The True Price of Weak Customer Service

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“One of the biggest mistakes companies make is that they view the customer’s purchase as a transaction versus an interaction. There is more than a subtle difference here. A transaction has an ending.”

Shep Hyken, top social customer service pro

Customer service is the most neglected aspect of effective marketing. Wait, customer service is marketing?

Yes, in two ways: one, it’s marketing to customers you want to become repeat customers. Two, it’s marketing to leads who watch how you interact with your existing customers.

Any business that isn’t treating customer service as a vital part of its marketing activities is leaving money on the table.

Salesforce reported that bad customer service costs American businesses $84bn every year; worldwide, that figure was $338.5bn. Repeat customers are the lifeblood of any business, yet only 27% of initial-purchase customers become repeats. What if we could use better customer service to hang on to a few more repeat customers? Well, since 78% of customers have walked away from a business due to poor customer service (Source: American Express), there’s a good chance that we can.

Maybe these stats don’t apply to you, though. After all, you hardly ever get a complaint.

Neither does anyone else. Only 4% of dissatisfied customers complain… to you. They tell their friends, though – and they’re twice as likely to pass on a bad experience as a good one. 96% don’t complain; 91% will never come back. In fact, if a 2008 Accenture report can still be believed, the real cause of business churn is poor customer service.

Sounds like a problem that needs fixing, but we need to understand it first. Let’s start with the customer: what do customers want?

What do customers want?

Customers expect prompt customer service from knowledgeable, trained individuals. When they don’t get it, they leave. That’s the clear picture from years of customer research.

On the phone, 75% of customers think they’re using the best channel for them to communicate with a business – but if they don’t get to speak to a real person, right away, 53% get irritated. When they did get through to someone, the result was unsatisfactory: customers said service agents failed to answer their question 50% of the time (Source: Harris Interactive).

Off the phone, the key channel for customer interactions is social media. Here, the gulf between what customers say they expect and what they’re getting is most dramatic. Customers say they want to hear back from brands. On Twitter, 14% of customers expect a response immediately, and 65% expect one in less than 2 hours. And what do they actually get? About 71% of the time they get no response at all (Source: Maritz Research).

Say you were in an industry where you lost 2.27% of your revenue – average monthly customer churn for a US wireless carrier (Source: Statista) – out of holes in your employees’ pockets. I’m guessing you’d start looking into thread. Or say you were in a business where 5% to 7% of your money – average SaaS churn rate (Source: Bessemer Venture Partners) – just blew away because you left the door open. Or what if it was 20% to 25% a – the average rate for retail banks (Source: Pitney Bowes)? You’d shut the door, I guess.

But every business is in the customer business. And customers are walking away – 25% of them every year, in some industries – and it’s overwhelmingly because of service. Not product, not price, but service. So when they’re telling us what they want so clearly, isn’t it time customer service was as much of a priority to us as it is to our customers?

Here’s how to do that:

  1. Measure Your Service

Start by finding out where you are right now. It’s hard to know exactly what to do if you don’t have any idea what your customer service currently looks like. Use customer feedback questionnaires. Try getting ‘mystery shoppers’ to try out customer service. You can take this further and check your Net Promoter Score. (Another good indicator is your churn rate!)

If you want to get a deeper view, try ClientHeartbeat – you’ll get in-depth analytics on customer satisfaction details. Moreover, the creators claim a customer feedback response rate three to five times the average, so you’ll have a clearer idea of where you need to improve.

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  1. Train Your Staff

Once you’re clear on the strengths and weaknesses of your current customer service provision, it’s time to start training your staff. Way too many companies take on customer service staff and just throw them in at the deep end, with poor pay, minimal training, no support, no authority – and they don’t do a great job.

But in those circumstances, it’s not surprising. Staff need to know what to do, and they need to know why. Start by explaining to service staff what good customer service is. Talk to them about how to handle difficult customer situations in an appropriate way – and actually train them; don’t just give them a ten-minute talk about it. One service staff member who reacts badly on a chat or social channel could be the thing your company gets known for worldwide!

  1. Support Customer Service Like You Would Sales and Marketing – Because That’s What They Do

Customer service is sales and marketing to people who have already made a purchase. Treat it that way. High-level training that’s geared towards satisfied customers will produce greater customer satisfaction, lower churn and more repeat purchases.

But it takes more than training on the phone or instructions on how to handle a tricky chat. Staff need technical support too. Teach them how to use social media channels, especially Facebook and Twitter, in an appropriate manner. Teach them how to use a wider range of customer service tools. The phone isn’t enough anymore: specialist social media training is still necessary because although most of your employees know how to use social media, they don’t know how to use it for customer service. Get them the equipment they need to deliver customer service that wows – because for many customers, customer service is the most important thing you do.

Since content forms the core of new age digital marketing, integrate your content marketing with customer service. And there’s no better form of content than video to do it most effectively. Anything that requires significant instruction or is visual can be dealt with by creating a video. Evan Hamilton wrote a great post on the UserVoice blog advocating the use of video in customer service.

You’d do well to invest in a tool like ClickMeeting to run webinars for explaining features of your product, one-on-one private chats for customer service, as well as moderated videoconferences with focus groups or brand advocates.

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  1. Make Customer Service the Center of Your Company Culture

Sales is at the heart of many company’s cultures. But sales is customer service, to customers who haven’t made a purchase yet. Customer service is sales. Put it right in the center of your company culture. Talk about it. Post big signs in the lobby congratulating the most effective customer service team. Consider incentivizing customer satisfaction the way you incentivize sales.

This unity of purpose between marketing, sales and customer services is increasingly recognized in CRM software like the modular Zoho, which offers a Service package, or Sage. Even the mighty, sales-focused Salesforce comes with dedicated service functionality.

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  1. Let Your Team Work

Your staff know what to do. They have the tools. Let them do it. Give them the authority to control how they operate.

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Image (Modified under CC license)

Wrapping Up

Learning to see every part of your business as part of an ongoing interaction with customers is difficult. But the rewards are clear. Happy, satisfied clients will recommend you to their friends, advocate for you on social media (and hopefully in their lives), and leave you positive reviews. They’ll also be back to make more purchases. And customers themselves are saying the way to do it is great customer service.

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