: customers having to repeat information; feeling trapped in automated self service systems and being forced to wait too long to receive a service.

Other bugbears included speaking to company representatives who were unaware of their service history and not being able to switch easily between communications channels. Some 41% of those questioned said they were most unhappy with having to use voice-based self-service systems, while 39% said they felt it critical to integrate such systems more intelligently with human interaction.

A huge 83% also said they would welcome proactive help when they became stuck trying to undertake a web transaction or some other form of self-service activity.


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By EdLennox
11th Jan 2010 12:15

I know how important it is to be impartial when passing comment that comes close to your own area of expertise and I'll try as best I can to be so...

I've been involved in customer experience management for almost 20 years, most recently running  One of my previous businesses, Harding & Yorke, have established the direct link between service excellence (they call it Empathy) and commercial success (Ryanair being the exception that proves the rule!).

Why do so many businesses fail to ask their customers, each and every time, whether they are happy or not?  And I don't mean asking them to fill in a TEN MINUTE questionnaire, as Currys did recently to me (The transaction took less than half that time!).  They need to ask customers quickly to comment and rate the service.  Not the product, the service.  Like Ebay.  It is to create reputation and TRUST.

Feefo provide such a service.  So do Ekomi.  Many websites have product reviews, generally passively offered, but this misses the point.  A store may sell superb products but have poor service, poor delivery, poor turnaround and a bad attitude..... in which case, people would be well advised to avoid and the business had best listen.  Product reviews can therefore breed a false confidence in consumers.

You get very few successful restaurants where they don't solicit feedback throughout the meal and at the end.  Why are any other businesses any different?  They shouldn't be.


- Ed Lennox Marketing Director

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By Neil Davey
12th Jan 2010 13:12

Many thanks for your comments, Ed.

The only thing I'd add is that a couple of years ago there was a study by CDC Respond that found that while 95% of respondents stated that they gathered feedback, less than half actually used that information to alert staff to problems and to drive change.

Gathering feedback is certainly important, but organisations also need to ensure they have the processes in place to do something with that information - otherwise soliciting that feedback from your customers (and taking up their valuable time in the process!) is an empty gesture.

Thanks again

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By EdLennox
12th Jan 2010 14:39

Hi Neil

Agree with you 100%.  What I should have said is that when you commit to publication of your feedback, it's amazing the catalytic effect it can have on businesses to act on it!  That is why we find that on average when a customer joins Feefo, within 6 months they more than halve their customer dissatisfaction.  Powerful.

Best wishes

-- Ed Lennox Marketing Director

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By DenisCanceallara
11th Oct 2011 18:21

Thanks for the post. It's a refresher that growth and customer retention are linked.


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