How Much Does a Bad Customer Experience Really Cost?
Your customer contacts your company with a complaint about a product or service provided. The representative on the line apologizes and does their best to resolve the issue. Maybe the call was short and offered a quick resolution, or maybe the call did not go so well. If you’re lucky, that’s the end of it.
Customer experience is the last source of sustainable differentiation and the new competitive battleground.
– Tiffani Bova, Gartner Vice President and Distinguished Analyst
Analyst Esteban Kolsky recently published the results of a study that illustrated the impact that a negative customer experience, even if resolved, can have on a business’ future. Here is a sampling of what Kolsky found in his research:
- 67% of customers site bad experiences as a reason to take their business elsewhere; 55% of customers are willing to pay more for a guaranteed good experience.
- 84% of consumers are frustrated when the representative does not have the information needed to help them.
- Customer frustration leads to 13% telling 15 or more people if they are unhappy; 72% will share a positive experience with 6 or more people.
Providing customers with correct answers is also important:
- 56% of customers simply want the right answer.
- 64% of customers lack the confidence that the answer provided was correct.
- 44% of customers confirm they got the wrong answer.
The numbers above speak for themselves and are amplified when one considers that the cost of gaining a new customer is more than the cost of keeping an existing customer.
Customer Experience and Engagement on 2016-17 Wish List
According to Kolsky, the 2016-17 budgeted customer service projects wish list shows two of the biggest targeted items as customer experience and engagement. Projects that received the most approvals however were related to cloud, knowledge, employee empowerment and analytics; a perceived higher priority for decision makers.
Management should not take lightly the importance of the customer experience, especially when one considers today’s smarter, more technologically savvy, sophisticated consumer. With the internet, consumers can easily research a product, compare it to its competitors, find positive or negative customer ratings and make a purchase decision prior to making contact with the seller. This holds true for both B2C (business-to-consumer) and smaller ticket B2B (business-to-business) transactions; larger ticket B2B decisions also start with online research and recommendations typically resulting in a shorter list (if not the short list) of vendors to engage with.
Cost of Not Meeting Customer Expectations
Companies not meeting customer expectations are paying indirectly through loss in marketshare and competitiveness on a local, national or international level. Regardless of where the loss occurs, lost revenues are lost revenues that affect the bottom line.
Customer loyalties are not only put to the test by bad experiences, but also by companies like Amazon who are driving the brick and mortar businesses away through competitive pricing, at home convenience and Amazon’s free Amazon Prime shipping program.
Technology to Meet New Customer Standards
Today’s customers have choices and they don’t need to wait for a company to get their act together. If a customer is not satisfied with a product or service provided, you can assure yourself that they are most likely looking for a new place to spend their money.
ERP solutions, like Epicor ERP, are providing businesses with technology that improves business processes, provides for easier, faster access to information, and enables mobility and internal and external collaboration and more. In short, technology reduces bottlenecks and improves business processes which lead to better customer service.
Embracing Technology leads to Greater Competitiveness
How does a business compete in today’s marketplace? Embracing current business technologies is one strategy businesses are using to regain their competitiveness, a strategy which can lead to greater competitiveness. The upfront costs of technology can be high, but the Return on Investment (ROI) is impressive. Technology enables companies to look at their processes from new angles and options for efficiencies. Some of the benefits include:
- Improved efficiencies for reduction in costs
- Better more proactive decisions
- Shortened production cycles that are closely linked to demand cycles
- A more complete view into the customer history, regardless of department, for better customer service
The benefits and ROI vary depending on the organization. Recent technologies have made leaps and bounds in providing value starting with greater efficiencies and insight to help businesses better plan for and meet their goals and objectives.
Short and Long Term Costs of Unhappy Customers
Still not convinced? Then consider both the short and long term costs of customer dissatisfaction to today’s business:
- For a company to expand its clientele, its growth rate, as measured by number of new customers, must exceed its churn rate.
- 50% of customers will naturally churn over 5 years.
- 66% of consumers switch brands due to bad customer service; 85% was preventable.
- Attracting a new customer is 6-7 times more expensive than keeping existing customers.
- 65% of companies are successfully able to upsell or cross-sell to existing customers
- Only 12% of companies are able to upsell or cross-sell to new customers.
- 1 out of 26 dissatisfied customers complain; 91% of non-complainers will not return (absence of feedback does not mean a good experience).
There is no doubt that today’s technology serves as an advantage over ERP technologies from as few as five years go. If you have not taken the time to explore the benefits of upgrading your ERP software, then it’s time to start discussions. Let MIS, with 30 years of experience helping companies identify technology solutions, show you how Epicor ERP uses the latest Microsoft technologies, combined with industry best practices, to improve operational efficiencies and insights. Operational efficiencies and insights are only the beginning of how current technologies will enable your organization to meet and exceed the expectations of your most demanding customers.
Source: Customer Experience for Executives – Esteban Kolsky