- Nearly two thirds of companies worldwide find bottom lines significantly hit by poor service
- One in four companies have failed to invest in customer service in the past 2 years
A BDO report, written by the Economist Intelligence Unit, released today, has for the first time unveiled the impact of poor customer service on businesses worldwide. The survey of more than 800 senior business leaders around the world reveals that almost two thirds (59%) of all companies admit that a customer service failing has had a clear, significant impact on financial performance.
The survey also revealed:
- A quarter have lost customers as a result of poor customer service (27%)
- Service failings have hit the share price of one in seven companies (15%)
- 23% have had to compensate customers due to poor service
- 84% of the companies, surveyed believe that customer service is ‘very’ or ‘moderately’ important to their financial performance, but only a third of companies (36%) currently have a strategy to link service and bottom line
Despite customer service draining profits for many, one in four (27%) businesses have made no investment in service whatsoever in the last two years. In addition, less than a third of companies (28%) have a designated head of customer service on the board.
Only a quarter (29%) of business leaders feel being seen to be customer focused is key to career progression. Indeed, employee and other internal issues are taking precedence over customer concerns in nine in ten organisations (89%).
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The report also finds that for many companies engagement is still low-tech: 36% of companies use social media to engage customers and just 15% believe social media will become the most important method of engaging with customers – more than a quarter believe its importance in 2020 will be the same as it is now.
Allan Evans, Global Head of Clients and Markets at BDO, said “The battle for customer growth and retention is going to be fierce in every market and sector. For many, it’s a fight for survival and competitive advantage is key. Companies are right to focus on quality, value, price and innovation but not to the detriment of service quality”.
“Boardrooms are blinkered – even with clear evidence that poor service is hindering profitability, businesses are failing to invest in, track or apportion sole responsibility for service. We’re calling for more companies to put service on the boardroom agenda and have a clearer focus on the link between service quality and the bottom line. Only then will companies be able to develop clear and effective strategies to make a return on service.”
Monica Woodley, the EIU’s Managing Editor, commented: “It’s clear many businesses find themselves in a service catch 22 situation. Companies intuitively seem to understand customer service impacts financial performance, but they are unsure how to make a clear link with the bottom line. So they don’t prioritise service at a board level because they don’t fully understand it, and they don’t fully understand it, because they don’t prioritise it. More businesses need to take action now to break this service cycle or risk losing out to competitors.”
Jo Causon, Chief Executive of the Institute of Customer Service, added: “Financials tell the CEO where the organisation has been, but customer satisfaction data gives good indications of where it is going. Today’s findings confirm that companies must be vigilant about regularly reviewing the metrics they use to measure customer service. If they don’t, it is impossible for Boards to measure the impact that service makes to bottom line and ultimately take action. A genuinely aligned, joined-up organisation sees customer service as a key part of its strategy and integral for every aspect of the business.”