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How Can We Help You (Lose Trillions) Today?

Posted by Sean Carton | February 6, 2015 | 2:13pm

Imagine for a moment that you have an important occasion to celebrate and you want to take your significant other out to dinner to celebrate. You want to try something new, and you remember that you saw an ad for an elegant new place that looks perfect. The big night comes and you and your significant other get all dressed up and head over to the restaurant.

When you get there, you’re blown away as soon as you walk in the door: the place looks even better than it did in the ad. You’re immediately seated by the impeccably-dressed maître d’ who directs you to a luxurious banquette and hands you the evening’s menu, a carte impeccably designed and printed on extravagantly heavy stock obviously made from the highest quality paper. You and your significant other exchange a brief, intimate smile over your menus, thrilled with the expectation of a magical experience.

Then the waiter arrives.

He’s wearing a stained t-shirt with the sleeves cut off, greasy khaki pants and a pair of tattered Birkenstocks worn over a pair of what apparently used to be white wool socks. He’s chewing gum, and as you look on in horror he spits it into his hand, wraps it in what looks to be a piece of lint and shoves it into his pocket before turning to you both and asking, “So? What’ll it be?”

So much for your big night out.

While this scenario might be a smidgen on the far-fetched end of the spectrum, we’ve deliberately exaggerated it to make a point: all the hard work you’ve done to woo prospects, bring them in the door and convince them to convert from “lead” to “customer” can be for nothing if they’re turned off by the people representing your organization.

Well, maybe not for nothing. According to a new study by Accenture, which surveyed 23,666 consumers in 17 countries over a 10-year period, the cost of poor service worked out to a little bit more than $6 trillion (yes, with a “T”) last year, up from $4.9 trillion in 2010. A trillion here, a trillion there…pretty soon we’re talking about real money, right?

Unfortunately, the impact of poor customer service is nothing to laugh about. Accenture found that last year, 53% of consumers they surveyed switched to another provider of the goods and services they were going to buy because of poor customer service. Even worse is that the trend seems to be on the rise: 51% of consumers switched in 2013, up from 46% in 2012.

When asked for specifics, 72% of consumers cited the overall customer service experience as the main reason for them going somewhere else…

When asked for specifics, 72% of consumers cited the overall customer service experience as the main reason for them going somewhere else, while 44% reported that their lack of trust in the company (presumably brought about by the bad service) was a major contributor to their decision to switch and 36% of the consumers surveyed reported that it was the lack of knowledge shown by customer service reps that drove them away.

These numbers are bad, but perhaps the worst finding is that 73% of those surveyed said that they would not consider returning to the companies they’d left, even if they offered them better products at a cheaper price. If the new provider they’d switched to didn’t deliver on their expectations, 42% said that they still wouldn’t go back. For those who would reconsider a company that disappointed them in the past, most said that they’d likely wait at least a year before giving them another chance.

So why don’t we seem to care?

OK. So what? We’d bet that none of this really surprises you all that much. After all, it’d probably be impossible to find someone who hasn’t had a bad customer service experience some time in the recent past. We’ve all been there. So why don’t we seem to care?

In 2014, US companies spent somewhere in the neighborhood of $180 billion on advertising across all media channels, ostensibly to turn prospects into customers and to keep existing customers coming back. Retailers alone spent about $105 billion just leasing space for their operations. Organizations across the US forked over at least $21 billion developing (and re-developing/enhancing) their websites. All told, there’s a lot of money being spent to attract prospects and retain customers.

There’s also a lot of money being spent on the salaries of the people who help attract those prospects and retain those customers. According to salary.com, the average entry-level salary for a Copywriter is $45,048. An Art Director Assistant can expect to pull in somewhere in the neighborhood of $75,000. Media Planners get paid around $59,000 per year and a Creative Director can expect to make $105,000. Heck, even “Advertising Clerks” are paid around $40,000 per year.

But these people (and many others) are somewhat “behind the scenes.” Nobody (except the clients) ever see them. Customers and prospects certainly don’t have to deal with them. What about the people who actually have to deal with customers? Considering the importance of customer service, certainly the customer-facing folks are making bank, right?

