Economy

Poor service triggering fall in customer loyalty: Four ways to fix it

Yolanda Redrup /

One in three Australian consumers are not loyal to any business and a further 40% are turning away in droves, with poor customer service the key driver, according to new research.

Research published yesterday conducted by Feedback ASAP revealed poor customer service is costing Australian businesses in excess of $9 billion annually, not including the ramifications of negative word of mouth.

The survey of 1114 consumers over 18 found 80% said poor customer service influenced their decision to leave a brand.

Ninety-two per cent of respondents also said customer service was a key factor motivating whether or not they remained loyal to a business.

Feedback ASAP chief executive Phil Prosser told SmartCompany businesses are being challenged to go above and beyond “good” customer service.

“What’s happening is customers today are spoilt for choice. For organisations to stand out you can’t just satisfy customers any more, you have to go that extra mile,” he says.

“The challenges are far greater for companies too since customers are more discerning and appreciative of things which really matter.”

International Customer Service Professionals chief executive Trish Olsen told SmartCompany Australian consumers are also less likely to develop loyalty to a brand as many shop around based on price.

The research found the top 20% of Australian companies which scored well in customer service had grown 10 times more than businesses which scored in the bottom 20%.

To help businesses develop brand loyalty, Prosser and Olsen gave SmartCompany their best tips on how to improve customer service and encourage people to keep coming back.

1. Listen to your customers

Prosser says to establish good customer service, salespeople need to put themselves in the customers’ shoes.

“It’s a journey, it’s not just a one-off answer, as what customers want changes over time,” he says.

“You need to break down the barriers and take a receptive view. Be open and challenged by customers rather than say you know it all and becoming pragmatic, but not empathetic with the customers’ experiences.”

Prosser says to understand what customers want requires gaining customer feedback and embarking on a learning process.

“Many businesses undervalue the importance of getting the customer service right financially,” he says.

2. Establish the root cause of the problem

Prosser says if a business is at a stage where customers are leaving, the first thing to do is find out what’s gone wrong.

“You need to stop and get clear feedback for why the customers are leaving, zone in on what’s causing it and get to the root cause for the attrition,” he says.

“Is it a lack of information, a lack of knowledge, poor performance or a loss of trust? You need to come to terms with the complexities of the situation before customers start leaving, otherwise it’s too late.

Prosser says to look out for the “warning signs” which indicate customers might leave.

“If customers have to make an enormous amount of effort to get what they want and if the process is in anyway difficult for them, this is a primary indicator of potential loss of business,” he says.

3. Hire the right staff

Olsen says businesses need to hire the employees who genuinely like dealing with people.

“The critical element with that is to actually go a step further and develop those people, train them and educate them on the product,” she says.

“So many people go to the business and don’t actually have induction training. It’s about building relationships and you can only sell a product if you know the product.”

Olsen says staff need to understand the importance of loyalty to a brand.

“The business has to understand loyalty is not just a matter of getting a person to come back each week, but it can also be used to create brand advocacy,” she says.

“Loyal customers are the most valuable part of your business and if they come back again and again they will tell others.”

4. Customer intelligence

Olsen says a crucial part of customer service is ensuring not all customers are treated the same way.

“The years have gone by where we said treat customers as you want to be treated, that only works if they’re all like you,” she says.

“You need to adapt relationship marketing to the person and watch for behavioural indicators. You can tell by the way people speak, if they’re interested in data, if they don’t like waffling and if someone loves a buy-one-get-one-free, these variations in behaviour are easy to read if you know what to look for.”

Olsen says businesses need to understand their customers and where they come from in order to know what they want from a product or service and how to help them.

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