What bad customer service costs

Learn How to Offer the Best Service Out There: Customer Service Expert Shep Hyken Tells Why it’s Worth it to Avoid Delivering Bad Customer Service

We’ve all experienced it — waiting for ages on hold, the obnoxious elevator music repeating for an hour. You get transferred a million times, the call fails, and when you call back you get a different person entirely. Or you fall into the abyss of IVR — “Press one for…, press three for…”

Bad experiences in customer service happen daily. And, customers are more empowered than ever to vent about it. I’ve written my fair share of poor Google Reviews after a bad experience. Many of us don’t hesitate to use our voice on social media to tell people about our negative experiences. Unhappy customers are quick to amplify their voices, sometimes leaving companies with PR disasters.

In a recent study, 95% of respondents said they usually tell at least one other person about a bad customer experiences with a company, while 54% said they share it with at least 5 other people. Poor service goes viral. And the cost of a bad experience is high.

 The Cost of Bad Service

In a recent report by New Voice Media, they found that U.S. companies lose more than $75 billion annually due to poor customer service. That’s so much money! How is that true??

After just one bad experience 51% of customers say they’ll never do business with a company again. People will leave if you don’t make their experience painless, swift, and consistent. So what annoys people so much? Respondents to New Voice’s survey flagged a few reasons in particular:

  1. 43% said having to repeat information to multiple agents is the top reason they dislike calling companies.
  2. 41% noted not being able to speak to a “real person” straight away.
  3. 39% get frustrated by being kept on hold.
  4. 37% are put off by needing to navigate multiple menus.

Inconvenience, a waste of time, agents’ lack of knowledge — these are at the root symptoms of delivering a poor service experience. These factors are headaches for your agents just as much as your customers. When agents are stuck with clunky tools, disorganized software, and poor training, they are doomed to deliver a subpar experience. In particular, financial companies, social media companies, media and telecommunications, and entertainment companies are known to provide the poorest customer service. Their problem? All of the above.

But there’s good news. Just because the trends and cost of poor service are bleak doesn’t mean your contact center is doomed. Take it as a warning sign. In fact, it doesn’t take dramatic changes to retain customers and provide better service.

We chatted with leading customer service expert Shep Hyken to understand what it takes to avoid delivering bad service.

Here’s what we learned:

Ask an Expert: What it Means to Avoid Delivering Bad Service

Q. What’s been the biggest customer service blunder you’ve seen and what was the result?

A. There are so many big blunders. The Comcast phone call is an example of one memorable failure – the customer service rep inexcusably and inexplicably gave the caller such a hard time. That’s why it went viral. I remember when Delta and Southwest Airlines had to shut down because of a computer glitch. Fortunately, the public, in general, has a fairly short memory. The airlines have been in something of a slump as far as customer service goes. The Cable/Internet industry also ranks pretty low. The most immediate thing companies can do after a failure like these is to try to go into crisis mode to preserve or rebuild their reputation. Honesty is key – tell customers what happened, and explain why.

Q. How hard is it for a company to change reputation or public perception after bad customer service – either isolated incidents or after years of subpar service?

A. I have a philosophy: let me down one time, I’ll let you get away with it. Do it again and we’re done.

Generally, it’s difficult – but it also depends on the industry. Consistency is key. It’s all about expectations – let’s talk about those for a minute.

For instance, the bar is set relatively low in the airline industry. On-time performance is barely above 80%. That means 1/5 flights are going to be delayed. This may be related to weather or maybe some kind of mechanical issue. But this element of unpredictability contributes to customer expectations.

How about the postal services industry? Carriers and shipping companies are depended on to deliver goods from point A to point B. But if a holiday storm shuts it down, a bunch of people aren’t going to be getting their gifts. This really underscores the importance of being able to forecast and predict upswings in activity and preparing for them. Noah built the ark before it rained – he could tell the storm was coming. So, you need analytics to calculate the kind of volume you can expect.

There’s also a certain implied level of service that you can expect. Service level differs between a multinational retail giant vs. a local hardware store where you’d expect more people to help you and a smaller store to navigate.

Walmart, for example, knows if they add 20 people in every aisle, they can’t give you what you want when you come into the store – an uninterrupted and predictable experience. It’s nearly impossible to provide really good service and offer the cheapest products. For the most part, they’re mutually exclusive. Why? Good customer service costs money, itself.

Q. What kinds of challenges do companies most routinely face in executing meaningful customer service experiences?

A. The #1 challenge is to get everyone – customer service agents, managers, and IT – into alignment. Define and understand the goal of customer service. Customer service shouldn’t be a separate function, isolated from the rest of the business. It should be a philosophy ingrained and embraced by the whole organization.

In addition to making sure everyone is in alignment with a clearly defined vision, hiring the right people and training them to deliver on your company’s values is critical.

Look at the Ritz Carlton. They have their credo – “we’re ladies and gentlemen serving ladies and gentlemen.” They only hire people who will fit into the fabric of their focused cultural vision.

Lastly, like it or not, money also plays a part because it enables scalability. A company that is growing bigger will probably have a difficult time scaling the same great customer service they had when they were small.

Q. Where are call centers missing the mark? How can they create better customer experiences?

A. Support center is really a better term. Today’s best companies enable multiple channels of support – phone, web chat, and online self-serve at the minimum. Technology is changing customer service.

A part of that is social media. Integrating social media within your technology – socializing with customers back-and-forth, even casually and impromptu, is an area of growth.

Take a look at all the advancements with AI. There’s something to be said for computers taking over and handling basic functions of service. The key here, though, is not letting customers realize they’re being handled by a computer.

True AI happens when the computer actually self-learns and starts to think. It will ask a bunch of questions before making suggestions for a very humanlike experience.

Q. What’s the most important or key thing businesses can do to avoid bad customer service?

A. Stop thinking customer service is a department – realize it’s a philosophy to be embraced by every employee in the company. Everybody has an impact on the customer. Everybody is involved.

Building a Department that Delivers Good Service

Great customer service happens when the whole company is practicing it. It starts by prioritizing customer service as a unifying ideology of your business. Begin the process with your team by constructing a common purpose you can all rally around.

Building purpose leads to all kinds of good. First, your customers will have a more positive experience. That’s a win for sure. Temkin Group found that after having a positive experience with a company, 77% of customers would recommend the company to a friend. That means your customer base will grow, your profits increase, and your existing customers become even more loyal. Actually, 66% of customers say they would be more loyal if they had better customer service. Tap into that potential as much as you can.

And last, but certainly not least, rallying your team, and company, around customer oriented purpose also builds employee engagement. Engagement has a myriad of benefits like lower turnover, higher performance, and greater revenue. Don’t allow bad service to happen on your watch. Poor service doesn’t make sense for your company, doesn’t produce happy customers, and doesn’t make money.

We shared some tips on how to update your contact center so you can deliver better service. Check them out here!

We originally posted this article on December 1 2016, and we updated it for new insights on June 27, 2019.