Customer Service and Support

Lost and Damaged Reputation: Consequences of Poor Customer Service

A customer may forgive and forget a bad product, but they will never forget poor customer service. After all, people always remember how you made them feel. Customer support is notorious for not being helpful.

Big brands like Amazon, Costco, Zappos, etc., are beloved by their customers owing to their wonderful customer support. And if you’re one of those businesses guilty of taking your customers for granted, then it’s about high time to reevaluate such a self-destructive strategy.

Here’s a deep dive into the consequences of bad customer service that will offer you perspective.

Worst Consequences of Poor Customer Service

Without beating about the bush, here is a look at the impact of bad customer service on a business.

1. Customer Base Erosion

Customer base erosion is one of the most significant consequences of poor customer service. And it takes place in different forms. You might find it harder to acquire new leads or convert them.

Or you could witness the loss of your existing customers – and no, your loyal advocates are not immune to this churn. Alternatively, you might notice a decrease in the customer’s lifetime value. Whatever may be the symptom, the cause for it is the same – poor customer service.

If you don’t believe us, consider the following quick facts.

  • 78% of leads fail to convert simply because of a poor customer experience. So, even your best and high-quality leads might hit a dead end in the customer journey.
  • 95% of consumers attribute customer service to building brand loyalty – that’s customer loyalty at stake.
  • 61% of consumers state that they would switch a brand and choose their competitors after a single instance of poor customer service. That just means that your customers would not hesitate to pull the killswitch on you.

Do you feel you are infallible? So did the Woolworths Group that operated the Woolworths outlets in the UK. Back in its prime, Woolies, as known in every household, was the ultimate retail chain that sold everything under one roof – clothing, sweets and candies, toys, you name it.

However, they failed to match customer expectations and started to neglect their customer service department.

The outcome? Nearly 800 stores across the UK shut down, marking the end of a formidable retail giant. 

Key takeaway – make customer service a priority!

2. Employee Turnover

losing customers of a company due to bad customer service

While losing customers may seem to be one of the most obvious dangerous effects of bad customer service, employee turnover is a lesser-known, unrecognized evil. But how does that fit into the picture?

Well, it’s fairly obvious. The inability to make customer support and service an organizational priority means that you fail to empower your employees with the tools, strategies, and resources.

Not to mention that bad customer support is a morale-sucking cycle. Your employees don’t have the means to offer passable customer service and support, which unlocks a flood of queries.

The increasing workload causes them to feel even more overwhelmed, especially when they fail to deliver the desired outcomes. And we haven’t even dived into the depths of the general frustrations that high-performing employees might feel when they have to pick up the slack without any benefits.

At the end of it all, you have insurmountable work pressure, disgruntled managers putting customer support agents in distress, and irate customers that become increasingly difficult to deal with, the triple threat of ultimate dissatisfaction.

The end result is employee churn – not a fun problem to have at a time when talent retention is a must.

You not only lose talent, but you also get a bad rep for a hostile work environment over platforms like Glassdoor or LinkedIn, causing you to repel high-value employees. And there’s no turning back from there.

Empowering your customer-facing teams with valuable tools and platforms (such as JustCall) paired with training and mentorship could be one of the best ways to reel them back in.

3. Negative Word of Mouth Marketing

Since we are already on the subject of how peers shape public perceptions, let’s take a moment to talk about word-of-mouth (WOM) marketing. After all, WOM weighs in heavily on the disadvantages of poor customer service. 

Take, for example, the fact that a positive customer experience will have a consumer sharing it with nine other individuals. That’s great and all, but contrast it with the flip side. Because on the other hand, a single negative experience will have people telling it to sixteen other individuals!

In simple words, negative experiences spread like wildfire.

This stark reality is even more true in the age of the internet, where unhappy customers can take to any medium to express their displeasure – social media, forums, blogs, product/service reviews, etc.

And their opinion will affect others since most of us turn to such digital sources of information while deciding whether a brand is trustworthy or otherwise.

Since negative WOM has a greater and wider reach than even the most fulfilling and rewarding positive experiences, you simply cannot leave any room for complaints.

At the same time, you will need a stellar reputation management team that can put out such fires on the regular. The latter is, of course, retrospective and plays a curative role and may not have that great of an impact if the negative experience is too scandalous.

4. Revenue Slowdown

Almost all of the consequences of bad customer service, as discussed above, will affect your revenue stream in one way or another. 

You fail to convert leads or acquire more customers. It will cause a loss in revenue. You fail to retain customers or cut short their lifetime value. It will cause a loss in revenue.

You are unable to retain talent or allow employees to perform up to their potential. It is as good as losing revenue. You have a poor brand reputation. You guessed it; it is a loss in revenue.

About 90% of consumers are ready to pay more for a rewarding customer support experience – this potential revenue also corresponds to a loss. It is just a series of unfortunate events that will continue to pile on.

For instance, a poor brand reputation will make it difficult for you to score leads, which means fewer customers. The trickling revenue will cause you to downsize your customer support team, which will cause employee and customer churn. And the devastating cycle continues.

All the dangerous effects of bad customer service will have a cumulative effect on your revenue, revenue potential, or profit margins.

Some sources even peg this value at a loss of $75 billion to $1.6 trillion per year. That’s clearly not a loss one can easily accept and move on; it will imminently make your business unsustainable and shove it to the point of closure.

So, rather than waiting until the point where you reach the mouth of this downward spiral, build your organization with a customer-centric mindset. With the customers being the center of all your business decisions and work culture, customer support and service would ultimately flourish.

Final Thoughts

Nothing spells doom on your business more than the label of ‘bad customer service’ or, even worse, ‘terrible customer service’.

It’s like that awful nickname that you cannot grow out of. And once you have gained one, it is almost impossible to change public perception. However, any horrible situation can be salvaged with quick and planned damage control.

You just need to have the vision that will act as the north star for your customer service team.

Frequently Asked Questions

What are the consequences of poor customer service?

The consequences of poor customer service are as below:

  • Loss of business reputation and negative word-of-mouth marketing
  • Poor lead conversion ratio
  • Loss of talent or poor employee morale
  • Loss of future and existing customers
  • Loss of customer loyalty and business credibility
  • Loss of revenue and profits
What is the cost of bad customer service for a company?

Bad customer service can cause losses equivalent to $75 billion to $1.6 trillion per year. And that’s just the quantifiable costs. Other losses, like the loss of trust and poor brand reputation, are immeasurable.

How does poor customer service affect a company's reputation?

Poor customer service dents a company’s reputation. Customers that face a negative experience are more likely to share it with others. As a result, businesses will find themselves in a negative light.

What are the long-term effects of poor customer service on a business?

The long-term effects of poor customer service include:

  • Dwindling customer base and erosion in customer loyalty
  • Unrealized business revenue and slimmer profit margins
  • Decreasing employee morale and talent churn

Such losses can affect the sustainability of a business and can cause it to shut down.

How can a company recover from poor customer service?

There are several ways in which a company can recover from the consequences of bad customer service. However, the most effective one is to proactively work on making the customer the focus of the organization such that every service and support agent work to improve the customer experience.

Additionally, businesses should equip these agents with the necessary tools, resources, and abilities so that they can provide such services consistently and scalably.

Vijaya heads the Global Support team at JustCall, where he has played a pivotal role in expanding the support team and diversifying its channels and services. Under his guidance, the team consistently earns top customer satisfaction scores. With a passion for team-building, Vijaya is committed to empowering his staff to deliver unparalleled customer experiences. In addition to his managerial responsibilities, he is a certified Leadership Coach, specializing in helping leaders overcome their unique challenges to achieve success.

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