The Hidden Cost of Poor Customer Service

What's the true cost of letting down your customers?

Statistics released in late 2010 showed that the UK average lost sales per customer were £248. In other words, if you upset a customer enough so that they never buy from you again, that costs the economy an average of £248 each and every time. That totals up to over £15 billion per year of lost revenue spread over the whole economy. The retail sector alone lost £1.2 billion through poor customer service.

That statistic prompted a certain fashion retailer based in the Midlands to do their own research and they discovered the true cost of poor customer service - and it's staggering.

For each upset customer, that retailer loses £20,000 of sales, due to the "pass it on" principle.

You get good customer service? You give the retail assistant a smile. You don't congratulate the manager on having a great team or staff member. You might tell 2 or 3 others, but hey, we're British, we don't evangelise advice on where to shop.

You get poor customer service? All of a sudden, you're an evangelist. You change you Facebook status, you tweet your disapproval, you go out of your way to warn people not to shop there ever again.

Negative networking in action.

How do I know this? My 9-5 job is with that fashion retailer.

What an opportune reminder to work on my integrity as well as my customer service skills in my own business.

How do you rate your own customer service? What is your approach when dealing with disgruntled customers? Do you feel you can improve?