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How Much Does Bad Customer Service Cost

20th March 2014

Have you had the chance to talk about the importance of listening and being responsive to your customers?

I have listed below some points about the cost of bad customer service.

These points are designed to motivate businesses to use tools such as focus groups, one-on-one customer meetings, and surveys to help create an early warning system to prevent customers from leaving. You should also use your client’s views in the strategic planning process, as well as some important survey trends such as a tool that gauges the loyalty of a company’s customers.

One of the most interesting areas is the cost of bad customer service. Ask yourself the following questions and then read on for facts and figures.

1.    How much more does it cost to attract a new customer than to keep an existing one?
2.    If you resolve issues on the spot, what percentage of customers will return?
3.    What percentage of customers do not complain?
4.    The average unhappy customer will remember the issue for how many years?
5.    For every complaint, there are how many others with same complaint?

There are a wide variety of answers to these questions and, in most cases, you will be surprised by the results. Most people do not consider these points but this should be of great interest.

But, before you glance down to see the results, try writing down your own answers. More often than not, you will be surprised at what you learn.

1.    It costs 6 times more to attract a new customer than to keep an existing customer.
2.    If an issue is resolved on the spot, 95% of those customers will continue ordering.
3.    97% of customers do not complain, even when they are unhappy.
4.    The average unhappy customer will remember for 23 years.
5.    For every complaint that’s lodged there are likely up to 25 more people with the same complaint.

A bad customer experience can result in the loss of that customer, but ongoing monitoring of your customers’ satisfaction can provide an early warning system about an unresolved issue…then give you the opportunity to resolve the issue without losing the customer.

Think about the cost/benefit ratio of better listening to customers. In other words, what is the cost to actively listening to customers and what are the benefits? An entry level campaign, that automatically sends out short surveys with every job, can cost a minimal amount a year. That means if you prevent just one customer from leaving, it would pay for itself.

Two parting questions for you to consider:

If you look back over the last few years, how many customers did you lose because something happened that you never had a chance to address?

Could that be different if you had a mechanism to monitor your customers’ satisfaction?

At Kestrel Printing Limited we use Customer satisfaction Sheets and regularly poll our clients so we can continue to strive to keep our high levels of service.