Research

The cost of bad customer service
A majority of Americans report that quality customer service is more important to them in today’s economic environment (61 percent) and will spend an average of 9 percent more when they believe a company provides excellent service, according to data from the American Express Global Customer Service Barometer.

However, in a challenging economy where growth is harder to achieve, many businesses are missing out on this opportunity.

Although only a little more than a third of Americans (37 percent) believe that companies have increased their focus on providing quality service:

• 27 percent of consumers feel businesses have not changed their attitude toward customer service.
• 28 percent say that companies are now paying less attention to good service.
• 48 percent feel companies are helpful but don’t do anything extra to keep their business.
• Worse, 21 percent believe that companies take their business for granted.

“Customers want and expect superior service,” says Jim Bush, executive vice president, World Service. “Especially in this tight economic environment, consumers are focused on getting good value for their money. Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service – suggesting substantial growth opportunities for businesses that get customer service right. It’s important to see customer service as an investment, not a cost.”

Good news travels fast
Importantly, customers are spreading the word willingly and widely when they experience good service. In fact, contrary to conventional wisdom, customers are more inclined to talk about a positive experience than complain about a negative one. Three-quarters (75 percent) are very likely to speak positively about a company after a good service experience in contrast with 59 percent who are very likely to speak negatively about a company after poor service.

Good service experiences also carry more weight than bad ones when Americans make future spending decisions. Consumers are far more likely to give a company repeat business after a good service experience (81 percent) than they are to never do business with a company again after a poor experience (52 percent).

In fact, consumers say the three most influential factors when deciding which companies they do business with include personal experience (98 percent), a company’s reputation or brand (92 percent), and recommendations from friends and family (88 percent).

Two strikes and you’re out. Or is it one?
A negative service experience is an important factor for most Americans: 81 percent have decided never to do business with a company again because of poor customer service in the past.

When asked how many poor experiences they allow, half of all Americans (50 percent) reported it takes two poor service experiences before they stop doing business with a company.

Importantly, consumers are far more forgiving if a company has earned their trust over time. Almost nine in ten consumers (86 percent) report they’re willing to give a company a second chance after a bad experience if they’ve historically experienced great customer service with that company.

But companies who get it wrong should realize it’s at a cost.

Half of consumers (52 percent) expect something in return after a poor customer service experience, beyond resolving the problem.

Most consumers (70 percent) want an apology or some form of reimbursement