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How much does poor customer experience cost?


Customer Relationship Management

In 2013 Sales Force, a company that provides software solutions for Customer Relationship Management, pointed out that on a yearly basis, on a global scale $ 338.5 billions are lost due to poor customer experiences. One year later, EY presents to the public its latest study from the EY Customer Experience Series, entitled “The cost of complaining” and reveals that Australian businesses lose more than $720 for every negative customer experience.

Almost half of the customers surveyed by EY (47%) did not report a disappointing experience directly to the product or service supplier. Instead, customers chose to complain to friends, family, acquaintances or on social media platforms. These comments spread quickly through social networks and the company is often not aware of the negative feedback regarding the brand.

Communication with customers is vital to ensure high customer retention. Tracking social media activity can provide early signals of dissatisfied customers and the opportunity to reconnect with the client.

Customer Relationship Management

According to the study’s results, 56% of the customers reported a poor service experience in the last six months. Most issues were found within the telecommunication industry, while the least critics were encountered in the banking sector. People chose not to submit a direct complaint to the company mainly because of the effort and time necessary for such an action, as well as due to the difficulties in finding the right contacts details.

As a result, 60% of dissatisfied clients did not make contact with their supplier and only 8% from those who did were pleased with the outcome of their complaint. The study also outlined that only 7% of the satisfied customers turn to social media channels, while 15% of the disappointed clients will express their frustrations online.

Another study, the 2012 Global Customer Service Barometer, also points out that dissatisfied clients are more likely to talk about negative experiences than about positive customer services. Furthermore, 78% of the customers reported to have stopped buying products from a company with whom it had an unpleasant incident.

Unsatisfied clients don’t impact the business only on the short terms, but also on the long terms, as spreading negative experiences in regards to the company makes it more difficult to attract new customers. However, even in normal circumstances, gaining a new customer is substantially more expensive than maintaining current clients.

In this context, the process of managing complaints is highly important for a company, impacting future revenues, retention rates and customer advocacy. The main aspects that generate dissatisfaction among customers in terms of processing complaints, as highlighted in “The cost of complaining”, are:

  • The speed to manage the problem;
  • The quality of feedback or explanation provided;
  • The ease of accessing information that helps to reconcile the issue.

Operating streamlined processes and monitoring performance in handling complaints can help improve waiting times and the quality of feedback received by the client. Examples of KPIs that can be monitored are:

Providing a channel through which customers can submit complaints 24/7 and receive prompt response for their issues is another initiative that ensures an efficient and rewarding customer service for both the clients and the company.


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