JOIN US AND HEAR BEST PRACTICES
At the 2019 NEXT GENERATION Contact Center & Customer Engagement events - Click here to book now
The True Cost of Losing a Customer - Blue Ocean Contact Centers - ContactCenterWorld.com Blog
One negative customer experience may seem like a drop in the ocean of all your customer interactions, but it’s never that simple. Consider these statistics from a recent survey from NewVoiceMedia:
After experiencing poor customer service:
• 37% of customers would change their supplier
• 28% would post a negative online review
• 26% would complain via social media
• 13% would tell friends/colleagues
• 10% would inform the media
It’s worth mentioning that many customer relationships can be saved even after a bad experience with the actual product or service, particularly if they choose to contact a customer service rep. But if that interaction also results in a negative experience, the customer support experience can become the straw that breaks the camel’s back.
The far-reaching impact of a damaged reputation, the lost lifetime customer spend, and the expense of winning back that customer and/or acquiring new ones add up to a significant loss – in terms of both revenue and reputation.
Calculating Lifetime Customer Value
Obviously, the cost of losing a customer isn’t as simple as the loss of one particular sale or the associated make-good. You have to assume that had that customer had a positive experience – both with your product/service and with your customer service team – they would have continued to buy from you and recommend your brand to others.
According to research, only 42% of companies are able to accurately measure lifetime customer value. This is a knowledge gap that prevents companies from comprehensively understanding the impact of a single customer on their revenue, and, in turn, how their customer experience impacts the company’s success.
If you’re ready to tackle the math, check out this post from Hubspot.
The LVT calculation can play an important role in determining the ROI of your customer care team, and specifically, the customer save team.
The Cost of Customer Retention vs Acquisition
It’s common knowledge that it can cost five times as much to acquire new customers versus retaining existing ones – and 70% of surveyed companies agree it’s cheaper to retain. Acquisition costs are seen in sales efforts, marketing, and advertising as well as customer onboarding, but it’s retention that appears to gain the most profit in return; a mere 5% increase in retention rates can garner 25-95% extra profit.
How do these statistics help us determine the cost of losing a customer? At its most basic, every lost customer creates the need to acquire a new one. And, as we can see, acquiring those “replacements” can get expensive.
A Real Life Example
A client of ours operates with entitlement contracts for their highest-value enterprise-level customers, requiring parts and labor onsite within either a two- or four-hour window (depending on contract terms) if that customer experiences an outage.
When one of our client’s customers experienced multiple cases of delays in part deliveries, the customer threatened to switch suppliers. In response, we at Blue Ocean created a 24/7 team of Subject Matter Experts dedicated to supporting this particular customer. We established separate KPIs for the team and empowered them to make decisions and take action outside of standard protocol. In addition, we collaborated closely with our client’s warehouse and logistics partners to ensure we were aligned in overcoming any obstacles that impacted on-time deliveries and feeding data upstream to prevent future delivery delays.
With this approach, results improved from an average of 71% on-time delivery to 95%+ on-time delivery rates month after month. This is an example of a company that understands how important it is to deliver outstanding service to existing customers. Their retention efforts, in this case, were complex but essential to avoid the devastating impact of losing a top tier customer with a significant LVT to the company.
Protecting Against the Cost of Losing a Customer
Losing a customer isn’t as simple as losing a single sale. The impact is far-reaching, and companies must have a thorough understanding of the extent of this cost in order to understand the true importance of excellent customer service and experience.
From a ruined reputation to a lost lifetime of sales to a never-ending cycle of replacing old customers, the cost is considerable. Are you ready to protect yourself against this expense? We’d love to chat with you about building a better customer experience.
Publish Date: January 8, 2019 5:00 AM
|All Suppliers||Get Listed|
A certified Genesys partner specialized in improving customer experience by building contact center solutions. We offer the following solutions to our customers based on their business demands and tec...
(VIEW OUR PAGE)
CTI Software is the creator of custom application called Davos, which complements the telephone client solutions with intelligent features such as automated call attendant, call recording and archivin...
|PREMIUMFuture Gen International Pte Ltd|
(VIEW OUR PAGE)
Outsourcing provider of English Call Centre services, Audio Transcriptions, Big Data ETL (Extract, Transform, Load) , Big Data Visualization, Big Data Predictive Model Generation
View more from Blue Ocean Contact Centers
Recent Blog Posts:
|Are You Using 1999 Metrics to Measure 2019 Customer Care?||February 7, 2019 5:00 AM|
|Which 2019 Consumer Trends Will Impact Your Customer Experience Strategy?||January 22, 2019 5:00 AM|
|Blue Ocean Specialty Team Named as Finalist in 2019 Stevie® Awards for Customer Service||January 21, 2019 5:00 AM|
|The True Cost of Losing a Customer||January 8, 2019 5:00 AM|
|RFP Questions to Ask About AI in the Contact Center||December 19, 2018 5:00 AM|
|Deck the Halls 2018: Coping with Peak Season Holiday Spikes in the Contact Center||December 17, 2018 5:00 AM|
|Blue Ocean Hiring for 60 New Positions in Halifax Area||October 30, 2018 5:00 AM|
|Is a Strategic Contact Center Partnership Even Possible? [eBook]||October 9, 2018 5:00 AM|
|Are You Ready for the Future of Customer Service?||August 30, 2018 5:00 AM|
|The Fundamental Guide to the Contact Center RFP||August 7, 2018 5:00 AM|