In this current service climate, customer experience has never been under so much scrutiny, and it’s critical to get it right. Service is different from experience. For example, if you went to the shop and ordered your coffee, and you got it quickly, and it tasted great, and it wasn’t expensive, that’s good service. But if the person who made your coffee was prickly and abrupt, and you’re not sure whether you want to go back because you didn’t feel welcome, that’s experience.
Of course, the two can work together. Bad service can lead to bad experience, and service is about the logistics of how a product is provided. But experience needs some thought and design to get right, because it’s all about customer impact. So what are the hidden costs to an organisation when they don’t get that experience strategy right?
In this article, we’ll list the seven deadly hidden costs of poor customer experience, alongside a five point checklist of simple things you can do to improve customer experience.
1. Poor experience leads to brand damage
Cost number one: poor experience leads to brand damage. This is about the hidden cost of damage to your brand when there is a poor or ineffective customer experience strategy in place. Approximately 87% of customers rely on Google reviews, with a four-star review being the minimum rating for most people to engage with a product or service. Did you know that it takes approximately 40 good reviews to remove one bad one? Forrester reporting surveyed over 200 enterprise brands and more than 1,000 customers recently and found that businesses underestimate how often customers have poor experiences by an average of 38%.
So this really begs the question: do you have a customer service strategy or do you have a customer experience strategy?
The increase of angry customers recently has also become problematic, with many organisations overwhelmed with complaints and frustrated customers, which affects these ratings dramatically. Did you know that 73% of customers point to experience as an important factor in their purchasing decisions, whereas companies that prioritise better customer experiences has dropped to just 10%?
Prioritising experience sets you apart from the competition and sets you up for success with your customers.
2. Poor experience impacts staff retention
Increased stress on the staff creates retention risk, and you can lose your talent very quickly when that happens. Recent research points to service businesses experiencing increased staff quitting due to the hostility of angry customers. This links staff retention and poor customer experience and reveals the negative and personal impact to people serving on the frontline.
Attrition rates, high customer service roles, and losing experienced staff is costly. It’s also not that easy to find skilled customer service staff who can represent your brand and organisation in a way that becomes an integral part of creating that positive experience for customers. Creating better working conditions and prioritising customer experience may help counteract this risk.
3. Poor experience increases costs of retraining staff
This follows on from the previous point. If staff turnover is high, and you’re constantly recruiting and training, it becomes a large expense. This cost would be better redirected into an effective retention and nurturing strategy for existing staff.
We can all think of at least one company with an incredibly bad staff support culture that’s created a revolving door of staff joining and then leaving soon after. Not investing and nurturing your staff is a false economy, which affects your bottom line and immediately impacts customer experience when there is low morale amongst employees.
4. Misunderstanding customer impact touchpoints can create poor experience
Not understanding or empathising with customer touchpoints can lead to blindsiding or poor customer experiences.
A classic example of this is when you’re put on hold for a long time, trying to get through to customer service on the phone. Some organisations work really hard at reducing this timeframe and may use positive acknowledgement messages, or offer a ‘hold your place in the queue, and we’ll call you back’ strategy, to create customer empathy. However, other organisations seem completely insensitive to wait times, and this is a major frustration for their customers. This is a classic result of focusing on a convenient, effective delivery mechanism (read: service), versus designing a better customer experience strategy.
How many customers does an organisation lose through frustrating access times with a lack of care attitude? How many people can they impress or relieve through offering a callback or similar? This is becoming more crucial to consider as technology and the ability to talk to a real human gets overtaken by cost-effective tech.
5. Poor customer experience can lead to a competitor sale
If you don’t have a good customer experience strategy, it can create easy sales for your competitors. The comparison sale happens when your client has had a bad experience with you. By default, you’ve made the competition look good. The customer will use their bad experience as a reference point, and anything that is slightly better will look amazing. This means that not only have you lost a customer, but your competitor doesn’t have to work as hard to gain their business. You’ve made them look really good.
6. Lack of attention to customer experience leads to increased marketing costs
If you haven’t paid enough attention to creating a customer experience strategy, you’ll have to work harder on the front-end to continually attract new business. It’s a well known fact that it costs far less to invest in existing customers who love you rather than the cost of buying a new one. If you don’t have an experience strategy, however, you’ll need to invest more in marketing and advertising to make up for this.
7. Underestimating your brand’s potential can cost you
Finally, underestimating brand potential and market penetration by not focusing on customer experience strategy can hurt your business. Many customers cite that positive customer experience is their most important criteria. So if that’s the case, how far could your organisation’s brand go with a well thought through customer experience strategy?
Five things you can do right now to improve customer experience
We’ve gone through what can happen when you ignore customer experience or prioritise service over experience. Now it’s down to what you can do. Here are a few suggestions to get you started.
- Create a customer impact blueprint. Identify touchpoints, gain impact data, and review how you can improve upon that data. What can you do better?
- Develop a service charter to create better practice standards for your frontline team, so everyone is on the same page.
- Identify how you measure the success of that blueprint. Then, charter and monitor the performance of it.
- Train your staff with professional skills and proactive customer service strategies.
- Lastly, employ an effective support framework strategy to sort to nurture the resilience levels of the team.