- Customer Service Statistics and the Impact on Revenue: The Economics of Loyalty
Customer Service Statistics and the Impact on Revenue: The Economics of Loyalty
It wasn’t so long ago that you could make a pretty good living without worrying too much about customer service. Businesses competed locally on the basis of quality and price.
Today, your business competes with goods and services from all over the internet. Big brands and startups alike have worldwide local presence on customer phones and PCs.
Why is customer service important? Because it raises your company out of the noise. Good customer service leads to happy customers and happy customers leave positive reviews and make referrals.
As recently as a decade ago, you could safely consider customer service a side matter. But rapid advances in communication technology and the emergence of social networks have made caring for customers a crucial priority for any business.
Companies are now explicitly competing not on the basis of what they sell, but on the quality of their customer service. Some experts predict customer experience will eclipse price as the most important factor influencing buying decisions by 2020.
We have compiled some of the most interesting customer service stats and facts to help you identify the strengths and shortcomings of your company’s customer support program and to illustrate the enormous impact that support has on your company’s success.
Customer Service Stats - Editor’s Choice:
- Acquiring new customers is 5 to 25 times more expensive than retaining existing ones.
- 72% of customers are willing to spend more money because of high-quality customer service.
- An average American will tell 15 people about their poor customer service experiences.
- When deciding whether to make a purchase, 90% of consumers are influenced by customer service reviews.
- After a poor customer experience, 39% of consumers will avoid a vendor for at least two years.
Recent research suggests that US companies are losing as much as $62 billion per year due to the poor customer services they provide.
Investing in great customer service can be the key to keeping your customers from switching to the competition. Between 2013 and 2015, US corporate losses traceable to inefficient customer service increased by more than $20 billion per year.
Retaining existing customers is significantly cheaper than acquiring new ones. In fact, it’s five to 25 times more expensive to get new customers.
Bain & Company research suggests that increasing customer loyalty by just 5% can increase profits by 25% to 95%. The conclusion? Customer service costs should be regarded as an investment in boosting sales. Loyal customers are worth up to 10 times as their first purchase.
72% of customers are willing to spend at least 16% more because of high-quality customer service.
The numbers are taken from the 2017 Amex Customer Service Barometer. The same survey has shown that 65% of consumers have spent more with a particular company because of a history of positive customer support experiences.
Millennials reward companies with good customer service by spending 21% more than they initially planned.
Members of the millennial generation love good service. But the number isn’t that different from what you get when you mix all the generations together. The average US consumer is willing to spend 17% more with companies that deliver excellent customer support.
Another stat highlighting the importance of customer services for avoiding revenue losses: 52% of American consumers have cancelled a transaction or planned purchase because of negative customer service experience.
The same goes for 66% of Singaporeans and Mexicans, as well as 63% of Indians. The percentage of B2B customers that will stop using vendors’ products and services is even higher; according to a survey by Dimensional Research, 66% of B2B customers have stopped buying after poor interaction with customer support. However, after a positive experience, 62% of B2B customers said that they have purchased more than initially planned.
Here’s another illustration: Depending on the industry, lowering customer churn rate by 5% can increase profits by 25 to 125 percent.
For 64% of customers surveyed by Gartner research, customer service is more important than price.
This is especially true in crowded markets. Research suggests that businesses operating in markets with lots of competition will achieve better results if they compete on the basis of customer experience instead of price.
Companies with great customer service make more money.
According to Bain & Company, businesses providing excellent customer experience generate 4% to 8% more revenue than their direct competitors. Superb customer support turns consumers into brand promoters with a lifetime value six to 14 times higher than ordinary customers.
When deciding whether to buy a product or service, 90% of consumers are influenced by customer service reviews.
In a survey by Dimensional Research aimed to identify the correlation between customer service and business results, most participants said reviews have influenced their buying decisions.
Word of mouth is also important: A typical American consumer will tell 15 people about their poor customer service experiences.
Americans tell more people about poor service than about positive experiences (11 people on average). The situation is a bit different with millennials. People belonging to this age group will tell an average of 17 people when they are satisfied and 15 if they are disappointed.
After a poor experience with customer support, 39% of consumers will avoid a vendor for at least two years.
