How Does Poor Customer Service Affect a Business?

Customers might not tell you that they’ve had a bad experience with your business — but they will tell their friends, family, co-workers and other acquaintances. The effects of poor customer service ripple far beyond the revenue lost with that one person. Customers are the foundation of success for any business, and if customers are not treated right, the business can lose its reason for existence. If you aren’t taking care of your customers, and your business becomes known for poor customer service, expect several things to happen — and none of them are good news for your business.

Customers Leave

Rare is the customer who will stick around through repeated experiences with poor service, especially in a competitive market where they can easily take their business elsewhere. When your customer walks, you lose not only that revenue, but also you potentially lose the word-of-mouth of advertising that only a satisfied customer can provide. It takes more effort to attract new customers than it does to retain a valued one, so shedding customers is something no business can afford.

New Customers Stay Away

Word-of-mouth has two sides to it. Just as new customers seek out businesses based on recommendations from people they know, prospective customers will avoid a business when they’ve heard first-hand accounts of poor customer service. People tend to believe firsthand accounts from their friends and acquaintances more than they believe impersonal sources such as advertising, and they give more weight to negative reports than to positive reports. Prospective customers that might have found their way to your business will instead check out what your competitors offer.

Business Reputation Suffers

It starts when dissatisfied customers talk to people they know about the poor service they got, and it escalates when they express these feelings online. Not only can tweets, Facebook posts and bad Yelp reviews go viral, but these statements can also last forever, potentially becoming only a Google search away from tarnishing your business reputation. Once a business is known for poor customer service, it’s difficult, if not impossible, to repair the image. The results go beyond loss of customer, because other businesses don’t want to partner or associate with a business that’s sliding downward in customer retention. If you can’t trust a business to take care of its customers, it’s even more difficult to trust that business’ agreements with its partners.

Revenues and Profit Shrink

Poor customer service is bad for your bottom line. The shrinking customer base results in fewer sales, which leads to direct loss of revenue. Add to that the increased costs from employee turnover. A business that tries to salvage its reputation by boosting advertising and public relations efforts will have additional costs added to the mix. If no effort is made to improve service to get those lost customers back, the result will be a downward spiral that could eventually lead to you losing your business.

Your customer is your best investment and a returning customer is even a better investment, try not to lose both with bad customer service.