The cost of bad customer service on your business

Bad customer service can cost a business in more ways than just financially. In addition to lost sales and higher marketing costs, a poor customer experience can damage a brand’s reputation, tarnish its professional image, encourage negative reviews, and harm employee satisfaction.

But whether you run a micro-business, an SME, or an established company, you can’t afford to take these risks and miss opportunities.

Let’s examine the consequences of bad customer service and how to improve it and go the extra mile for your customers.

Financial implications of bad customer service

First and foremost, bad customer service directly impacts your bottom line. You may dismiss the occasional frustrated caller or impatient live chat user as a one-time issue, but every negative experience can cost your business money.

The 2024 Customer Satisfaction Index, published by the UK Institution of Customer Service (UKCSI), shows that the nation’s customer satisfaction levels have slumped to their lowest levels in over a decade.

As of January 2024, the UK’s average customer satisfaction (CSAT) rate is 76. While this might not seem like too bad a score out of 100, it’s the lowest score since 2015. Furthermore, the UKCI estimates that the current state of customer dissatisfaction costs UK organisations an enormous £7.1 billion per month.

On the plus side, this figure dropped from £11.4bn in 2023. That said, it’s still a tremendous financial loss, indicating that many businesses struggle with inefficiencies that lead to wasted time and resources.

Regardless of your business size, you don’t want to lose money. Therefore, considering the above figures, prioritising customer service excellence is absolutely necessary and doing so will boost customer satisfaction and protect your revenue.

Bad customer service can damage your reputation

Can you remember the last positive experience you had when contacting a business? You might struggle with that. However, if you were asked about a bad customer experience, chances are one springs to mind straight away. 

• See also: Customer satisfaction: 7 ways to keep customers happy
• See also: How to improve your customer lifetime value (CLV)
• See also: Tips for improving customer communication

That’s because people are naturally more likely to remember a bad experience over a positive one. This is due to a combination of psychological and emotional factors.

First, our brains process negative experiences more intensely, making them more memorable. Second, bad experiences trigger strong emotions like anger and frustration, increasing the likelihood that we’ll share them with others.

Therefore, a consequence of bad customer service from your business is a damaged brand reputation. An unhappy customer might leave a negative online review, spark an uncomfortable conversation on social media, or spread negative word-of-mouth (which travels fast).

A negative image will also have a knock-on effect on your finances. It will cost you more to secure new customers (and customer acquisition is already estimated to cost five times more than retention), and an existing customer’s average spend will likely drop.

Let’s return to the UKCSI report from earlier. Results show that over 20% of unhappy customers will spend less with a business after receiving bad customer service from them, and nearly 10% will leave a negative review.

Bad customer service puts your business at risk of losing existing customers and missing out on new clientele. Remember that losing that all-important trust is detrimental – and challenging to repair.

You could lose customers to a competitor

When a customer leaves your store or website feeling dissatisfied, where do they go next? Most likely, to one of your competitors. You risk losing them due to:

• Long response times – Customers don’t want to wait for someone to answer their phone call or message. At most, you have a couple of minutes to respond before they go elsewhere.
• Unhelpful staff – Unprofessional, unempathetic, and unknowledgeable teams can make customers feel unvalued and disrespected.
• Unresolved issues – People lose trust when their concerns are left unresolved.
• Inconsistent customer service – You should deliver the same high level of service to each and every customer no matter how or when they contact you. This helps establish trust and dependability.
• Lack of personalisation – No one wants to feel like a mere number on a spreadsheet. Customer service should be tailored to individual needs and circumstances.
• Not listening to feedback – Whether it’s positive or negative, it’s crucial to acknowledge and respond to customer feedback. Failure to do so leads to bad customer service, leaving people feeling unheard and frustrated.

These are some of the core expectations customers have when contacting your business. If your business doesn’t achieve them the first time around, you might get one more chance to make things right. After that, the price you’ll pay for bad customer service is losing those customers to a competitor.

