The costs mount when customer service is disconnected

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The unfortunate truth is that customer service often works in isolation. While companies realize its important role in responding quickly to customers problems, still they are left to operate on their own without support from other departments. They are a silo among many.

This is disconnected customer service.

Disconnected customer service can create many problems for a company. One of the biggest is that the root cause of problems reported by customers goes unaddressed because teams are not working together on solutions. When this is the case, those problems continue, creating strains on the business. An example of disconnected customer service is when products shipped to customers repeatedly arrive broken due to faulty packaging because manufacturing is not aware of the problem or is not held accountable to fix it.

So, though calls and emails may be responded to in a friendly and professional way, it doesn’t matter. When customer service is not working cooperatively with the entire organization, the results are dysfunctional. Some of the costs of operating in this mode are obvious while others are not, and some of those costs are immediate, while others are long-term. Over time, they might never be recovered from.

Impact on customer service

By operating as an island without permanent solutions to problems, customer service provides customers with workarounds. These types of customer issues represent a volume of customer contact that could be permanently eliminated if customer service is working with other departments. How much money is saved by doing away with these redundant contacts will depend on the types of problems and the cost per call, but it quickly adds up.

What also adds up are all the calls, emails, and chats accumulating in queues of customers waiting for answers. As the volume builds, the finite number of staff will see the hold and wait times rise. As any customer service practitioner will tell you, a waiting customer usually does not provide high CSATs.

Add to this the frustration on the part of the customer service agent. They must appease the waiting customer. They must exercise care to avoid saying the issue the customer is calling about is known. They must deal with the fact that this same problem has existed for a long time. And they must dole out the same answer, time after time.

Bearing on company-at-large

Recall the example of items arriving to customers damaged. This type of issue and lack of action represents some of the additional financial costs to the company beyond customer service expenses.

If an item must be replaced, there is the cost of that replacement. On top of that, there is the price of shipping–and that shipping might come at a premium price if the company’s policy is to correct the customer situation quickly with expedited shipping. (Some companies also request that damaged products be returned for evaluation, further adding to the expense.) And the final cost is the staff effort required to correct the situation: customer service responding to the customer, fulfillment placing a replacement product order, and the warehouse processing it.

Companies build margin into the cost of their products to accommodate such issues. Yet if customer service were connected with the entire organization and worked together to identify and eliminate the root cause, the company’s profitability per product sold would increase. The company might also elect to offer their product at a lower price and put pressure on competitors since a higher margin would not be necessary to cover as many instances of failure.

The product replacement example is an extreme one, but there are other issues that come to customer service warranting investigation and corrective action. What if a manual is missing a step? How many customer inquiries are occurring as a result? What are the costs of answering those questions as opposed to reprinting and replacing the manual? Only with customer service working with other departments is it possible to answer that question, and to do so in a manner that benefits the customer and the company.

The ultimate penalty

We are living in the age of the customer. Customers have more control and more choices than before. And they will choose the winner with their wallets.

According to American Express’ 2017 Customer Service Barometer, more than half of Americans have abandoned a purchase or transaction as a result of bad service. This same research revealed thirty-three percent of Americans would consider switching companies after a single poor service experience. And if your company is known as one that is difficult to work with, word gets out. According to American Express’ 2017 Customer Service Barometer, on average, Americans tell fifteen people about a poor service experience as opposed to the 11 they would share a good experience with. Is it any surprise NewVoiceMedia research found that poor customer experiences are costing U.S. companies $75 billion a year, a $13 billion increase from 2016, as a result of customers switching to competitors and potential customers avoiding the poor performers?

While poor service can come as a result of other reasons–poor agent training or attitude, long wait times, etc.–eliminating the root cause of issues chips away at the scenarios where customers need assistance and frees up time. This is not a substitute for addressing those issues causing poor customer service, but it helps to eliminate a volume of contacts and creates the opportunity to tackle them.

Come together

Providing customer service is a cost of doing business–and doing it well improves a company’s standing among its competitors. But that’s not enough. Companies that want to prosper and succeed on the customer experience front must do even more.

Connecting customer service with the rest of the organization is the answer. It helps drive improvements to the overall customer experience, saving the many costs of addressing the same issue over-and-over and driving greater profits through higher customer retention and positive referrals.

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