The high cost of poor customer service
Most of us have seen these statistics:
- In the average business, for every customer who bothers to complain, there are 26 others who remain silent.
- The average wronged customer will tell 8 to 16 people (about 10 percent will tell more than 20 people).
- 91 percent of unhappy customers will never purchase goods or services from you again.
- If you make an effort to remedy customer’s complaints, 82 to 95 percent of them will stay with you.
- It costs about 5 times as much to attract a new customer as it does to keep an existing one.*
Based on several recent unpleasant customer experiences, I suspect that many executives don’t actually believe these statistics, or they would insist on creating a customer-focused culture if only to enhance their organizations’ bottom lines.
Many organizations believe that training employees to use standard phrases when confronted with a complaint or establishing guidelines that permit employees to compensate a wronged customer in some way is a sufficient approach to providing customer service. However, those fall short of what the Baldrige Criteria ask, “How does your management of complaints enable you to recover your customers’ confidence, and enhance their satisfaction and engagement?”
Effective customer service requires more than a program
What’s at the heart of genuine, effective customer service? I believe it’s empathy, the ability to put oneself into another person’s shoes and feel the emotions they are feeling. That leads, then, to responding appropriately to that person when there is a complaint.
According to the latest neuroscience research cited in a June 2015 edition of BBC Magazine, 98% of people (exceptions include those with psychopathic tendencies) have the ability to empathize wired into their brains, the built-in capacity for stepping into the shoes of others and understanding their feelings and perspectives. Multiple studies strongly suggest that empathy can be taught, in essence, tapping into what is already wired into our brains.
Proof that empathy delivers measurable results
But what if empathy went beyond providing a positive customer experience? What if it actually contributed to reducing a key problem in health care that drives higher costs and poor patient experience? An article in Harvard Business Review described a recent study that looked at hospitals with high quality care that focused on either improving communication with patients or on improving the response time to the expressed needs of the patient. The communication-focused dimension and high quality care combination resulted in a 5-percentage-point reduction in 30-day readmission rates for an average U.S. hospital. When the hospitals focused on high quality care and response time, the reduction was under 3 percentage points.
Empathetic customer service starts with empathetic leadership
These studies along with the statistics above point toward a different approach to improving customer engagement and loyalty. But the costs may be more than some executives are willing to pay. Creating a customer-focused culture where empathy is at the heart of each customer experience requires that the behavior be role modeled at the top. In another recent Harvard Business Review article, “Empathy Is Still Lacking in the Leaders Who Need It Most,” author Ernest J. Wilson III describes an unpublished survey of his university’s graduates over the past 10 years who now occupy professional positions. “Empathy is most lacking among middle managers and senior executives: the very people who need it most because their actions affect such large numbers of people.”
As leaders, have you assessed the quality of customer service in your organization? If it isn’t at the level of performance you expect or your organization needs to remain competitive, have you checked your EQ – empathy quotient?
*Source: The SCORE Association, a nonprofit association dedicated to entrepreneurial education and the formation, growth and success of small businesses nationwide.