You could end up paying for another company’s bad customer service

Did you know that the level of customer service someone receives from another business can directly impact your own? The UKCSI report found that 65% of consumers who rated an organisation poorly for overall satisfaction said their experience affected their feelings and behaviours towards other organisations.

Here’s a breakdown of their answers:

Over 20% of respondents are inclined to trust other businesses less after receiving bad customer service. A further 15% said they become less tolerant of other organisations, and 12% will challenge other businesses more after a poor experience.

It’s impossible to control the customer service quality of external businesses. However, the key learning from this data is that organisations have a shared interest in improving customer service. Business owners, managers, and teams must unite in their commitment to deliver reliable and effective customer care.

Bad customer service affects your employees

Poor service doesn’t just affect customers; it also takes a toll on your employees. Handling complaints and dealing with frustrated and often abusive customers can diminish their job satisfaction and wellbeing. This impacts the business as a whole in several ways.

Firstly, prolonged stress leads to burnout. Employees will become less productive and motivated to perform their jobs to a high standard. Not only will this worsen the customer experience, but the business is likely to experience high sickness levels and absences.

Secondly, bad customer service creates a negative work environment. You could see a rise in tension among staff, unhappy employees, and poor team collaboration. The company culture could suffer as a result.

Lastly, if the issue persists, employees could resign, leading to high staff turnover. The business may experience skills gaps and long periods of vacant positions, not to mention the increased cost of hiring and training new staff members.

What does good customer service look like?

Now that we’ve explored the risks associated with bad customer service, let’s take a look at how to turn that around.

1. Respond quickly

It won’t surprise you to learn that customers don’t want to wait. In fact, this is such a crucial customer service KPI that it often determines whether or not they’ll return.

But just how quick should your response times be? Research by SuperOffice shows that, on average, customers want businesses to answer within four hours. Over 10% expect a response in under 15 minutes.

But it depends on the channel. You should aim to answer phone calls within 2-3 rings, social media messages within a couple of hours, emails in up to four hours, and live chats instantly (up to 40 seconds).

2. Respond to negative reviews

Whether it’s one negative review or ten, you should respond to each one and take action. Frustration isn’t the only reason someone might leave a negative review after receiving bad customer service; it’s also because they expect you to reply and do something about it.

Take the time to acknowledge each message and apologise for the poor experience. It might even be appropriate to take high-priority issues offline and speak to customers on the phone. This gives the interaction a personal touch and shows that you care.

Remember to address the problem directly and offer a suitable solution. It could be a refund or discount, for example. But don’t just offer blanket incentives; pay attention to the customer’s needs and expectations and offer personalised care.

3. Create an emotional connection

Empathy is key to improving bad customer service. Use this element to establish trust with your audience and show them that you value how they feel and genuinely want to help.

No matter how basic or complicated a query might be, tailor each person’s experience to them. For example, address them by their name, apologise for their bad experience, and be honest and apologetic when you’ve made a mistake. Empathy, acknowledgement, and action are often all it takes to win customers back.

4. Use professional services

Exceptional customer service can be difficult to implement, especially if you run a small business where resources are limited. But remember that you don’t have to do it all alone.

Consider using a telephone answering service. An external partner that specialises in customer care will treat your customers like their own and answer queries in your company name and style.

You’ll reduce caller waiting times, and your clients will receive a high-standard, trusted, and reliable experience every time – even if you’re not around.

Say goodbye to bad customer service

No business can afford to maintain poor customer care. Choose Bizik to guarantee that every interaction is a positive and memorable one.

Our team of best-in-class PAs will take the time to get to know your business, products or services, and tone of voice. They’ll then work with you to establish how you’d like your calls and/or chats to be answered and when they should transfer them to a member of your team. 

Bizik acts like your own in-house team of receptionists. Whatever you need, we can help. Give our team a call on 020 3917 7444 for more information, or start your free trial today.