According to the Research Institute of America and CX Solutions (formerly TARP), 90% of dissatisfied customers will not come back or buy again. 90%. And yet we see service breakdowns in every type of organization pretty much every day. Think of the last time YOU received poor service – from a utility or cable company (Comcast scored dead last – 277th – in recent Temkin Customer Service ratings), a retailer or restaurant, or even a manufacturer, hospital, or governmental agency. Was it earlier today, yesterday, last week? I’ll bet it wasn’t long ago, unfortunately. In a time where good customer service may be the difference between keeping and losing a customer (or a patient, or a stakeholder), why are there so many breakdowns? The financial impact of these service issues may alarm you…
Consider these data, compiled in a study conducted by the Research Institute of America for the White House Office of Consumer Affairs:
- 90% of customers dissatisfied with the service they receive will not come back or buy again.
- Only 4% of unhappy customers bother to complain. For every complaint we hear, however, 24 others go un-communicated to the company. Imagine that. So, in theory, if you have 10 complaints in a month, that means that potentially 240 customers also have complaints but just didn’t share them with you. But they did share them with others…
- Unhappy customers tell his or her story to at least nine other people. That’s not the “word of mouth” you want about your organization. And with today’s social media, I think the number is growing.
- Of the customers who register a complaint, between 54-70% will do business again with the organization IF the complaint is resolved. That number goes up to 95% if the customer feels the complaint was resolved quickly. This is commonly referred to as “service recovery”: we all make mistakes, but it’s how quickly and thoroughly a company resolves those mistakes that determines whether a customer will remain loyal and engaged.
- 68% of customers who quit doing business with an organization do so because of company indifference. In other words, if you don’t respond and/or resolve a customer-related issue, your customers perceive that as not caring about their business. And it takes 12 positive incidents to make up for one negative incident in the eyes of customers.
There is also research out there that claims that it costs anywhere from five to 20 TIMES more to acquire a customer that to retain one. So there is a HUGE financial link between high levels of customer satisfaction and the bottom line of a company.
But here is where I’m concerned: after the “Great Recession” a few years ago, many (maybe most) organizations “downsized,” “rightsized” or whatever you want to call it. Now, I’m all for productivity, lean operations, and elimination of waste, but you can see the dangerous paradox organizations are in: the more an organization cuts, the more risk there is that they fail to satisfy their customers’ needs, which could further damage sales and company performance.
Here’s an example, according to the International Customer Management Institute (a call center consultant): if a company eliminates just four representatives in a call center of about 36 agents (that’s about a 10% layoff), the number of customers put on hold for four minutes will increase from 0 to 80. Think about that example applied in different settings: the customer waiting to purchase something at a retail store; the length of time a patient has to wait to be seen by a medical (or legal or some other) professional; even the possible impact on a manufacturers’ delivery of product because capacity was cut along with its staff.
We are all asked to do more with less these days. With generally leaner (and meaner?) workforces that are trying to get the same (or more) work done with generally smaller staffing, in my opinion, this is a recipe for disaster when it comes to customer service. So I challenge us all to:
- Develop listening and learning approaches to capture the voice of the customer. We need a way to hear – and understand – their needs, expectations, and requirements, not just of the products and services they are buying but how they prefer to buy them…the whole customer experience pre-, during, and post-sale.
- Consider the touchpoints you have with your customers – the phone calls, the face-to-face interactions, the emails, and so forth. And then proactively think about how you can create positive interactions – experiences that satisfy or exceed customers’ expectations. Consider doing this in a team or department meeting to get everyone on the same page and exchange ideas for better service touchpoints.
- Identify processes that touch the customer – ordering processes, inquiry processes (like call/contact centers and your website), complaint and suggestion processes, physical space (your lobby, your “store”), and certainly service/product delivery processes – and ensure that each of these customer-facing processes is designed to ensure more service “deposits” than “withdrawals.” Then,
- Focus on your workers: train your staff to ensure that they have the skills and tools necessary to serve customers, internal and external. Cross-train employees so they can step up to fill a variety of needs, which also gives you capacity and flexibility in your staffing model.
- Reward staff for their good customer service (and for service recovery).
- Focus on workforce engagement. Empower your people to take care of customers. Ritz Carlton is known for their credo “Ladies and gentlemen taking care of ladies and gentlemen.” And they back it up with empowering their staff (right down to the housekeeper) to spend up to $2000 to satisfy a customer, without approval. Your staff provide those customer “moments of truth”: let them take care of who pays the proverbial bills.
- Invest in simple technology. Consider systems that provide direct value to the customer through better information, faster delivery, or improved accuracy. These could be Customer Relationship Management (CRM) software to help you track and manage customer relationships, social media to help you listen to – and communicate with – your customer community, or any number of other customer-facing technologies.
- Baby your best customers. Now is not the time for equal treatment. Keep your most active buyers coming back with faster service, extra attention, and flexible rules. Segment your customers not only by size, industry, and other quantitative demographics, but also by buying behavior, levels of engagement, and needs. And then focus on those that are most important to your organization.
- Measure your customers’ engagement. Research shows that having fully engaged customers (instead of just satisfied ones) will lead to sustainable, long-term performance. Engaged customers are those that are committed to the organization and its offerings, are loyal, are willing to make an effort to utilize its services, and will actively advocate for and recommend the organization to others. There are ways to measure customers’ engagement levels, and that information will help organizational leaders determine the effectiveness of all of their processes on satisfying customers’ needs.
These tips don’t only apply to retail, service-oriented businesses. They apply to manufacturers, schools, healthcare providers, non-profit and governmental agencies. Every organization has customers or stakeholders. And every organization therefore has touchpoints that either make or break customers’ perception of the organization. Remember, 90% of dissatisfied customers won’t come back: so there is a huge financial return for those organizations which truly focus on customers rather than just talk about customer service.
Next month, PEN is hosting full-day workshops on customer service: From Great to World Class: Creating a Service Culture, September 28 in Rochester and September 30 in Bloomington. The workshops are facilitated by Bryan Williams of B. Williams Enterprise LLC (and formerly of Ritz Carlton).
The workshop will be highly interactive, engaging, and valuable for service professionals, leaders, and other practitioners from all types of organizations. Filled with tools, best practices, and proven methods, the workshop will focus on five essential aspects of strengthening and sustaining a strong service culture. For more information, visit the links above. Don’t miss this valuable opportunity to improve your organization’s customer focus!
Never stop improving!
Brian S. Lassiter
President, Performance Excellence Network
Catalyst for Success Since 1987!
[this article modified from an original post September 2010]
[photo credit Inc.com]