Quantifying the Impact of Good Customer Service | CPI's Blog

Quantifying the Impact of Good Customer Service

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Christy Green

These days, most goods and services are commodities, making product differentiation a challenge. However, top companies are realizing in this customer-centric era, the best way to differentiate their company is by the experience they deliver to customers, not on the products they sell.

Customer experience has emerged as the single most important aspect in achieving success for companies across all industries, according to Peppers and Roger. James Allen of Harvard Business School found that 80% of businesses state that they offer a great customer experience, while only 8% of customers feel the same way. In order to thrive in today's customer empowered environment, companies need to deliver the best customer experiences when, where and how customers want it.


According to a recent Forrester report, good customer service has quantifiable revenue impacts:


Good customer experiences boost long-term loyalty

Customer loyalty has economic benefits as measured over three dimensions: 

  • Willingness to consider another purchase 
  • Likelihood to switch business to a competitor
  • Likelihood to recommend to a friend or colleague

The revenue impact from a 10-percentage-point improvement in a company’s customer experience score, as measured by Forrester’s Customer Experience Index (CXi), translates into more than $1 billion. And for many companies, customer service is the cornerstone of their customer experience strategies.

Poor customer service leads to increased costs

The cost of failing to meet customer expectations is high: 75% of consumers move to another channel when online customer service fails, and Forrester estimates that unnecessary service costs to online retailers due to channel escalation are $22 million per year on average. That is a staggering figure!

Poor service experiences risk customer defections and revenue losses

For example, if a company has four million customers and each spends $100 per year, the total projected revenue for a year would be $400 million. Forrester survey data shows that approximately 11% of companies have poor CXi scores. That represents 440,000 customers, and typically only about 2% of them complain to the contact center, which leaves 98% who don’t complain, or a total of 431,200 customers at risk to defect. At $100 apiece, this represents over $40 million in potential loss in revenue annually.


But not all customer experience initiatives are created equal. Initiatives that embrace social, mobile and cloud tend to get a faster and higher ROI by connecting people, processes and information in innovative ways. This approach gives organizations and their customers the power to conduct transactions at the moment of awareness and anytime, anywhere – fundamentally changing the way companies derive and deliver value.


Forrester also reports that customer service leaders aim to strike the correct balance between customer needs and cost of operations. Specific challenges in finding the right balance include the need to:


Support end-to-end customer journeys

It’s not uncommon for a service request to begin on one channel, for example Chat, and then be transferred to another, like a voice call. Customer service organizations must be able to support a seamless handoff between channels so that customers do not have to restart the conversation.


Empower customers and agents with consistent answers

A majority of online consumers use web self-service to find answers to their questions, and customer service agents rely on knowledge management solutions to effectively answer customer inquiries. Yet many customers and customer service agents find the knowledge management solutions unsatisfactory because information is often difficult to locate, difficult to maintain, and not always relevant to the customer’s context. 

Provide a consolidated customer service tool set for agents

Today a vast majority of companies have non-integrated communication channels, which means that transactional data and customer history are often neither consistent nor consistently available to customer service agents across communication channels. This often results in unsatisfactory and inconsistent service for customers, which increases costs and decreases customer satisfaction.


Follow consistent processes

Customer service agents are often forced to use multiple, disconnected applications when resolving a single customer issue. The lack of a standardized process negatively affects agent consistency and productivity, increases agent training times, and leads to a higher level of agent turnover due to frustration with the tool sets. You are probably all too familiar with the time and money lost by these frustrating challenges you and your agents face in your contact center.

Provide multiple communication channels for customer interaction

Customers want to be able to request service in the way that’s most convenient for them, whether it’s by phone, email, chat, Twitter, etc. Organizations need to be able to deliver relevant information to their customers over a range of communication channels. 


Are you and your organization on a journey to revolutionize your customers' experience? Do you have questions on how to reach your customer experience goals? We'd be happy to answer your questions. Feel free to reach out to our team.  


The full Forrester report that’s quoted above can be found at The Forrester Wave:  Customer Service Organizations Solutions for Enterprise Organizations, Q2 2014 


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