The Effects of Bad Customer Service and Why it’s Costing Your Company MILLIONS!

Sometime today or tomorrow you’re going to receive bad customer service from a company that you do business with. It could be a dry cleaner, auto mechanic, dentist, or any company. Immediately you will feel the effects of bad customer service.

I’m not being cynical, it’s just the fact of the matter.

After centuries of doing business, why is something as important as delivering great customer service to grow through referrals and repeat customers seem to get a short end of operating budgets?

Companies like Warby Parker and Starbucks are people-focused which allows them to deliver great experiences to customers, employees and their community.

The outcome is multi-billion dollar companies.

Most companies are either product, sales or marketing-centric. To put it another way, their engineering, business development, and brand teams are much larger than their customer service or HR teams and receive a larger piece of their operating budget.

These companies are focused on customer acquisition through PPC, Facebook ads, expensive sales seminars, influencer marketing and more. I’m not suggesting that any of this is wrong but I will advocate that keeping a customer is just as important, if not more important than inorganically acquiring them.

I don’t believe any company thinks, “I’m not interested in delivering great customer service.” I do believe that we lose focus on what’s most important. Publicly traded companies must grow each quarter at all costs and that could mean only investing in things that will help them grow in the short-term.

Companies like Warby Parker and Starbucks don’t do that. They invest in the long-term even if that means “willing to be misunderstood for long periods of time” as Jeff Bezos famously said many years ago.

Take Amazon, for example, I’d bet that you didn’t know that their tagline and slogan for the company is to be “earth’s most customer-centric company.” It’s not to be “earth’s biggest.” This is a testament to their seamless customer experience that has us buying more and more every year.

Amazon started off as a small, garage-operated website, they earned our trust by selling books. For years they created loyalty by selling one product and when the time was right, they started selling more products in different verticals. Today, they have Amazon Web Services (AWS), Amazon Basics and more.

I believe everything they did was calculated. They lost or broke even for years because they wanted to. They wanted to continuously reinvest in the business so they could create better experiences for us, the customers. When they knew they had our loyalty they created services – ones like AWS and Amazon Basics – that had much higher profits margins. Now, they are extremely profitable and one of the biggest companies on the planet.

How did they do this? Because of their investment in customer service and to be “earth’s most customer-centric.”

My question for all of us is – why aren’t we investing in the same philosophy?

I believe there are five things to consider to understand why your company is still delivering average or poor customer service which is impeding your growth.

1. You Aren’t Hiring Customer-Centric People

One of the things I’ve grown as a skill set to ensure my companies deliver a great customer experience is my ability to spot what I call “customer-centric pros.” These individuals know how to care about strangers.

After all, at the beginning of your relationship with new customers, they will be strangers. It takes a certain individual, or as I say, “one with customer-centric DNA” to deliver great customer service every single day.

Review the way you interview for, not just customer-facing roles, but every role in your company. What type of questions do you ask in the interview to probe for this skill set? Do they have soft skills? Are they humble? Are they kind? Start saying no to brilliant jerks.

To truly be customer-focused, every single person in your company must be devoted to delivering an amazing experience.

2. You’ve Grown Too Fast

Controlled growth is the way I like to expand a company. If you’re growing too fast without a customer-centric strategy to support this growth, then the seams of your company will start to unravel.

When our company added another venue and 50+ new team members I knew we would need help so I created a Culture Committee team. I appointed individuals from different venues and departments to form a team that came together to talk about our customer experience every single month. It also gave me half a dozen sets of eyes and ears on the ground floor to advocate our customer experience efforts.

If you expect to grow in 2020 and beyond, please do your company and customers a grand service by creating a Culture Committee and Voice of the Customer (VoC) program. If you’re already doing this, great! Keep going and consider doubling down on your efforts. Your customers will never complain about having too much service and you will be rewarded with more profit because of repeat customers and word of mouth marketing.

3. Determine Your Customer’s Pain Points

Customer journey mapping is an extraordinary exercise that hasn’t gone mainstream yet. In short, it’s when your team comes together to identify each interaction your customer experiences when doing business with you from beginning to end.

Take my industry, hospitality, as an example. If we were to host a customer journey mapping exercise we would be identifying customer touchpoints like booking a reservation on our mobile or desktop website, where our guests park their cards, cleanliness of our bathrooms and elevators, how long it takes for drinks to arrive at the table after being ordered and more.

After we’ve outlined each interaction, we start to discuss which touchpoints we’re excelling in and which ones are frustrating our customers and causing pain points for them. These pain points are when you have customers saying,

“Screw this restaurant! I’m never coming back.”

Maybe the pain point is that it takes too long to respond to guest’s emails inquiring about a reservation or it takes too long to receive your bill after dining. Regardless of the pain point or moment that it happens within the journey, it’s frustrating your customers and causing a lot of friction in the experience.

The effects of bad customer service are that they never come back, spread negative word of mouth and write bad Google reviews.

Before you move to the next point within this post, think of which touchpoint within your customer journey map is causing your customers frustration.

4. Legacy is Crushing You

I see this a lot in family runs businesses and companies that have been around for decades.

The people who started the business and did an exceptional job at growing it haven’t sharpened their skill sets over the years and neglected that behaviours – ones of customers and employees – have changed.

If you find yourself thinking, “But, this has worked in the past” to justify doing something the same way as you did ten years ago then it’s likely you’re on the wrong side of the fence.

Sometimes there needs to be a changing of the guard. I’m not suggesting that the leadership from yesterday needs to retire or move into the shadows but I am strongly advocating that they allow the leaders of tomorrow to have a say in how they operate. A fresh perspective can be very valuable to create great customer service strategies.

At the time of writing this blog post, I’m 33 years old. I wouldn’t suggest that legacy is crushing me and I don’t plan on that happen. To prevent this, I regularly meet with more youthful professionals, like Swish Goswami and Kieran Matthew, to advance my knowledge.

5. You’re Not Investing In The Right Areas Of The Business

I mentioned this earlier in the blog post, you may not be investing enough resources into your customer service efforts.

I’m often greeted with, “But, Michel, we can’t afford it.”

My response is always, “Yes, you can afford is. You’re just choosing to spend it elsewhere.”

There may be an opportunity to invest more without actually spending more. Consider this…

What if, next year, you take 10% of what you spend on marketing the year before and invest it into improving your customer service?

Now, before you think, “But, what about our marketing efforts to get new customers?!”

Remember what I said earlier, retaining customers is more important than acquiring new ones that are only going to buy off you once and never again because your customer service is bad.

Do you recall the Starbucks Superbowl ad from Superbowl LIII? No, you don’t because Starbucks doesn’t advertise traditionally.

As former Starbucks CEO said, Starbucks is not an advertiser; people think we are a great marketing company, but in fact, we spend very little money on marketing and more money on training our people than advertising.

That training produces a greater customer experience that allows them to go from four stores to 20,000+ and become a globally recognizable brand and worth billions of dollars.

Customer service training can be your greatest source of advertising, you just need to invest to reap the benefits. Trust me, the effects of bad customer service are not worth it!