There’s a cost to everything! Even when you treat customers poorly


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There’s no denying the fact that today the cost of conducting business has gone up. Another important point to be noted is that if you aren’t matching the standards that your customers have set, you start losing business rapidly.

And sadly, more than 80% of companies believe they are offering a great experience, while only 8% of their customers concur with their assessment. In other words, most organizations are living in denial.

But the question that needs answering is how devastating can the consequences of a poor customer experience be? And why is it that you need to discover the truth behind what your customers are experiencing in their interactions with your company?

Your Company’s reputation dwindles

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffet.

In today’s highly competitive world, your brand’s reputation is invaluable. Thanks to social media, even one little lapse on your part can do some irreparable damage to your reputation especially if it involves an angry and irritated customer.

Keep in mind that it’s very easy to ruin a reputation but extremely difficult to fix it. And when you consider that 95% of customers will tell at least one other person about their poor experience, while 54% will tell at least 5 people, you can see how it can quickly things can escalate.

The result is a damaged reputation and a significant decrease in word of mouth marketing leading to higher customer acquisition costs and a significant drop in loyal customers.

Conversion Rates hit a new low

When we use the word ‘customer experience’, it spans all the interactions a consumer has with your business. So, if they have to deal with a business that never gives them respect and treats them without care – a sales rep who moves at the speed of a snail and can’t be bothered to really help and a complicated call centre service that keeps the customers pressing menu buttons forever – you can imagine that they aren’t going to be all that enthusiastic about doing business with you over the long run. Your conversion rates will eventually drop, which will increase the cost of doing business.

Customer Defection goes up

65% of customers said that they would never again buy from a company where they had a poor customer experience, according to RightNow Technologies’ annual Customer Experience Impact Report (2006). In 2011, the same report showed that 89% of customers would defect to another company and never again do business with the organization that provided them a poor experience.

In other words, by offering a poor customer experience, at least 89% of your customers could migrate to the competition, which, of course, lowers profit margins because you are constantly having to acquire new customers. This becomes increasingly difficult and more expensive as your company gains a reputation for offering a poor experience.

If your customers aren’t complaining, don’t think that it means they’re all happy. Only 1 out of every 26 unhappy customers will complain, but 91% of those who don’t complain will defect, according to a survey conducted by thinkJar in 2015.

You’ll be leaving money on the table

All that said, even if the experience you offer is borderline mediocre there’s every chance that you still lose customers. In fact, around 85% of customers say they are willing to pay more for the same product or service from another company if they will have a better experience.

Furthermore, a loyal customer is likely to spend 10 times as much as they did on their first purchase, i.e. they will spend much more than new customers. And 78% of consumers who have a great experience will recommend a brand to friends and family.

In other words, you could be acquiring more new customers, increasing loyalty and charging more for your products and/or services just by offering a delightful and superlative customer experience.

Employee Churn becomes a worry

Unhappy customers don’t just affect your bottom line. Another unpleasant side effect is an increase in employee churn.

Dealing with disgruntled customers all day long takes a toll on even the most dedicated of employees. It will eventually lead to burnout and dissatisfaction, and you could soon find yourself losing some of your best employees.

A high employee churn will make it more difficult to hire good people in the future, and will increase costs as you have to constantly train new people and wait for them to gain the experience of those who left. That can take a while and your customers will be even more annoyed.

A poor customer experience boils down to one thing for a company — loss of revenue. Costs increase due to the constant need of acquiring new customers. And when your reputation is damaged, it gets even harder to make customers give you a chance.

If you’re still not convinced enough, then consider the data ClickSoftware shows us:

“Poor customer experiences result in an estimated $83 billion loss by U.S. enterprises each year because of defections and abandoned purchases.”

The sad thing is that it doesn’t take a lot to offer customers a great experience. You can start out by collecting customer feedback – listening to what your customers are saying and understanding their expectations.

One of the best investments you can make when you are just starting out with your customer experience strategy is a customer experience management platform, which will make life for your business. A customer experience management tool will help you manage all the data you collect from your customers and turn them into actionable strategies, which is essential to creating a delightful experience for your customers.

Ganesh Mukundan
I'm a content marketer at Hiver. I've been writing about customer experience for the past 5 years. I'm passionate about narrating delightful customer stories, researching CX trends, and deep-diving into concepts such as VoC and Customer Journey Mapping.


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