Lousy customer service costs Aussie businesses $8 billion each year: study

Australian companies are losing an estimated $8 billion as a result of poor customer service, according to research by cloud contact centre vendor NewVoiceMedia published today.

The study of 2004 Australian adults found 58% of respondents will vote with their wallets and choose to shop elsewhere when they experience inadequate customer service, with a staggering 92% of these respondents having switched businesses at least once or twice in the past year.

Of the same group, 55% of respondents said they feared being kept on hold so much that they would opt to switch to a competitor rather than resolve the issue.

Among the top gripes that cause customers to opt for competitors are lack of appreciation from a business (46%), unhelpful/rude contact centre staff (38%) and being passed around multiple agents (32%).

The study found that customers spent $807 on average before taking their business elsewhere, amounting to an estimated loss of $8 billion to Australian businesses each year.

This does not include the flow-on effects of negative word of mouth and the costs associated with replacing lost customers, with 58% of respondents reporting they would tell friends and colleagues not to use the business after a negative experience. The same amount of respondents said they would never use the company again.

The internet was found to be a significant channel for customers to voice complaints: 16% of consumers admitted to voicing dissatisfaction through posting a review or a social media complaint, with this figure soaring to 53% among 16 to 34 year olds.

Truelogic mystery shopping account manager Jackson Halstead told SmartCompany Australian businesses need to understand the importance of customer service particularly in the post-GFC climate where online is an ever-growing platform.

“At a bricks and mortar level, bad customer service tends to fuel the online revolution,” says Halstead.  “Good customer service will keep people coming through the doors.”

“Online, especially when you  have similar products, location and scope, the little one percenters – the things that take you ahead of your competitors – say social media footprint, offering a thankyou card with purchase, these are the things are the things that boost the bottom line,” says Halstead. 

“There are too many brands out there that don’t appreciate social media – one dissatisfied customer can reach a portal of thousands of people,” he says.  

“It is important to engage with customers regularly and understand what is relevant to them because that is what is relevant to your business. Customers are time poor so swift contact resolution is essential.”

However, the research from NewVoiceMedia suggests businesses can significantly increase their profits by getting customer service right, with 77% of respondents indicating good customer service was a major influence on their loyalty, while 76% said they would recommend the company to others after a positive experience.

NewVoiceMedia chief executive Jonathan Gale said in a statement fostering a positive customer interaction is paramount.

“With $8 billion of revenue being transferred between companies, this research reinforces just how much influence customers have on a business’s success – it’s surprising how many organisations still aren’t getting it right,” said Gale.

“Great customer service is the critical differentiator and investing in providing personalised and engaging customer experiences will help businesses succeed in retaining customers and securing new business,” he said.