The cost of poor customer service. the economic impact of customer experience in the us


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The cost of poor customer service. the economic impact of customer experience in the us

  1. 1. The Cost of Poor Customer Service The Economic Impact of the Customer Experience in the U.S. October 2009
  2. 2. Executive Summary Snapshot of Key Findings by the Numbers: $83 Cost of poor customer service to the Billion overall U.S. economy Average value (in one year) of each $289 customer relationship lost to a competitor or abandoned Percent of consumers who said it is critical to provide more intelligent self- 40% service to reach a human so they are not trapped in automated systems Percent of consumers who would welcome proactive engagement to improve their 90.5% experience through extended offers or help during self-service transactions Poor customer service has a major impact on enterprises in the U.S., directly resulting in lost revenue for most companies. More than 65% of consumers have ended relationships there due to poor customer service. And, while 61% of those relationships end up with a com- petitor, 39% of them are lost or abandoned completely as consumers decide not to purchase from anyone. 2 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  3. 3. Introduction Introduction W hile many companies are keenly aware of the value of excellent customer service, few can accurately quantify its direct impact on their bottom line. On the face of it, the problem is simple. Most businesses understand that turning the customer experience into an emotional engagement adds value to their brand and results in consumers who are more loyal and satisfied. However, most companies do not measure their effectiveness in converting each opportunity into revenue, nor do they measure the overall cost of poor customer service. For example, contact centers have consistently measured a wide variety of key indicators, such as the time spent on each call, the speed-of-answer, and customer-reported satisfaction rates. Yet research shows that less than one-third of companies worldwide measure revenue per call. Furthermore, the problem has become more complicated as customer interactions move beyond the contact center. According to numerous industry researchers, more than 90% of all transactions initiated over the Web are abandoned before any transaction is completed. And virtually no researchers have accurately measured the value of customer service across communication channels. How can we best measure the impact of lost business opportunities from customer service each year, and identify the underlying causes? To answer these questions, Genesys collaborated with leading industry analysts at Datamonitor/Ovum to accurately measure the cost of poor customer service in the U.S. Genesys engaged an independent research firm, Greenfield Online, which conducted an online poll of 517 consumers in the U.S. In addition to the consumer survey, Datamonitor/Ovum used its proprietary country-level contact center models. Leveraging both data sets along with Datamonitor/ Ovum’s modeling expertise, we have produced the first large-scale attempt to place an economic value on the lost revenue from customer service across all channels when businesses do not measure up to the consumer’s expectations. The 28-question online survey included diverse participants, with representatives from virtually every age and income bracket. The result of that effort is “The Cost of Poor Customer Service: The Economic Impact of the Customer Experience,” an in-depth look at the issue. Those results are included in this report. Please note that this report presents the survey results from consumers in the U.S. only; additional regional results, as well as other individual country reports, will be made available separately from Genesys as those results are tabulated. At Genesys, we believe it is important to continually gain perspective on the changing nature of customer service, as well as consumer perceptions of it. We are extremely aware of the challenges enterprises face in today’s dynamic environments as they strive to deliver on their vision of a great customer experience. We hope this survey will be of use for customer service organizations, as well as others, to help them understand the opportunities and the challenges ahead for all involved. 3 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  4. 4. Key Findings An $83 billion per year problem When a consumer defects it is also costly for a rival to gain that business, since a company must recoup the Behind the Numbers: marketing expense of gaining a customer, depending What is the value of excellent customer service? on the industry, according to researchers at Datamoni- While satisfaction is a critical measure of customer tor/Ovum. Consumers were asked specifically if, as a service, ultimately companies respond to metrics that result of a poor customer experience, they awarded translate into hard costs. And lost revenue is a very their business to a competitor or decided not to stark reminder of those costs. purchase at all. While consumers cannot abandon some industries — such as utilities — other industries The cost of poor customer service is a significant indeed experience losses when consumers choose problem. Enterprises in the U.S. lose an estimated substitute goods, such as movies instead of cable TV. $83 billion each year due to defections and abandoned purchases as a direct result of a poor Who are the biggest losers? experience. Nearly two-thirds of consumers said The problem is even clearer when