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The True Cost of Poor Customer Service

Upsetting customers can be more costly than losing one sale. Here’s how to make sure you’re not damaging your reputation permanently.

No company wants to give a poor customer experience. However, many companies may not understand the true cost of bad customer service. You will find it’s ultimately much cheaper to invest in good service than neglecting it. Providing excellent customer experience isn’t a nice bonus or an “add-on” feature, it should be a core tenant of just about every company’s mission statement. Below are just some of the many ways providing a bad experience might be hurting your business.

Losing Customers

Obviously, you never want to lose customer loyalty. However, things happen; you can’t possibly keep everyone happy. That being said, never write off those customers you lost due to poor customer service. They could be damaging your profit margin much more than you know. Even when a problem does occur, providing a poor customer experience only hurts your chances of getting a second chance to woo your customer.

Poor customer service damages both customer retention and new customer acquisition. An American Express study showed that half of Americans have scrapped a planned purchase simply because they felt the company's customer service wasn’t up to par. Especially during COVID, I don’t think losing satisfied customers and alienating potential new ones needs any more explanation, do you?

Low Company Morale

Happy workers are good workers. You want your employees to believe in your product, your company, and your business. This is what dictates the outcomes of great customer service. More than that, ideally you want your employees to take pride in the company they work for. Generating poor customer satisfaction can make this very difficult. How could anyone in their right mind be excited about a company that treats their customer base poorly?

Providing poor customer support creates a revolving door of negativity. When contact center employees are constantly forced to deal with angry customers, it will, in turn, make them angry. When they see that management isn’t providing the proper tools to alleviate this problem in customer care, they’ll start looking for the door. Harboring a toxic work environment only increases turnover. With a high turnover rate, expect higher costs in recruiting, hiring and training. That's one of the many customer service costs for both small businesses and large enterprises.

Bottom line, customer service is about finding solutions with your customers and removing systematic problems through positive experiences. Never treat your customers like the opposition; your employees will notice and carry on that negative attitude as well.

The success of  your inbound call center depends on the quality of the work of your customer service agents. Here are some best practices we recommend for customer retention:

Damaged Reputation

Word of mouth travels fast. In the age of social media, a bad review about a service provider can be blasted all over the internet in moments and read by hundreds of thousands of people instantly.

You don't need an infographic to understand that you simply can’t afford to be known for bad customer experience.

Increased Sentivity to Price

According to TARP Worldwide, customers that don't experience good customer service are far more sensitive to price changes, service changes, and additional fees.

In any market, there are highly disloyal customers who are ultimately looking for the best price in the industry. Experiencing bad service is enough to turn these loyal customers away to your competitors.

Laura Freedman, President of the E-tailing Group, once said "Always keep in mind the old retail adage: Customers remember the service a lot longer than they remember the price." Obviously you can see how this stretches beyond retail.

Providing poor customer service can send all of these potential customers right into the waiting arms of your competition.

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