Wednesday, November 18, 2009

The Cost of Poor Service

A survey sponsored by Genesys Telecommunications Laboratories,Inc in collaboration with Datamonitor/Ovum has some very interesting results. The 28 question survey was conducted with a sample of 8,880 consumers from 16 countries. A minimum of 500 surveys were completed for each country. The countries surveyed were Australia, Brazil, Canada, China, Czech Republic, France, Germany, India, Italy, Mexico, Netherlands, New Zealand, Poland, Russia, U.K. and United States. The respondents were selected from all age and income groups. They were asked about the frequency of their interactions with businesses via the Web, through contact centers and with their mobile devices. The purpose was to determine the impact of their interactions with their purchasing decisions.

This survey was aimed at financials services, cable and satellite TV and a variety of telecommunications companies. The survey results indicate that these industries in these 16 countries lose about $338.5 Billion per year as a result of poor customer service when customers defect and/or abandon their purchases as a direct result of poor customer service. This translates into $243 per year per customer. Of this total 63% was lost to a competitor and 37% led to the transaction being abandoned.

These losses are broken down as follows:
1. Financial services lost $44 billion in revenue
2. Cable and satellite TV lost more than $37 billion in revenue
3. Wireless carriers and internet service providers each had $36 billion in lost revenue.
4. Land line carriers lost $33 billion in revenue.

The most frequent reasons the consumers mentioned for leaving (the apparent dissatisfiers) are:
1. Being trapped in automated self-service
2. Being forced to wait too long for service
3. Repeating themselves
4. Representatives that lack the skills to answer their inquiry.

The consumers were asked to identify the factors that have the greatest impact on improving customer satisfaction. The four most frequent responses are:
1. Competency
2. Convenience
3. Proactive engagement
4. Personalization.

There is a customer wish list which includes the following:
1. Provide better integration between self-service and assisted service.
2. Be able to start in self-service and then switch to an agent without having to repeat all the information previously entered (Don't ask me twice!)

The bottom line is that poor customer service is expensive. The good news is that this study appears to have some statistical rigor and thus has believability. The dollars of loss shown in this report should provide a wakeup call to companies in these industries. How can any company stand to lose $243 per lost customer and expect to maintain a viable business? Time will tell if these companies are listening.

As the authors of the report so wisely note "differentiating on service, especially in service-centric industries, such as finance and telecommunications, is how enterprises can retain customers in today's challenging business climate."

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