Ummm…in a word, no. The average personal income for a person with a bachelor’s degree (the pre-requisite for the jobs mentioned before) is $56,078 (though for women it’s $40,483 while men make $60,493…but that’s a subject for another whitepaper). However, the average salary for an entry-level Customer Service Representative is only $36,665. Even worse, a full-time Retail Salesperson can expect to make only $20,592 per year…almost half of what an “Advertising Clerk” makes.

“But that’s retail,” you might be saying, “lots of those people are high school kids. People who deal with higher-end, considered purchases must be paid a lot more.”

Not really. The average salary for an Admissions Representative in higher education (the person who represents the school to prospective students) is only $37,464…at least $3,000 below the national average for people with bachelor’s degrees, and not much considering that every student they bring in is worth (based on a 4-year degree…increasingly a rarity) between $91,304 (4-year public college) and $179,000 (4-year private college). Real Estate Agents who are responsible for selling a product with a median price of $188,900 only make about $38,465 per year. That’s even less than a Car Salesperson who, on average, pulls in $42,150 per year for being the “face” of the car dealership responsible for selling hundreds of thousands of dollars of cars per year.

However, there’s no escaping the fact that the people who are on the front lines of the customer’s decision whether to buy or not are some of the lowest paid people on the proverbial totem pole.

Yes, we’re sure there are outliers for all of these positions (and many other customer-facing jobs…don’t even get us started on receptionists—$30,953 per year in case you’re wondering—who are often the first human being that a customer or prospect comes into contact with in many B2B settings). However, there’s no escaping the fact that the people who are on the front lines of the customer’s decision whether to buy or not are some of the lowest paid people on the proverbial totem pole.

Now we’re not saying that lower pay = lower quality employees. Obviously there are some very conscientious and hard-working folks out there working in these customer-facing jobs. But if what a company pays someone signifies their value to the organization, the message that’s getting out there is that customer service doesn’t really matter because companies aren’t willing to pay for more highly-qualified and skilled employees.

This is nuts. You can do all the advertising and marketing in the world to drive leads to your organization, but if those prospects don’t convert to customers, you’ve wasted your money. All ad campaigns—even those that are about awareness or branding—are ultimately about sales. If your ads aren’t moving the needle upwards on the bottom line, you’re wasting your money. The best ads in the world don’t mean much if customers and prospects go somewhere else because they’ve had a bad experience with your organization.

Dealing with this issue isn’t going to be easy. The service sector has a long history of harboring some of the most underpaying jobs. But as market forces, automation and the efficiencies that come from ongoing technological innovation continue to make selling more important than making (in other words, as we move more and more to a service-based economy), the organizations that figure out how to differentiate themselves based on customer service are the organizations that will win.

As many retailers are now finding out, the Internet has flattened the effects of time and space and have put everyone on more-or-less a level playing field when it comes to competition. When a prospective customer can walk into a store and use their phones to scan barcodes in order to compare prices and one-day (or even same-day) shipping become more commonplace, competitive factors that used to make a difference (such as location) cease to matter anymore. Even colleges aren’t immune to this effect: now that prospective students can “tour” dozens of colleges through their websites and apply en-masse to schools that strike their fancy, even institutions considered to be “regional” in the past are now competing on a national basis. For online education, it’s even worse because every school that offers a degree online is equally “close” to the prospect when it comes to competing for those same students. And as far as business services go, the rise of technological solutions that eliminate distance such as cheap video teleconferencing and even telepresence robots are going to make “location” much less of a competitive factor than it was in the past. No matter how you look at it, everyone is on the same playing field competitively…or will be soon.

So what can organizations do to compete?

So what can organizations do to compete? The answer is pretty simple: invest in the one thing that technology can’t replace…people. If your organization can convert more prospects into customers and retain more of your current customers than your competition by providing superior service (as the Accenture study implies), you’ll win. If you keep losing them because your customer service is bad, you’ll lose: after all, what organization can continue to lose more than half your customers to the competition?

Probably not yours.