Only Bad Customer Service Is a Cost Sink


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When budgets are tight, businesses tend to focus on cutting costs and reducing expenses. This usually leads to reticence on the part of executives to spend for new or upgraded business technology. Sadly, this is a case of being penny wise but pound foolish, if the figures reported in a recent study are to be believed. Billions of dollars are slipping through the fingers of companies who deliver poor customer service, and a lack of good CRM is one of the causes.

“The Cost of Poor Customer Service: The Economic Impact of the Customer Experience and Engagement,” a joint study by Ovum and Greenfield Online (commissioned by Genesys Telecommunications Laboratories) surveyed nearly 9,000 consumers in 16 countries. It revealed that lost relationships—defined in the study as transactions taken to a competitor or abandoned entirely—cost businesses $338.5 billion per year. That works out to about $243 per loss, according to the study. So if somebody ever says, “So what’s one customer more or less,” now you can tell them. For complete reporting, see the article by Christopher Musico.

Certainly, poor business processes and a lack of understanding of how to best relate to customers take part of the blame, but everything cited in the study as needing improvement—being trapped in automated self-service, waiting too long for service, callers having to repeat themselves, and customer service representatives lacking the skills to answer inquiries—everything can be remedied by smart use of CRM technology. Here’s a list of the traditional solutions to these problems:

  • Trapped in automated self service? This one is easy, even anti-tech: Make sure there’s a way to escalate from the IVR to a live agent. Call deflection has value only if customers are getting the help they need. A timer or tracker that follows a customer’s call and lets a customer service rep break in with live service if the call goes too long or revisits the same menu too often would work if the company (foolishly, in my opinion) doesn’t want a “press zero to speak to an agent” option.
  • Waiting too long? There are more than a few on-demand contact centers out there, as well as software that allows companies to direct their call overflow to work-at-home agents who can help absorb the volume. Take your pick.
  • Callers having to repeat themselves? This makes me sad, because even simple integration between the CRM system, the IVR, and the agent’s desktop takes care of this, 100 percent. I can’t believe it’s still an issue.
  • Representatives lacking the required skills and permissions? A well-stocked and -maintained knowledgebase means that your customers don’t have to suffer for gaps in a particular agent’s expertise. E-learning tools help agents stay current on important information. Not penalizing an agent for handing the call off to somebody who does know how to help, rather than flailing uselessly at a problem, is also wise.

Those are the usual ways to deal with the issues brought up in Musico’s article. It also mentions social media as a potential problem solver. I don’t deny the closing statements of the piece, where Ovum analyst Daniel Hong says it will take some time to get businesses comfortable and proficient with social CRM, but the investment of time and money must be made. It’s been shown that fellow customers are often better at solving some problems than a CSR, so answers are provided for free without costing agent time. Answers generated by the community can be added to the company’s knowledgebase, and over time this feedback can help fix issues with the next product or service in development. That sense of shared experience also makes for loyal customer advocates, which is money in your pocket.

Basic integration has been too long in coming for too many businesses, so perhaps the study will show them the true cost of delay. I hope they remember the social CRM part of the integration as well—bringing businesses into closer and more productive contact with their customers.

Republished with author's permission from original post.

Marshall Lager
CRM Evangelists
Marshall Lager has been writing about CRM and related topics since 2005, first as a journalist for CRM Magazine and then as an analyst and consultant. He has worked at Informa and G2, and as an independent. Specialties include customer experience, B2C, customer journey mapping, and finding the humor in our sometimes dry and dour field.


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