The Cost of High Customer Effort

Customer support team

We all know we need to strive for positive customer experiences and do everything we can to avoid negative customer experiences.

What many CX leaders fail to consider, however, is the relationship between your customer experience and your bottom line.

What is a “Bad” Customer Experience?

Depending on your team and the products you support, your challenges may be different. But, generally, a “bad” customer experience means the customer’s expectations were not met in one way or another. For example, maybe it’s tough for customers to reach you. Maybe they have to wait on hold longer than they’d like. Maybe they are transferred multiple times and have to explain their situation more than once. In each case, it’s easy to see how a customer might feel they have to try too hard to do business with you. High customer effort often means bad customer experience.

Bad customer experiences obviously damage existing customer relationships, but they can also endanger potential opportunities and erode your bottom line. Research by Microsoft found that 58% of consumers simply switch companies when they have a poor customer service experience. Furthermore, according to Qualtrics XM Institute, businesses globally stand to lose $4.7 trillion in consumer spending due to poor customer experiences.

Drivers of Costly “Bad” Customer Experiences

What are some of the drivers behind those poor customer experiences, then? Customer complaints tend to fall into a handful of categories:

  • Failing to resolve in the first touchpoint. Customers have come to expect their issues to be resolved quickly–making first contact more important than ever.
  • Failing to provide an efficient customer support experience. This could manifest from the overuse of scripts, a lack of customer service etiquette, or even with customer service agents offering wrong or inaccurate information.
  • Failing to listen to customers. Customers will absolutely tell us what they want and expect—if we bother to ask them.
  • Failing to use the right tools. Email may have been the cutting-edge solution once, but email support threads can take days and details get lost when emails are transferred between support agents. Newer technology like AR-powered video chat and live text chat can augment these experiences.

What is a “Good” Customer Experience?

By contrast, a good customer experience feels effortless for the customer. It should be easy, natural, and fast, and it should use technology that makes sense under the circumstances. According to Mark Fortlage, vice president of Operation Support at Alorica, “Brands have shown their ability to deliver the level of customer service that consumers want with digital avenues such as chatbots and social media, which offers more convenience to consumers.”

In fact, he says that the American Customer Satisfaction Index ranking top online retailers high on their list demonstrates that, “the evolution to digital in all aspects, including customer service, is a success for companies.” New technology is having major implications on customer service, so brands will need to adjust their tactics to keep customer satisfaction—and earnings—up.

The Cost of Bad Customer Service

CS executives looking at how to improve customer experience need to understand exactly how customer service affects profitability. A CustomerThink article identified top ways customer experience affects the bottom line:

Satisfied customers spend more. According to a Harvard Business Review study, customers who said their experience met or exceeded their expectations spent about 140 percent more than customers who reported a negative experience.

Resolving issues for unhappy customers is expensive. Each customer contact, product return, or request for refund costs money to address. Gartner estimates that support guided by an agent costs an average of $11 per contact, where self-service is closer to $0.10.

Happy customers are loyal. The same Harvard study found that consumers with high levels of satisfaction have a 74 percent chance of still being a customer one year later. Those who rate their customer experience as poor only have a 43 percent chance of sticking around another year.

Unhappy customers share their experiences widely. With the proliferation of social media, one dissatisfied customer has the power to share their disappointment, not just with family and friends but with everyone on the platform. A hit to your brand’s reputation certainly has the potential to impact your bottom line.

Furthermore, the probability of selling to an existing, satisfied customer is 60 to 70 percent (while the probability of converting a new customer is only 5 to 20 percent). This clearly demonstrates the value of keeping your existing customers as satisfied as they can possibly be.

How To Fix Your Poor Customer Experience Practices

Luckily, while the costs of bad customer service are high, good customer service provides numerous benefits beyond keeping your customers—including referrals, reputation, and growth.

To fix your current customer experience practices you must first transform your customer experience goals to reflect what actually matters to customers. When customers get fast, intuitive, delightful experiences, companies gain measurable business benefits—including the chance to win more of their customers’ spending dollars.

Meet customers where they are.

Consider Traeger Woodfired Grills. By implementing AR video for warranty support and customer service they were able to see what their customers were seeing—in real-time and without barriers. Using that technology improved customer experience and resulted in a 51 percent reduction in warranty spend, a 30 percent improvement in customer KPIs, a 60 percent increase in first-call resolution, and a CSAT score regularly about 90.

See customer relationships as assets to protect.

American Express* also saw benefits from changing their approach to customer service. Rather than continuing their outdated model of treating customers as cost centers, they began looking for opportunities to build customer relationships. This allowed Amex to better understand the needs of their customers. To support this effort, Amex shifted their tech stack to align with their new strategic approach of putting customer relationships at the core of their business model. The result? A 400 percent increase in customer retention.

Connect the pieces to create a holistic experience.

Another great example is Best Buy. Predicted to be forced out of business by Amazon, they turned things around by investing in customer experience and transforming from a traditional retail store to a customer-focused technology partner. Best Buy no longer just sells products, they focus on building relationships by providing expert advice and leveraging digital solutions to improve the customer experience.

Ready to lower the efforts of your customers? Learn how at

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