Consumers’ perception of customer support has a long-lasting impact. The customer categories likely to avoid a business for two or more years are women (45%), B2B (51%), Gen Xers (54%), and 79% of high-income households. Positive experiences are less influential: On average, 24% of surveyed customers say they are likely to stay with a vendor for two years or more after a positive experience.
Two factors should be taken into account when a business is looking to improve customer support effectiveness. The first is speed — 69% of customers attributed their positive experience to a quick problem resolution. The second is operator training: 72% of consumers said they disliked their experience in part because they had to present their problem to multiple company representatives.
1 out of 2 millennials have complained about a business over social media. Customer service statistics show that 74% of people born between the early 1980s and the mid-1990s have a positive perception of brands whose representatives respond to social media inquiries.
Listening to customers on social media is a must, especially if millennials are among your customers. Response time is once again a crucial factor, as 66% of people polled in a Microsoft survey expect response from a company’s social media profile page within 24 hours.
Mobile customer service facts: 65% of customers around the world — and almost 80% of Millennials — favor brands that have mobile-friendly customer service.
These customer service trends reflect customers’ need to resolve purchase issues regardless of physical location.
For a company with $1 billion in annual revenues, a moderate improvement in customer experience generates an average increase of $823 million in revenues over three years.
Customer experience consists of three components, all of which have a significant impact on loyalty: success, effort, and emotion. According Temkin Group’s 2018 report ROI of Customer Experience, an improvement in emotion has the most significance for increasing customer loyalty.
More customer experience statistics: 90% of customers expect brands and businesses to offer a self-service online portal.
These expectations correlate with how engagements between customers and businesses begin. About 75% of customers use a search engine before calling an agent, and 74% have used a self-service support portal. More than half were unable to resolve issues independently because of insufficient information available online.
Knowledge articles, FAQ pages, and forums are therefore great ways to build customer loyalty.
52% of US customers and 49% of UK-based customers prefer live chat with customer support over other communication channels.
Online chat is the top-rated customer-service communication channel, followed by phone (24% US customers versus 20% of UK customers), email (13% v. 18%), and social media (11% v. 13%).
Customer service by industry: According to a recent study, supermarkets provide the best customer experience, followed by investment firms, insurance companies, and car dealers.
A 2018 study of 10,000 US consumers suggests that cable TV and Internet service providers deliver the worst customer experience.
After having a positive customer-support experience with a business, 77% of consumers will recommend it to a friend.
Better yet, 86% of respondents said that they are likely to repurchase after the positive experience. A single positive experience with a brand will make 62% of consumers likely to forgive future negative experiences. Finally, 79% of consumers will trust a business more after it delivers the positive experience.
Over the course of five years, US car-insurance companies that have provided customers with extraordinary experiences have generated 30% higher profits and two to four times more growth.
One of the main reasons: Satisfied customers are 80% more likely to renew their policies than unsatisfied customers.
Customer satisfaction is the most crucial aspect of maintaining a successful business. In a survey of around 200 senior marketing managers, 71% responded that they use customer satisfaction metric for evaluating their business success.
Businesses that have successfully improved customer experience see employee engagement rates increase by an average of 20%.
Another effect of an improved customer journey is a reduction of service costs by 15% to 20%.
40% of US consumers and half of British consumers say they prefer a human agent over a chatbot.
According to 32% of consumer reports, customer service involving human agents is falling short because it’s less available and takes longer to resolve an issue. The top reasons customers reach out to human agents are the complexity of their problem or question, the bot’s likelihood of redirecting them to the FAQ, and the expectation that conversations with bots will be slow and impersonal.
However, three quarters of consumers say they wouldn’t pay extra to interact with human customer-service agents. They simply expect to have agents standing by in case they are needed. have a human customer service; they just expect to have an agent available when they need one. Also, 38% of customers expect customer service reps to be have access to a full history of their past interactions and purchases.
For years, the clients I worked for were banks. That gave me an insider’s view of how banks and other institutions create financial products and services. Then I entered the world of journalism. Fortunly is the result of our fantastic team’s hard work. I use the knowledge I acquired as a bank copywriter to create valuable content that will help you make the best possible financial decisions.
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