Poor Customer Service

Example of poor customer service

To illustrate poor customer service and its consequences, let's consider an example in a restaurant:

As you can see in the example above, poor customer service destroys the business's public image and results in business failures. The sad thing is that all these problems could have been avoided if the business has invested more in training its employees.

Causes of poor customer service

The causes of poor customers service can be internal or external. Here are the four most common ones:

Poor Customer Service: Businesses make too many promises

A business making too many promises can lead to high expectations among customers, meaning if the business is unable to deliver those promises, customers will be disappointed. As an example, if a business promises next-day delivery if customers order before 6pm, but cannot keep up with it consistently, consumers may be disappointed. To avoid poor customer service, companies should not make promises they cannot keep or invest more resources to ensure the promises are kept.

Poor Customer Service: Ineffective resource management

Even if a business has the resources to attain its promises, but is unable to manage its resources properly, it may not meet customers' expectations and cause customer dissatisfaction. For example, even if there is enough staff on a shift in a busy restaurant, if they are not managed properly or allocated to do the right duties it may cause customer disappointment, perhaps due to the slow service and unclean tables, among many others.

Poor Customer Service: External influences

Bad customer service can occur due to external influences. For example, if certain passengers are travelling with small children in an airplane, and they are loud, it can result in an unpleasant experience for passengers that are sitting nearby. It's not under the business's control, however, businesses could avoid this by making a seating plan dedicated to families with small children if they have enough resources.

Poor Customer Service: Insufficient communication

Businesses can disappoint customers if they do not communicate transparently with them. As an example, if a concert starts 30 minutes late and this is not communicated to the customers in advance, it can lead to customer disappointment. On the other hand, if the company has informed consumers in advance, it may not have caused as much disappointment as consumers will probably have expected the delay and may have arrived at the venue later.

Figure 1. Causes of poor customer services, StudySmarter

Consequences of poor customer service

Poor customer service can lead to various consequences, from customers not returning to the business to a damaged reputation due to bad reviews. Let's have a look at some of them:

Customer dissatisfaction

If customers are dissatisfied with the business service, they may not return to buy from the business in the future. This can cause a loss of sales and incur more costs for acquiring new customers. The cost of new customer acquisition can be five times as expensive as retaining existing ones.¹

Dissatisfied customers may also talk about their negative experiences to their family and friends or leave a review online. This leads to the next consequence which is the difficulty of attracting new customers.

The difficulty of attracting new customers

To grow, a business needs to expand its market and attract new customers. However, this may prove difficult if the company gets a bad name due to its horrendous customer experience. Without new customers, businesses are likely to fail because they can't make sufficient income to cover day-to-day expenses.

Poor Customer Service: Incurring additional costs

Another way for a business to grow is to retain existing customers. However, this is much harder to do if customers undergo such a horrendous service that they never want to experience it again. To gain back customers' trust, the company will need to pour a lot of money into repairing its reputation.

In cases where the business provides wrong information or sells customers incorrect or damaged objects, it also has to do a refund on customer requests. This incurs more costs for the company.

Poor Customer Service: Losing revenue

Overall, bad customer service can lead to businesses losing their revenue. Without enough income to sustain itself, the business will face the risk of closure.

Poor Customer Service: Poor reputation via word of mouth

Another negative outcome of bad customer service is poor reputation due to negative word of mouth.

Word of mouth is one of the most trusted forms of communication in business. It outperforms many popular marketing channels including TV commercials, print ads, and social media.² People are more likely to purchase items recommended by friends and family or ones that have positive reviews on the Internet.

Negative experiences, however, can lead to bad word-of-mouth that destroys the company's reputation. This is because people often exhibit 'a negativity bias' - the tendency to remember unpleasant experiences vividly and gossip about them. In fact, according to research, if your business receives one negative review, it will take up to 40 positive customer experiences to undo it.²

Figure 2. Consequences of poor customer service, StudySmarter

Signs of poor customer service

In this section, we shall look at the signs of poor customer service. Here are three tell-tale signs customers may get a bad experience at a business:

Poor Customer Service: Inflexibility in regards to appointment times

Today people are living busy lives. They have jobs, families and many other personal commitments to attend to. Businesses that offer only a few appointment times per day can cause inconvenience to the customers and result in an overall negative experience. For example, if someone needs to get a COVID-19 test for their travel but there are only a few time slots in a nearby test centre, it can create a nuisance as they have to travel further away to get tested.

Poor Customer Service: Unfriendly welcome

The first thing a customer should experience when encountering a business is a friendly welcome. Suppose a customer enters a hotel that they have booked without being greeted or being smiled at, this is a sure sign of poor customer service. The unfriendly welcome can make customers feel offended and thus they may not return to the hotel. Rather than ignoring guests, the hotel receptionists should smile, greet them warmly and ask how they can help.

Poor Customer Service: Long wait times

Businesses that let customers wait a long time before getting assistance are bound to offer a bad service as well. When customers hold on to the phone or wait in-store for too long they can get frustrated and hang up or leave before using the service. This results in a loss of sales and negative word-of-mouth. To reduce customer wait times, the business should ensure sufficient staff and hire temporary workers during peak hours.

Overall, we can see that the causes of poor customer service can be both internal and external. Whatever the cause, poor customer service tends to cause a negative experience and result in people not using the service again. In the long run, this can lead to business failure. To stay in the market for a long time, it's important for companies to recognise signs of poor customer service and address them before it's too late.

SOURCES

1. Taylor Landis, "Customer Retention Marketing vs. Customer Acquisition Marketing", outboundengine.com, 2021.

2. Jon Tan, "Why Word-Of-Mouth Is The BEST Marketing Tool You Have", referralcandy.com, 2015.

3. Andrew Thomas, "The Secret Ratio That Proves Why Customer Reviews Are So Important", Inc.com, 2022.