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Bad Customer Service Image - SirVent ChimneyBad customer service cost U.S. companies $62 billion a year, according to a recent report. When you are operating a small business, it can be hard to tie a dollar amount to your customer service practices, but understanding how customers react to the service they receive — good or bad — can help you better understand the cost of bad customer service.

Unhappy customers will do business elsewhere.

Perhaps this is the most obvious tenant of customer service: If you treat your customers poorly, they will choose to do business with one of your competitors instead. In fact, 49 percent of U.S. adults reported that they had chosen switching companies due to bad customer service. Studies also have shown that the longer it takes to resolve an issue, regardless of how hard a company worked to resolve it, increased the likelihood that the customer would continue to do business with them. Even worse, industry experts project that very few unhappy customers bother to contact a company to report an offense and to give them to opportunity to right it. More often, the customers will flee to a different company without complaint.

Unhappy customers tell their friends.

It’s a common cliché that people will tell their friends of an unhappy experience much more frequently than they will relate a positive customer service experience. Research regularly backs this up. In a 2014 American Express survey, 60 percent of people reported that they always tell their friends about a bad customer service experience, and when they share their bad customer services stories, they tell three times as many people as they would have told about a positive customer service experience, for an average of 21 people versus 8 people. This age-old customer service axiom is only amplified in the age of social media. A Chinese study of 70 million social media posts over a six-month period revealed that the post most frequently shared multiple times were posts that expressed rage. That means your business could face some serious costs if that rage is directed your way.
Happy customers are loyal customers.

Perhaps the good news in the customer service story is that customers are willing to pay more for good customer service, and they will stay with companies who provide them with exceptional service. That means when you treat your customers well, when you are in tune to their concerns, and when you address those concerns quickly, your customers are more likely to stay with you, and they are willing to spend more on your products and services and weather price increases.
All of these facts about customer service underscore the importance of being in tune with your customer base and of making a habit of always treating your customers well. When you know an unsatisfied customer will leave without complaint, and likely tell many of their friends, it pays to know what your customers are looking for from your business and to always provide your customers with exceptional service.