Startling truth: Why most firms’ approach to customer service is wrong

3 things successful, fast growing companies do differently

Part 1 of 3

Most companies think that by reducing the number of customer complaints they will improve business results. Ironically the exact opposite it true!

As no doubt you already know, customer loyalty cards and programmes are mis-named.  The best they may do is provide some good purchase data into what your customers’ purchase behaviour

The Facts about Customer Service

It is commonly accepted that, when customers have a bad experience only 2% complain. Experience has shown them that complaining is too hard and painful to bother. (£15.3 billion is wasted in the UK alone every year due to poor customer service[1].) So almost all disappointed customers just drop it- and go elsewhere. Unfortunately, as no doubt you already know, they tend to tell eight to ten people (on average) about their poor experience. They risk nothing by telling someone about their personal experience and it acts as a release valve.

Most companies do not realise this. They think that customers will tell them when they have a problem. As a result, when people complain they often disregard it, not realising that 98% of their customers just kept quiet.

Customer loyalty: the holy grail- if you can work out how to find it

A tiny percentage of companies have understood how to win powerful customer loyalty. The challenge is that most customers are not prepared to put their reputation on the line with their friends and colleagues because they fear they may not enjoy the same experience and that will undermine the trust and respect they enjoy.

The companies that have understood how to win strong customer loyalty are seeing a massive increase in revenue and profits. Research looking at 60 large UK companies found that, where the customer experience was just slightly better, they earnt more than £250 million extra revenue over 3 years than other firms[2]. What is more, 19% more of their customers are so confident that they take the risk of recommending them to their friends and colleagues[3]. As people are increasingly sceptical about marketing claims, 49% of customers value recommendations from friends and colleagues as the most reliable [4]. What is even more interesting, 92% of customers who choose a supplier due to a recommendation are loyal to that supplier[5]. That is an incredibly high percentage.