Every business talks about the importance of customer service.
It’s always been important, but in a time when customers have more choice over what to buy and who to buy from, service has become a selling point in its own right – rather than a bonus.
Nearly half of businesses are making the customer experience a top priority over the next half decade.
And for good reason, with 86% of buyers saying they’re willing to spend more in order to get a better experience, with most willing to pay higher amounts for more expensive goods and services, according to PwC.
But just as good customer service can boost profits, poor customer service can destroy the bottom line.
In this article telephone answering service experts Face For Business explain five ways poor customer service is hurting your bottom line.
Poor customer service ruins brand trust
While a strong brand and reputation can equal greater profits, a poor reputation has the opposite effect – especially in relation to customer service.
A company’s reputation can account for as much as 63% of its market value, while 60% of customers say that negative reviews will stop them from using a business or service.
Poor customer service increases churn rates
Just a 5% increase in customer retention can increase profits between 25% and 125%, according to a well-known study by Bain & Company.
Although the study is a few years old now, the principle behind it stays the same.
The costs of acquiring a new customer far outweigh the cost of retaining an existing one (the marketing and sales costs alone can be huge).
Therefore it makes sense to invest in good customer service to retain customers.
The alternative is to continue investing heavily in generating a constant flow of new customers to replace older ones who no longer want to work with you.
Customer service is a conversion factor
More than half of customers admit to backing out of a purchase because of poor customer service.
This could be anything from a rude customer rep, being forced to wait too long on the phone, to delays in responding to questions about contracts.
It’s often thought that customer service only starts from the point the person becomes a customer.
In reality, it starts from the first moment anyone contacts your business, and you need processes in place to ensure every stage is as smooth as possible.
Unhappy customers aren’t shy
Before the internet, an unhappy customer would often voice their frustration to a few friends and family.
Today, an unhappy customer has the ability to tell everyone about the poor experience they had with you.
Whether through online review sites, or social media, the impact a single unhappy customer can have can be massive.
And customers aren’t shy.
Around a third of all customers will share details of their experience with others.
You’ll have to invest more in unhappy customers
Happy customers are a dream for any business.
They don’t bombard you with complaints, they don’t take much of your time.
They just go along spending money with you.
You’ll obviously check in with them regularly to make sure things are going ok, but on the whole happy customers are easy to deal with.
Unhappy customers, on the other hand, require much more attention and resources to handle.
Not only will you have to spend time resolving their initial problem and repairing the damage, you’ll then need to invest more in the long-term ensuring they remain happy.
It also requires you to spend more time and money investigating your processes to understand why the customer was unhappy in the first place.
This is all time and money being taken away from your business.
Happy customers equal higher profits
The vast majority of people say they’re more likely to turn from one-time payers to regular customers if they have a good experience with a business.
Around 93% say they’ll be more likely to make repeat purchases with companies offering better experiences, according to research by HubSpot.
Another three out of five customers say that great customer service is vital for increasing their loyalty towards a brand.
And nearly 80% of customers say they’d forgive a mistake and spend more money with a business, provided they still got great service.
Ultimately, great customer service has become the main contributing factor to customers deciding who to buy from, and how much they’re prepared to spend.
Get your customer service on track for long term growth
To be successful in business today it’s not enough to provide a great product or service at a great price.
For the most part, many businesses are selling the same products as you and most will price everything around the same value to save creating a race to the bottom.
Customer service has become the only differentiator for customers to judge which business is best for them to work with.
So it’s critical every aspect of your customer service, from call answering, to ongoing management is up to scratch.
The consequences could be huge if you get it wrong.