What is the Cost of Bad Customer Service ?

Everyone knows the value of great customer service, but do we know the cost of bad customer service. Customer service that is horrible can cost a company in so many ways, which  reduces company revenue.


The most obvious is the loss of the current customer, but what can be even more costly is when the customer experiences bad service, they are going to tell everyone they know. So now you have negative word of mouth, which prevents a lot of potential customers from trying your product or service. This is clearly not good for business, so it should be avoided. Also the company would lose customer referrals, which adds up to a lot of money, over the lifetime of the customer. Indeed the loss of customer referrals, not only means the loss of revenue, but now the company is forced to spend more money to attract new customers.


When you add up the costs of losing the current customer, losing customer referrals, and losing potential customers due to negative word of mouth, you can see the high cost of bad customer service. Also do not forget, that the marketing budget will now have to be increased to find new customers, to replace all those lost customers. The costs will keeping adding up, if there is no strategy in place to ensure exceptional customer customer service is delivered to customers.


Clearly , companies will need to have a good strategy for implementing exceptional customer service, to avoid the high cost of bad customer service. This strategy will need to include a customer referral plan and have exceptional customer service guidelines, which would need to be monitored to ensure proper implementation. Once this strategy is implemented, it will lower marketing costs and increase company revenue. The true cost of bad customer service is so high, how can any company really afford not to implement an exceptional customer service plan to avoid the high cost of bad customer service.