Australian service businesses are losing $720 for every negative customer experience, with a survey by Ernst & Young showing poor customer experience could impact $40 billion worth of spending.
The latest EY Customer Experience survey explored the impact of poor customer experiences on businesses in the telecommunications, utilities, general insurance, private health insurance and banking sectors.
It found 56% of the 950 respondents had reported a poor service experience over the past 12 months, with the highest percentage encountering problems with the telecommunications industry.
Almost 40% of households had a negative experience with a telecommunications company, with these predominantly a result of poor coverage or service interruptions or poor customer service.
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The utilities sector had the next highest percentage of unsatisfied customers, 27% having a negative experience in 2013.
Thirty-two per cent of the respondents said price rises were the cause of their complaint, while a further 25% had issues with billing.
But despite more than half of Australian households having a negative experience with a service company, 39% of these customers did not contact their supplier or attempt to have their complaint heard.
Instead, the study found these customers would either ‘sulk’ or ‘walk’, leaving the business without an opportunity to rectify the issue.
EY advisory partner Jenny Young told SmartCompany there is the potential for $40 billion of household expenditure in these service industries and the study found 6.9% of that is affected by poor customer experiences.
“This then works out to be around $720 per negative experience. So it’s a big issue, but also a big opportunity for businesses to improve their customer service,” she says.
“When you consider over half of the respondents had an issue with their suppliers in the past 12 months it’s obvious all businesses have room to improve.”
Of the respondents who did address the company with their complaint, only 8% were satisfied with the outcome.
Overall, 54% of respondents said they had been very or fairly dissatisfied with the speed in which their complaint was handled, 57% were unhappy with the quality of feedback given in response to their complaint and 48% with the ease of accessing information to help reconcile the issue.
Young says businesses won’t get customer service right all the time, but they should aim to “provide an optimal level of service experience” and respond quickly to any complaints.
“Suppliers need to supply products and services which meet or exceed customer expectations in the first place. If a customer does have an issue, it needs to be easy for them to have it resolved,” she says.
“If it takes a lot of effort for a customer to get a problem resolved, it can lead to a worse outcome for the brand, but if it’s solved quickly the business can turn a complaint into a compliment.”
Young says if a complaint is well-handled, the customer often becomes an advocate for the brand.
Of all the service industries in focus, the banking sector had the fewest disgruntled customers.
Only 12% of respondents had any qualms with their bank, although 29% of these were centred on poor customer service.
The survey found 47% of unhappy customers spoke ‘publicly’ about the issue to two or more of their friends, family or colleagues, or else posted about the issue on social media.
But despite each negative social media comment being viewed by approximately 200 people, in 75% of cases the supplier did not acknowledge or address the complaint.
“Businesses need to be open in terms of their communication, particularly on social media,” Young says.
“Many suppliers aren’t addressing comments on social media, despite it being a powerful platform for the brand to respond. This doesn’t lead the customer to a favourable position about the brand.”
The study found 15% of unsatisfied customers vented their frustrations on social media.
Young says if a brand is responsive this can lead to a positive outcome and a new brand advocate.