If you’ve watched any episode of Gordon’s Ramsey’s Kitchen Nightmares, you would frequently hear Gordon tell restaurant owners that they are the reason why customers (ie: diners) quit eating at their establishment.
Owning any business has challenges. Coming to terms with rejection from internal and external stakeholders alike can easily make business owners feeling defeated. Settling with defeat and denial, however, will likely keep a company from growing or achieving success.
In this article, we dive into some of the biggest statistics around customer service and why customers leave.
Here are some quick customer service statistics to get the taste buds warmed up:
- 68% of customer defection takes place because customers feel poorly treated.
- Consequently, it can cost five times more to buy new customers than retain existing ones.
- 1% cut in customer service problems could generate an extra 16m – 20m in profits for a medium-sized company over 5 years.
Why do customers quit buying?
Why do customers stop shopping with a company? To be fair, some customer churn or attrition is associated with things out of your control, but the major things are:
- 1% die
- 3% move away
- 68% quit because of an attitude of indifference towards the customer by the staff.
- 14 % are dissatisfied with the product.
- 9% leave because of competitive reasons.
Source: How to win customers and keep them for life (2000) – Michael Leboeuf
From this data, we can assert that customers are heavily impacted by their interaction with a company than anything else. It edifies that people are more interested in an emotional connection than the product itself. After all, the customer is always right.
What is customer experience?
Customer experience is your customers’ perception of how your company treats them. These perceptions affect their behaviors, and build memories and feelings to drive their loyalty.
In other words – if they like you and continue to like you, they are going to do business with you for a long time and recommend you to others.
So, it’s easy to see why it’s important for so many companies to focus on CX.
How to improve customer experience
It’s no surprise that customer experience (CX) is the number one priority for companies focusing on the bottom line.
Industry leaders in the US are truly customer service icons because they do all the research and have done all the heavy lifting for us.
The Temkin Group found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience.
For SaaS companies in particular, they can expect to increase revenue by $1 billion. That’s right. Investing in CX initiatives has the potential to double your revenue within 36 months.
So, where is this revenue growth coming from? The customer’s wallet. A good customer experience means your customers will spend more. Customers who spend more increases your customer lifetime value, which is a cornerstone metric for calculating ROI.
In fact, 86% of buyers are willing to pay more for a great customer experience.
The more expensive the item, the more they are willing to pay, according to a research from PWC.
For example, customers are willing to pay a price premium of up to 13% (and as high as 18%) for luxury and indulgence services, simply by receiving a great customer experience.
CX also influences on-the-spot purchasing, too – as 49% of buyers have made impulse purchases after receiving a more personalized experience.
But the most convincing reason why CX has become so important is this:
A Walker study found that at the end of 2020, customer experience will overtake price and product as the key brand differentiator.
Customer service complaint statistics
Customer complaints are never fun. Business owners take pride in their work and products, and hearing a customer’s feedback is truly an opportunity to learn.
Consider these eye-opening statistics regarding custom complaints:
- For every customer who bothers to complain, 26 other customers remain silent.
- It takes 12 positive service incidents to make up for 1 negative incident.
- The average “wronged customer” will tell 8-l6 people about it. Over 20% will tell more than 20.
- 91% of unhappy customers will not willingly do business with you again.
- 70% of complaining customers will do business with you again if you resolve the complaint in their favor.
- 95% of complaining customers will do business with you again if you resolve the complaint instantly.
Source: Lee Resource Inc
Reducing customer defections can boost profits by 25-85%. In 73% of cases, the organization made no attempt to persuade dissatisfied customers to stay; even though 35% said that a simple apology would have prevented them from moving to the competition (Source: NOP).
To speak generally, a lot of customer complaints received by an organization are likely to have poor communication as their root cause, either with the customer or within the organization itself.
This means communication training and expertise is critical to anyone’s success in business. No people skills; no customers. Period.
A long list of additional customer service metrics
At Frasca Digital, we believe growth and marketing go hand-in hand. This also means employee growth to accommodate more customers. Below, we feel there are a number of statistics that can really help guide actionable next steps towards mitigating the loss of clients.
We hope at least one of these statistics stands out as an opportunity for improvement for those with customer service woes.
- 56%-70% of the customers who complain to you will do business with you again if you resolve their problem. If they feel you acted quickly and to their satisfaction, up to 96% will do business with you again, and they will probably refer other people to you. Source: the White House Office of Consumer Affairs, Washington, DC.
- A dissatisfied customer will tell 9-15 people about it. And approximately 13% of your dissatisfied customers will tell more than 20 people about their problem.
Source: the White House Office of Consumer Affairs, Washington, DC.
- Happy customers who have their problems resolved will tell 4-6 people about their positive experience. Source: the White House Office of Consumer Affairs, Washington, DC.
- Customer loyalty can be worth up to 10 times as much as a single purchase. Source: the White House Office of Consumer Affairs, Washington, DC.
- Customer loyalty is, in most cases worth 10 times the price of a single purchase. Source: “Understanding Customers” by Ruby Newell-Legner
- A typical business hears from only about 4% of its dissatisfied customers. 96% just go away and 91% will never come back. Source: “Understanding Customers” by Ruby Newell-Legner
- 13% of the people who have service problems tell 20 others.
Source: “Understanding Customers” by Ruby Newell-Legner
- It takes 12 positive service incidents to make up for one negative incident. Source: “Understanding Customers” by Ruby Newell-Legner
- 7 out of 10 customers will do business with you again if you resolve the complaint in their favor. Source: “Understanding Customers” by Ruby Newell-Legner
The Future of Customer Service
- Customer experience has fast become a top priority for businesses and 2022 will be no different. But, why are so many companies focusing on the customer experience and what happens to companies that choose to ignore it?
- Customers no longer base their loyalty on price or product. Instead, they stay loyal with companies due to the experience they receive. If you cannot keep up with their increasing demands, your customers will leave you.
- Cross-device shopping via a wide range of channels has made it difficult for companies to maintain consistency. Processes and technologies need to change in order to provide a consistent experience across all platforms.