Do you enjoy reading stories about bad customer service? The ones that make the headlines and trend on social media. They’re usually interesting and fun to read because it’s someone else’s problem. But just stop for a second and think. Can lack of customer service be profitable? Turns out, there is a chance it is.
In today's post, we’re talking about why the tier structure might be profitable, who’s to blame and why poor service does hurt businesses in the long run.
What is Bad Customer Service? Is it Profitable?
Customer service is considered bad when businesses fail to meet customer needs and expectations. As simple as that. Expectations vary from industry to industry. However, there’s a set of pretty common situations that leave customers frustrated:
- Being put on hold for too long.
- Being bounced from one agent to another and having to explain your problem repeatedly.
- Negative language or bad attitude.
- Being directed to the website.
- Agents with no people skills.
- Facing an automated system that fails to solve the problem and makes it hard to reach a human agent.
The list goes on, of course. But how come that in a world where seemingly every business is dedicated to pleasing their customer, we still get bad service? Can it benefit companies?
According to a 2010 study by Mike Desmarais in the journal Cost Management, the reason behind lousy service could be profits. Here are some interesting citations:
Since 2015, we examined the incentives structures within customer service departments at over a dozen companies in finance, technology, and travel services to understand why customers perpetually experience hassles. We found that these companies screen complaining callers by using a hierarchical organizational structure. This structure, we argue, keeps a lid on the amount of redress customers are willing to seek. In other words, by forcing customers to jump through hoops, the organization helps curb its redress payouts.
Seems counterintuitive. Angering your customers on purpose will inevitably hurt reputation. But here’s what the research has to say about this:
So what about the idea that frustrating customers has consequences on customer retention and long term reputation? For example, some experts advise companies with upset customers to reach out to them directly to win them back. But, some companies have little regard for their reputation, especially those who control a large market share.
This could explain why airlines, internet, cable and telephone service providers top the lists of companies with bad service. However, this is a topic for discussion. In the end, what if the tier structure just doesn't cut it anymore?
What or Who Makes Customer Service Terrible?
There’s a saying known to most people in the business world. It goes like: “if you can’t measure it, you can’t manage it.” The original quote, however, says:
“It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth.” — W. Edwards Deming (The New Economics)
Companies have become increasingly reliant on metrics to tell them how they’re performing to meet high expectations. Customer service is no exception. But the problem with metrics is that:
- They measure single touchpoints.
- Standalone metrics don’t show you the big picture.
- Many companies still rely on legacy metrics.
Let’s take the good old “average time-to-resolution” metric. First, it speaks to the experience of one single touchpoint. Second, instead of speaking to the customer’s urgency for a solution, it often incentives agents to rush customers aways to get a higher score.
Companies should have shifted from touchpoints to journeys a long time ago. Only by looking at the customer’s experience through their own eyes—along the entire journey taken—can you really begin to understand how to improve performance meaningfully.
How Does Poor Customer Service Impact the Credibility of a Brand?
Have you ever dealt with a company that did the exact opposite of what it stood for? Or didn’t live up to the promises they made on their website? Would you work with them again? Moreover, would you recommend this company to a friend? Unlikely.
That’s the impact of bad service. When a brand fails to deliver to its promises or standards, a few things happen:
- The brand becomes less or not trustworthy.
- The brand decreases the customer’s lifetime value because customers don’t stick around. They also need to put in more effort and spend more to acquire new customers.
- Unhappy customers scare away potential buyers by spreading the word about their negative experiences.
Simply put, brand credibility is reputation. Making customers jump through the hoops creates a reputation of a brand that is not reliable and not to be trusted. So what, or more exactly, who can make your brand credible?
Customers
Jokes aside, customers are indeed the ones who shape the reputation of your brand. They carry valuable insights into what it’s like to work with you or use your products.
Your customers are also the best marketers. People trust recommendations from other people more than marketing. On top of that, word-of-mouth is directly responsible for 90% of all purchases. That’s huge! So, the business needs to deliver what they promise.
A bad reputation can spread like wildfire. Just imagine the damage.
Employees
Focusing on customers is important, but you should never neglect your employees. Firstly, employees can help detect the health of the company culture and the overall business.
Secondly, employees are the ones delivering the service. Needless to say that their satisfaction directly impacts the quality of service.
Finally, employees are marketers too. Go on YouTube and search “my experience working at.” You will find a whopping amount of videos where people share their experience working at different companies. Why should you care? Because millennials represent a large segment of the population and are an essential target market for consumer companies. And many millennials research online.
They seek out honest reviews and pay attention to company culture before buying from a business.
Top 3 Things You Can Do to Improve Brand Credibility
#1 Get reviews and build case studies
Getting honest reviews is something you should focus on at all times. As mentioned above, people trust recommendations from other people over ads.
#2 Keep up with the needs and values of your audience
Understanding your potential customers' values and pain points can help adjust your strategies to cater to those needs.
#3 Focus on the customer journey
Other than trying to better service at individual touchpoints, look at the big picture. Customers can experience lousy service at multiple levels.
#4 Encourage employees to get social
If employees don’t share news and pictures about their company online, it’s a telltale sign that the company culture needs attention. Of course, some policies prohibit sharing photos of the office, etc. But if your social policy is flexible enough, and employees.
#5 Be honest and transparent about your products and services
Everything from your website, ads, social posts, how information is shared with prospects and potential buyers all matters to your credibility. Make sure that the public policies like SLA, Privacy Policy, etc., are up to date and contain all the necessary information. And make sure to steer clear from misleading slogans and promises.
Can Omnichannel Customer Support Help Improve Service?
The omnichannel service model is a significant improvement from the traditional service paradigm. Not only because it introduces new technologies like AI. Omnichannel helps customer service agents get a comprehensive view of a customer’s interactions. Thus, enabling them to answer queries more effectively and efficiently.
What’s the Difference Between Omnichannel and Multichannel?
The multichannel model aims to provide customers with multiple ways of contacting a business. Quite literally, provide various channels like social media, email, phone, SMS, etc. In this approach, each channel functions as a standalone entity.
Omnichannel customer service aims to provide a seamless customer experience across multiple channels by integrating them within a single system. All the touchpoints are liked to help the customer perceive the brand as a seamless unit, regardless of where they contacted the brand.
The Pros and Cons of Omnichannel Support
There are more pros than cons.
Pros:
- The omnichannel model can help expand the breadth and reach of your support;
- Seeing all the interactions the customer has already had with your business, you can deliver better support and thus raise customer satisfaction;
- Increasing sales opportunities by accumulating data from support interactions and using them to drive change;
- You can drive long-term growth through customer loyalty.
Cons:
- Requires a solid strategy for establishing and scaling;
- You need to choose a customer service solution carefully. It’s often a technology problem if you track one customer journey as separate interactions;
Wrapping Up
Happy customers will be loyal to your brand, and they’ll be much more likely to spend their money at your business again. Customer service is only dead if you let it die.
You need to nurture it, prioritize it, and build on it. If you fail to focus on customer service, you fail to inspire loyalty, and your sales will fail to happen as well.
