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Costs of Poor Customer Support Higher Than Imagined

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Costs of Poor Customer Support Higher Than Imagined

May 17, 2016

  By Tracey E. Schelmetic, TMCnet Contributor

While the recession may be over, few companies are thriving in the ways they did before 2008. Profit margins are slimmer, purchasing funds are scarcer and employee benefits are more expensive. Most companies are still looking for ways to save money and cut corners. There is evidence that many are doing it at the expense of the customer support function.

It’s a tempting thing to do. Customer support is expensive, time-consuming and ever evolving, so the amount of cash and effort that needs to go into it is high. Many organizations like to fool themselves into thinking that self-support is “just as good” as live support, that long call queues just mean customers will give up gratefully and call back later, and that shortening scripts in order to shave seconds off of calls is transparent to the customer.

The truth is, however, that the costs of poor customer service far outweigh the benefits. Customers today have higher expectations than ever, and they’re much faster to bring their business elsewhere if they have even a single bad experience. Fundamentally, what needs to happen is that companies need to change the way they view the customer support process, according to a recent blog post and infographic by B2B customer support solutions provider TeamSupport.

“Many businesses today still see customer support as a cost center, and yet Gartner (News - Alert) predicts that by the year 2020, businesses will be competing on customer experience as a main differentiator,” wrote Team Support. “Will you be one of those? Or will you ignore the huge benefits of providing an exceptional customer experience?”

The cost of customers switching due to poor service has been about $1.6 trillion to date, according to research by Accenture (News - Alert). A large majority of customers – 70 percent – have stopped doing business with a brand because of poor customer service, and more than half will continue to avoid the offending company for at least two years. This means that customers are essentially playing “musical chairs” in their effort to find good customer support by switching their loyalties around. Think about it: what costs more…offering a great customer experience from the beginning, or offering a sub-par one, driving the customer away, and having to try and win him or her back two years later?

Data from Harvard Business School indicates that it costs seven times more to win a new customer than it does to keep an old one. So how does it make sense to cut corners on customer support when there is so much at risk?

It may be because the executive office is trying to show short-term gains for shareholders, and is willing to do it at the expense of future customer relationships. It may be because managers simply aren’t given the budgets to make a difference. It may also be because some companies fool themselves into thinking that their customer loyalty is higher than it really is. But it’s important to remember that when a customer churns, there is more at stake than the dollar value of the customer relationship at that moment. Future opportunities are missed, as well.

The infographic provided by TeamSupport shows that great customer support leads to great opportunities to cross-sell and upsell, and that improving customer retention by even five percent can lead to profit gains of between 25 to 95 percent (source: Harvard Business School). So when you’re shortchanging your customers on quality customer support today, you’re actually shortchanging your company on profits for the future. 

Edited by Maurice Nagle
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