While good news travels fast, in the world of customer experience, bad news travels faster. The average customer who has a poor experience will tell twice as many people about that experience as a happy customer will about their positive experience.

The customer experience challenges facing service organizations is determining what is behind their poor sentiment. A product issue? A customer service issue? Both?

The stakes are astronomical

A 2020 study by Customer Care Measurement & Consulting estimates that Corporate America is risking a staggering near half a trillion dollars in revenue by delivering customer service wrong. The study further uncovered that 66% of households experience a product or service in the prior 12 months, and as a result:

• 1 of 8 indicated they would be willing to recommend the offending organization to a friend or family member
• Satisfactory complaint handling remains strongly correlated with high brand loyalty
• Customer Rage occurs when customers perceive they are “wasting their time complaining”

So, what are common drivers of poor service, and how do we tackle them?

Eight warning signs of poor customer service

Poor customer service often reveals itself through consistent patterns that frustrate and drive customers away, ranging from:

• Slow response and resolution times
• Repeated transfers between agents without a resolution
• Lack of product or service knowledge from agents
• Overly scripted or unempathetic communication
• Divestment of blame towards policies or other departments regarding issues
• Inconsistent service quality across channels or interactions
• Ignoring customer feedback or complaints
• Overpromising and underdelivering

Together, these warning signs of poor customer service indicate deeper operational and cultural gaps that can significantly impact customer loyalty and brand reputation if not addressed.

Customer service is a people-driven trade

Supporting the people responsible for delivering exceptional experiences is the key to preventing poor experiences. Poor hiring, training, people management, and employee engagement and retention strategies lead to inconsistent delivery performance, higher costs, and a greater risk of adverse customer service events.

A March 2020 study states that the average cost to hire an employee is 1.5 to 2 times the employee’s salary. A sobering fact that considers the cost of hiring, training, lost productivity, and other elements but not the less tangible impacts to the morale of remaining team members and any effects on their performance. Average employee turnover rates in the service industry have been rising each year since 2015. It also does not measure the impact decreased employee engagement before turnover has on performance, productivity, and customer experience.

A study released by Gallup in 2016 indicated employee turnover of the millennial generation was already a significant challenge for business owners and employers, with 21% of those workers indicating they had switched jobs in the past 12 months. Statistics from the U.S Department of Labor indicate that this number rose each subsequent year, with employees between 18 and 35 years of age as the most significant contributing group. While a growing book of data on millennials suggests it may not be realistic to expect to retain them in a job at the same rate as previous generations of workers, there is more to be gained by driving engagement with this group than railing against the change. And a pleasant side effect is likely to be a reduction in turnover and its associated challenges. As this demographic category makes up more than 40% of the available workforce in North America, understanding what motivates workers and drives employee engagement in this group will be critical to mitigating costs and customer experience impacts for services organizations now and in the future.

Cracking the code

Some trends among millennial era workers include:

• A strong desire to “contribute their skills and talents to a meaningful cause, purpose, and mission”
• Prioritizing a healthy work/life balance
• Flexibility
• Opportunities for personal growth
• A desire to be measured on output and performance vs. time spent on a project or tenure
• Social consciousness
• High student debt loads
• As with most workers, they are still interested in competitive pay, opportunities for advancement, and quality managers and coworkers

These trends, coupled with the impacts of the ongoing Covid-19 pandemic, are reshaping what is considered the “ideal” workplace. They redefine people management strategies and force employers to evaluate what perks and benefits will allow them to retain valuable employees in a competitive field. Here are a handful of ways that employers can invest to reduce attrition and improve performance across their service employee population:

1. Connect with employees on an individual level: Fulfill your employees’ desire for a mentor and a coach. Deploy a program that identifies what is standing between them and success and intervenes with support and coaching before your customers can see the symptoms.
2. Consider useful perks: Today’s recent graduates are often saddled with a mountain of student debt. A foosball table or free snacks won’t help them with that. A student loan assistance program will, and when structured appropriately, can be a very effective retention tool. A relaxed dress code allows them to be comfortable at work and eliminates a significant expense to maintain a second wardrobe for work.
3. Provide flexibility wherever possible: Flexibility can take a variety of forms. Providing different or non-traditional shift or scheduling options, hybrid or telecommuting arrangements, anything that will afford employees the ability to fulfill passions and commitments outside of work while still contributing positively to the organization will be of value to your employees.
4. Have a solid and transparent corporate social responsibility plan: Allow your employees to be involved in something greater than themselves through work. Leaders in the space have moved beyond simply collecting tax-deductible charitable contributions through payroll deductions and incorporated initiatives that allow greater direct involvement from employees. Companies are now offering paid time off to volunteer, arranging group events with local charities, matching individually charitable donations, and providing greater transparency to the initiatives and organizations supported at an enterprise level.
5. Promote diversity and inclusion – involve your millennial workers in the process: It’s no secret that millennials feel connected to their work when actively involved in changing the workplace to align closely with their values and their peers’ benefit. Having a hand in reshaping the company in a meaningful way provides fulfilling work and fosters a deeper level of employee engagement. It will help them buy into shared goals and shared success in a way that can be difficult to achieve in service organizations. 
6. Double down on culture: Given the tendency of the millennial generation to seek out meaningful, mission-oriented work, companies that are purposeful in defining and living out their unique culture, values, mission, and purpose stand a much better shot at attracting, engaging, and retaining millennials who care about delivering against them.

Conclusion

Armed with the right strategies and techniques, any service organization can put itself on a path to attracting and retaining high-caliber employees who are willing and able to deliver loyalty-inducing customer experiences and mitigate the risks associated with high turnover. An investment in your people is an investment in your brand-give your customers more good news to share.

At eClerx, we recognize that service transformations don’t happen overnight, which is why we offer our clients in-depth CX consulting and award-winning automation technology, to ensure their contact centers and support operations are prepared for any customer experience challenges that may arise.

Frequently Asked Questions

Q) What are the effects of poor customer service on an organization?

Poor customer service directly affects revenue, brand reputation, and operational efficiency.

Customers who have negative experiences are more likely to cause churn, leave unfavorable reviews, and discourage others from engaging with the brand. Internally, it leads to increased agent attrition, higher support costs, and employee burnout.

Over time, the effects of poor customer service erode customer trust and loyalty, making it harder and more expensive to acquire and retain customers, forcing organizations from being growth-focused to shift into damage-control.

Q) What is the average cost of poor customer service to businesses?

The cost of poor customer service is significant and often underestimated by businesses.

Businesses lose millions annually due to customer churn. On an individual level, even a single unresolved issue can result in lost lifetime customer value, negative word-of-mouth, and significant reputational damage. Inefficiencies such as repeated support interactions, escalations, and wasted operational time only further increase operational costs.

Altogether, these factors make poor customer service quality a major hidden expense impacting both top-line and bottom-line performance.

Q) How long does it take to transform poor customer service?

Transforming poor customer service is not something that can be solved overnight, typically taking anywhere from three months to a year depending on the size, complexity, and existing customer service challenges present at an organization.

improvements like process optimization and staff training can deliver quick wins within a few weeks. However, sustainable transformation takes a longer-term commitment. Organizations that invest in cultural change, technology adoption, and continuous improvement tend to see faster and more lasting results.

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