Many businesses looking to save money will cut corners at customer service first, as it seems like a waste of money. If the business sells X, then anything not directly selling more units of X can be seen as overhead. Customer service appears to fit into this category, but customer service is actually a preventative measure for stores.
If customer service is good, you don’t really notice it. Managers may see no customer service issues as an indication that their customer service investments are a waste of money… after all, if spending more doesn’t make it look “better”, and spending less doesn’t make it look “worse”, then why not spend less?
The problem with this strategy is the cost of bad customer service is not in an immediate effect, but rather an avalanche effect. One bad encounter can be enough to deter any customer for life from your store. You may only lose $20 on a sale today, but losing that customer for life could mean maybe 50-100 more $20 sales over time from them, their friends and families. If you think of a lost customer as 50-100 lost sales over several years, and if you’re losing customers every day, how long could you really afford not to care about that bad customer service experience?
One might think that’s the end of the damage, but it can get much worse. Deter the wrong customer and you can have a powerful negative PR movement against your entire company, and these have been known to drive entire branches or regions out of business. Negative PR grassroots campaigns are further fueled by false ‘mea culpas’ because any other new customer service problem, even an accident, becomes deliberate in the eyes of your alienated customers. Get yourselves a few political enemies through a delayed response and you can be trying to prove your case to the federal government, just ask Toyota. Lots of car companies issue recalls all the time, but Toyota didn’t respond quick enough (appropriate response time is a part of customer service) and so they are in a heap of trouble.
So what is the solution? Obviously customer service is not to be ignored, but it is not the sole cure for slumping sales either. Customer service is simply one of many preventative measures that help keep you from alienating loyal customers. Maintain it, and you will likely maintain a steady customer base. Ignore it, and you may suddenly find yourself with a plummeting income and a hornet’s nest of bad public relations.