we look at the data they had ended a relationship due to customer at industry level. The biggest losers are in cable & service alone. satellite TV, financial services, and consumer products. The survey participants said that when they end a relationship, 61% of the time they take their business Chart 2: Losses by Industry $15 to a competitor. One consumer said: “I booked several rooms at a hotel and was told one price, Industry losses $10 (billions) but I was billed another price. I will never do business with them again because I spent so much time and money and $5 25% the problems were never resolved” Chart 1: $83 Billion — Overall Cost of Poor Customer $0 Service in the U.S. s ces er er e tel es e nce es r V s r he uct ion car ide lin eT rri rri nci liti Ho Ot rvi ura Air ipt rov rod nsu ealth llit Ca Ca ge Uti Se Ins scr ate ep rP ta ne ess ial H dli en me Sub vic /S Business abandoned and rel anc Lan nm ble ser Wi lost to entire industry, Fin ver Ca Co et Go ern $32.4 billion Int The worst offenders lose substantially more customers. Nearly one quarter of consumers said they abandoned a cable/satellite company in the past year, resulting in over $12 billion in lost revenue. And financial Customer churn and defections within industry, services companies suffered more than $10 billion of $50.6 billion losses alone. Industries that were previously safe from competition, such as utilities in deregulated regions, are also feeling the pain, with $1.75 billion in lost revenue. One consumer said: “I switched to a utility that was not only less expensive, but had their call center located in the U.S.” 4 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  5. 5. Introduction Key Findings Ending a Business Relationship Root Causes of Lost Relationships How many relationships does the average consumer Why do customers leave? Assisted service is well abandon per year due to customer service and what is developed, with 78% of consumers saying their most their value? satisfying experience occurred because of a capable In the U.S., 71% of consumers have ended a and competent customer service representative. But relationship due to a poor customer service self-service lags because it is not often intelligently experience. integrated with assisted service. Consumers feel the most significant root causes of poor service are: The average U.S. customer surveyed had 11 interactions each year and ended 1.2 relationships. • Repeating themselves • Being trapped in automated self-service Value of Customer Interactions: • Forced to wait too long for service The average value of lost relationships in the U.S. is $289 per year. • Representatives don’t know my history and value • Cannot switch between communication Younger consumers differ sharply from older channels easily consumers in their willingness to switch. Consumers aged 27-43 terminated relationships most frequently, The most challenging channel is voice self-service at 1.52 times per year, followed by consumers under where 33% cite it as the most challenging channel age 26, at 1.43 times per year. Those in ages 44-62 compared to only 1% who find it most satisfying. did so once per year, and those over 63 years old did And 38% of consumers said it is critical to improve so 0.71 times per year. voice self-service to make it more intelligently integrated with human assisted service. In experiences Chart 3: Interactions Per Year and Relationships Ended where they were trapped in an automated system, Interactions Per Year Customer Relationships Ended consumers spent, on average, more than 9.5 minutes 20 trying to reach a human. As a result, even paper mail is preferred to poorly implemented voice self-service. 15 Consumers say the biggest issues are that voice 10 self-service does not recognize the value of the 11 consumer, lacks context, and needs to recognize 5 customer needs and intent better. 1.2 Another consumer said: “I don’t mind automated 0 systems but…I hate it when I am unable to reach a human, and the automated voice continues to make me repeat over and over, and when I finally get close to being connected to a human, I am disconnected and have to start over again.” 5 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  6. 6. Key Findings Where are the Biggest Gaps in Communication Channels? Best Communication Channels Consumer satisfaction with each channel varies Consumers were also asked to select the most dramatically. The chart below shows in blue the satisfying areas of customer service in the U.S. percent of consumers in each communication channel When asked to cite the areas where companies are who were satisfied with that channel. The portions in most effective, consumers selected their preferred red display the percent who were dissatisfied with that channels of interactions (first or second choice). channel. The channels with the greatest disparity The consumer’s first choice is shown in blue, and between positive and negative experiences show the second choice in red. trouble spots. For example, most people are happy with live agents, Web chat and Web self-service, but Chart 5: Preferred Communication Channels would like improvements to voice self-service and paper mail. 1st Choice 2nd Choice Phone Chart 4: Satisfaction with Channel E-mail Web % positive % negative Web Chat 80% Voice self-service Satisfaction with Channel SMS 60% Paper mail 40% 0 20 40 60 80 20% 0% All ‘other’ Mobile and SMS Web self-service E-mail Web Chat -20% Paper mail Phone to live agent -40% Voice self-service 6 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  7. 