The cost of a bad experience

The cost of a bad experience

Enhancing customer loyalty is critical to ensure success in today’s competitive and digital environment, but a bad experience can risk it all.

Customer loyalty is hard to win and easy to lose, and in these digital time, a bad experience can spell disaster.

Today’s competitive and immediate environment complicates the process of recognizing and rewarding customers, however, they still expect relevant interactions and conversations despite having a large variety of channels and options, but not all companies are getting it right when it comes to understanding of individual needs and living up to the expectations, and that is costing serious money.

In a recent study published by customer experience expert InMoment, consumers report that unpleasant interactions with company staff is the #1 cause of bad brand experiences, and actually, 63% of consumers said “it only takes one unsatisfactory shopping experience” to make them stop shopping your brand, according to BRP’s Keeping Loyal Customers Happy report. Moneywise, the 2018 “Serial Switchers” report by NewVoiceMedia reveals that poor customer service is costing businesses more than $75 billion a year… that’s up $13 billion since its last report in 2016, making leaders of both small and large companies start recognizing the importance (and the cost) of delivering a better customer service experience, because much is at risk.

The “Serial Switchers” report by NewVoiceMedia also claims that “Brands are failing to create the positive, emotional experiences that drive customer loyalty.” The result is that 67% of customers have become “serial switchers,” customers who are willing to switch brands because of a poor customer experience. That’s an increase of 37% since NVM’s last report, and some of the main reasons for customers ceasing to do business with a company are as follows:

  1. Customers do not feel appreciated.
  2. Customers are not able to speak to a person who can provide them the answers they are looking for.
  3. Customers experience rude and unhelpful employees.
  4. Customers are being passed around to multiple people.

According to a Spiegel Research Center, a negative word of mouth is evident at the cash register, as those who were negatively ranked on social media channels reduced spending by 12% while their purchase frequency was also reduced by 5%.

For a company that provides good service, 66% of customers would be more loyal, 65% would be willing to recommend the company to others, and 48% would spend more money.

A contrast in perception

One of the biggest dangers hiding behind customer service is the fact that just 29% of company employees surveyed said that negative customer interactions play a major role in bad brand experiences.

According to a January 2019 survey conducted by The Harris Poll, 84% of marketers in North America and the UK said they are satisfied with their company’s abilities to leverage technology to deliver on key customer experience measures, but only 68% of consumers felt the same. That’s a huge difference in perception.

According to eMarketer, these discrepancies are important to note as more than half (55%) of US shoppers said that just one bad experience would stop them from returning to a brand, according to a July 2019 survey from alternative payments provider Klarna. But retailers are having trouble providing this experience that consumers crave—more than one-third (36%) of respondents said they struggle to keep pace with changing consumer expectations, and more than double that figure (69%) said they have to work harder than ever to retain customers.

Click here to read about the industries with the worst customer service during 2018.

The future of customer service

While it’s important to treat all customers well, the BRP report also cited the Pareto Principle, which broadly states that in many cases, 20% of the inputs create 80% of the results. As applied to the business world, what this often means is that 80% of a company’s business will come from 20% of its customers. Those are the ones most likely to serve as its brand advocates. That makes it surprising that while 62% of retailers surveyed by BRP said they could identify their most loyal customers, 84% acknowledged that their processes on that front need improvement.

According to April 2019 data from business intelligence company Incite Group, customer service professionals from various industries worldwide said that a seamless omnichannel user experience (34.0%) and the encouragement of self-service tools (29.7%) will be two of the most transformative customer service innovations over the next five to 10 years.

To keep consumers coming back, it’s now more important than ever for marketers to focus on a responsive, streamlined shopping experience.

In sum, do you want to keep your customers? Don’t lose sight of that human connection. Consumers won’t sit still for a poor experience because, in most cases, they don’t have to. It is important to ensure that each and every shopping experience, in every channel, is seamless, personal and positive.

2019-08-14T22:26:42+00:00

About the Author:

Abigail Mitchell
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