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The Cost of Not Measuring Customer Satisfaction


Or, the cost of doing nothing to improve customer customer loyalty and retention – the (R.O.N)Return on Nothing

You may be surprised to know that doing nothing about your customer service best practices is costing you serious money. The fact that doing nothing will cost you money may at first glance sound absurd, but when you look into this in detail it will make perfect sense.

How can poor customer service cost company money?

In order to better understand this concept it is necessary to look into the business risk of poor or ineffective customer service.

  • Slow resolution of customer’s problems: customers want quick answers and resolutions for their problems. If the customer representative does not have an answer for the customer they will often have to call back several times. This will increase the customer’s frustration and can put the company at business risk of losing the customer and consequent sales. It will also cost the company for the extra calls.
  • Dissatisfied customers equal poor retention rates: dissatisfied customers will result in loss of customers. This in turn costs the company money in lost sales and weakens them in the market, as the competition will get stronger.
  • Mistakes in product delivery or defective merchandise: this can cost the company in different ways. Firstly replacing a product and paying for return shipping is costly. Secondly extra calls to the customer service will also cost money.
  • Customer service reps who clearly do not know their job: customers know if the rep on the other end of the line is really up to the job or just there for the money and does not know or care about the customer. This type of representative will make the customer lose faith in the company and very likely cause the customer to abandon the company and go to their competitors. This will cost your company in lost sales and increased competitor strength.

What the statistics show:

  • 96% dissatisfied customers will not bother to tell you they are not satisfied and will often quietly leave the company. This means that customers and revenue are decreasing and you may not be aware why this is happening.
  • One in 25 of your customers will express their dissatisfaction. On the one hand this is a golden opportunity to work on resolving the problem and retaining the customer. On the other hand complaints will result in more phone calls and increased expenses for the company.
  • It is ten times more difficult and expensive to gather new customers than retain old ones. Remember the 80/20 rule.
  • When competition is strengthened it will cost your company money in sales.

Calculating the costs:

Corporate executives are still in the dark when it comes to understanding the cost of customer’s complaints and the additional cost of gaining new customers. Companies are still calculating the cost of individual calls rather than understanding the real costs of poor customer service.

If customer service is neglected and no effort is made to improve it the customer will become dissatisfied and profits will decrease. The hard fact is that customers must be made happy at all times. The way to do this is to constantly improve your customer service. When you work on customer loyalty in this way you will increase your base of loyal customers and ultimately increase your profits.

If you would like to know more about how the ASK LISTEN RETAIN System or how it can help create customer retention and loyalty, please contact us.