Disgruntled Customers: The Rapidly Rising Cost For Small Businesses

‘Designing Strategies’ Newsletter

July – August 2012 Volume 9 – Issue 48

The Rapidly Rising Cost of Disgruntled Customers

Sometimes, it is difficult put your arms around actual costs related to losing a customer. But, the fact remains the impact on your bottom line can be significant. It is common knowledge that holding existing customers is less expensive than courting new ones. There is a good chance dissatisfied customers won’t bother to say goodbye, or tell you why they are unhappy. Be aware of the cost of disgruntled customers and how it affects your bottom line.

Once a customer leaves, you lose control over the situation. You cannot count on them remaining silent about their issues. They may not tell you why your company, product or service fell short, but they will tell others. Statistics show each disgruntled customer will tell 8 to 16 others. In a world of social media, that number can increase, spreading bad news in a nano-second. Their dissatisfaction will become costly unless you intervene quickly.

I recently learned of a situation that clearly shows how much more reach customers now have thanks to the Internet and social media. A young man involved in customizing cars ordered parts from an Internet operation. The parts arrived in poor condition, due to the way they were packed for shipment. The box arrived with no external damage, but the parts inside had obvious paint damage from rubbing against each other in transit.

He contacted the company about exchanging the parts, only to be given the run around. They cited their policy of only allowing customers 24 hours to notify them of problems. When the package was delivered, he was out of town, so the box was received by someone else. With no obvious damage, the package was set aside. When he returned several days later, the 24-hour return policy time frame was long past.

After several phone calls and e-mails with images of the damage, the company finally agreed to take back the parts — at a 25% restocking charge. They even asked him to repack the individual parts in bubble wrap (which they never did themselves) before shipping them back. Really! You can’t make this stuff up. What are the odds this experience will bring him back in the future? I doubt he will ever recommend this company to friends or family.

What the company didn’t know was this young man is a moderator of two online car forums. One of the forums has nearly 20,000 members, the other has over 6,000. What kind of costs to the parts supplier will be felt when he shares his unpleasant experiences with other car enthusiasts on those forums? Do you think their run around was worth the risk? I doubt it.

If you aren’t aware what mistakes are being made by your staff, or what problems exist, you are operating in a fog. It is very likely that your firm will continue to alienate and lose customers. To ensure the continued success of your company, you need to know your customers are being treated in the very best manner. When they share information about your company you want it to be positive. A satisfied customer can bring more potential customers to your door and profits to your firm.

If you don’t have a customer service policy, it’s time to create one. Develop processes for getting constant feedback from customers. Set policies for handling negative situations. Develop those policies and processes from the perspective of retaining good customers.

As part of your strategic planning process be sure to allocate time and resources to develop your customer service procedures and policies. Then, be sure to allocate time and resources to train all your staff on the importance of dealing with customers.