Technical Assistance Research Programs (TARP) of Washington DC ran some studies that are quite revealing.
• On average, twenty-six (26) customers will not complain for each customer who will.
• Yet each of the twenty-seven (27) unhappy customers WILL tell an average of sixteen (16) people about their bad experience with your company. – This means for every one complaint you hear, four hundred and thirty-two (432) negatives things are spoken about your business. By the time you hear a complaint three (3) times which is about the number of times a complaint is heard before it is perceived as a possible problem, 1,296 people have already heard about the problem.
• Ninety-one (91%) percent of your unhappy customers will never buy from you again.
• But if you make a focused effort to remedy your customers complaint, eighty two (82%) percent of them will stay with you.
• It costs about five (5) times as much to attract one new customer as it does to retain an old customer.

It is not hard to see the value of good customer service when you look at these numbers. But unfortunately, the real cost of customer service is often not seen until far too late because as you see above, you are generally one of the last to hear about your customer’s complaints. It is more than worth the effort to be proactive addressing customer concerns.

Another story about customer service comes from the story of Jan Carlzon of Swedish Airlines. In the late 1970’s he became president of the airline with a large initiative on customer service and discovered some basic human traits. Customers do understand that there are some problems that cannot be solved. Customers wish to be treated with respect and have a company representative advocate on their behalf regardless of the outcome. Even when the source of the customer’s complaint could not be changed, the customer was generally satisfied when the person from the company who they talked to became their advocate, listened to the problem and made an effort to resolve it. Carlzon empowered every employee for Swedish Airlines to address customer complaints. No matter if it is was a baggage handler or a customer service rep, whoever had contact with the customer was empowered to solve the customers problem. The customer satisfaction ratings and bottom line for Swedish Airlines skyrocketed.

Today, the difference between company “A” and company “B” is seldom in their products as the majority of products today work and are getting better all of the time. The difference between companies and hence the opportunity is in the way they interact with the customer. Consumers are not looking for unreasonable attention or spectacular results. As Jan Carlzon discovered, they just want to be treated fairly by the employee that is their connection to the company. Empowering your employees to use a common sense approach to serving the customers concerns may be the best investment you can make. It is one of those strategies that will not immediately show its value. It is doing the right thing because it is the right thing to do. And when you do it. The TARP numbers above will not come back to haunt you.

This entry was posted on Friday, July 16th, 2010 at 2:46 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.