7. Introduction Key Findings Greatest Sources of Customer Satisfaction Improving the Customer Experience Consumers were also asked the factors that made the Consumers want consistency and continuity. biggest difference in satisfaction. Their satisfaction is The biggest opportunities for improving the increased when four key needs are met: customer experience are in: • Competency • Greater proactivity • Convenience • Improved personalization • Proactivity • Better cross-channel integration • Personalization For consumers, proactivity almost always creates Consumers felt that companies had done much more pleasant surprises. One consumer said: to improve in the area of competency than any of the “My most satisfying experience was when my cable others. When thinking of their most satisfying company offered to lower my bill for that month since experience, consumers said competent service I had an issue.The representative suggested it right before representatives played the largest role. Proactivity I was about to ask for it.” makes a significant difference. Consumers overwhelmingly said they would like Chart 6:What were the most significant factors in your more proactive outreach. More than 83% of most satisfying customer experiences? consumers said they would find proactive engagement either a “strong benefit” or would 80% “welcome proactive assistance” when they were 78% stuck on the Web or in self-service. 60% Chart 7: Consumer Views of Proactive Contact 48% 40% “No 38% Thanks” 37% 9.5% 20% Welcome 0% 41.7% Strong plus Competent The communication The company The transaction 48.8% customer service channels were was proactive in was personalized representatives convenient reaching out to me Continuity is also key. One participant summed this up by saying: “The most annoying aspect of dealing with customer service is because with each new person you have to completely repeat the entire scenario.” 7 The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S.
  8. 8. Consumers prioritized the following as most important when asked how they want companies to improve their cross-channel conversations. They want companies to enable them to: Genesys Worldwide • Start in voice self-service and get assistance from an agent Genesys, an Alcatel-Lucent company, is the • Start on the Web and get voice assistance or chat from an agent world’s leading provider of contact center and customer service management software • Receive an e-mail and then get assistance from a contact center — with more than 4,000 customers in 80 countries. Genesys software directs • Schedule callbacks to avoid wait times more than 100 million interactions every • Add chat or instant messaging to Web interactions day, dynamically connecting customers with the right resources — self-service or assisted-service — to fulfill customer requests, optimize customer care goals, and Conclusion efficiently use agent resources. Genesys helps organizations drive contact center Poor customer service has a clear and immediate impact on a company. These efficiency, stop customer frustration, and accelerate business innovation. responses suggest the steps companies can take to make improvements. The first For more information visit: step should be to understand and measure the direct business impact of customer, or call service, and identify the gaps between the customer experience and expectations. +1 888 GENESYS or 1-650-466-1100. To do so, companies need to assess their existing communication channels, and Americas make interactions more convenient across multiple channels. It is imperative that Corporate Headquarters an enterprise engage consumers on the customer’s terms or risk losing them. Genesys Consumers will welcome companies who are more proactive, such as offering 2001 Junipero Serra Blvd. Daly City, CA 94014 USA to move a customer out of automated systems like the Web or voice activated Tel: +1 650 466 1100 self-service. Fax: +1 650 466 1260 E-mail: And finally, companies need to become more personalized in their overall treatment of consumers by integrating customer data, and developing processes Europe, Middle East, Africa that recognize the value and history of each customer. EMEA Headquarters This initial regional survey is part of a series conducted by Genesys in partner- Genesys House ship with key industry thought leaders, such as Datamonitor/Ovum. As other 100 Frimley Business Park Frimley results are available, we will gladly share them. For more information, please Camberley visit: Surrey, GU16 7SG United Kingdom Tel: +44 1276 44 7000 Fax: +44 1276 44 7001 Asia Pacific APAC Headquarters *The value of business lost due to poor customer service was calculated based on information Genesys Laboratories Australasia Pty Ltd survey respondents provided, including how many times they had ended a business relationship Level 17, 124 Walker Street and the specific value of that relationship. In addition, consumer responses were compared against North Sydney NSW 2060 Australia proprietary Datamonitor/Ovum data on the volume of customer service interactions, and Tel: +61 2 9463 8500 transaction values. The U.S. country-level data was calculated based on U.S. population levels, using people aged 18 years or older as the purchasing population. Genesys and the Genesys logo are registered trademarks of Genesys Telecommunications Laboratories, Inc. All other company names and logos may be registered trademarks or trademarks of their respective companies and are hereby recognized. © 2009 Genesys Telecommunications 8 Laboratories, Inc. All rights reserved. The Cost of Poor Customer Service: The Economic Impact of the Customer Experience in the U.S. 3112 v.1 - 10/09-U.S.