The Real Costs of Poor Customer Service, Part 1

How poor customer service impacts a communication
& media company’s bottom line

By    Joe Dyer    Director of Experience Strategy & Insight projekt202

By Joe Dyer
Director of Experience Strategy & Insight
projekt202

Customer service has always been considered an important part of doing business, but it doesn’t often get listed as one of the top drivers of consumers’ final decisions on products and services.

It isn’t often that one sees advertising that pushes a data, media or communication company’s customer service as the top reason a consumer should make a switch to them. Instead, companies tout their superior price and better offerings.

But as recent data suggests, this may be a big mistake. According to the 2018 Serial Switchers report published by NewVoiceMedia, poor customer service costs companies more than $75 billion per year. This study shows that customer service is increasingly one of the most important aspects of a consumer’s choice. Since NewVoiceMedia conducted the study, that figure has increased by $13 billion.

In an age when media and communications companies are having a tougher time creating separation among their competitors on product alone, the service aspect of the business is becoming ever more important. In fact, the study found that 67% of consumers have become what it calls “serial switchers” – those who have no problem switching brands due to a poor customer experience, an increase of a whopping 37% since the last report.

Why Customer Service is Important

It might seem obvious that customer service is important, but if that truly were the case, so many companies wouldn’t treat it as an afterthought. Instead, they would invest money and resources into making the customer experience as delightful as possible.

Providing good customer service can be a great differentiator for a business, particularly when the products and/or services it offers are like that of its competitors. For instance, think of cable and satellite companies that offer the same paid-television channels and high-speed internet service at similar price points. What sets each apart from the next?

One key is good customer service, which is proven to increase a customer’s loyalty to a company. Businesses that can build trust with customers on a human level – think empathy — are able to break down the barriers that stand in the way of a purchasing decision. Good customer service also increases the amount of money a customer spends with a business and the frequency of purchases.

In addition, customer service goes a long way in determining the tone of word-of-mouth, which is especially important today with the proliferation of social media and customers’ continued reliance on social proof.

What are the Results of Poor Customer Service?

Poor customer service can occur when consumers don’t feel appreciated, when they’re unable or have trouble speaking to a person instead of an automated messaging system, are passed around to multiple people, are put on hold for a long time, or are generally treated in a fashion that makes it clear, “This company doesn’t know me or my needs.”

It’s often said that one poor customer service experience is more impactful than dozens of good experiences. When one person has a bad experience, the ripple effects can be monumental.

When a person shares his or her bad customer service story on social media, for example, one often sees others from around the world share similar poor experiences, which compound to serve as powerful anti-marketing.

Indeed, as the NewVoiceMedia report shows, poor customer experience alone can be powerful enough to convince consumers to switch to a competitor. Of those surveyed in the report, 39% said they would simply never use the company with which they had the poor customer experience again.

What Does This All Mean?

The results of the NewVoiceMedia survey should be eye-opening. If organizations didn’t already recognize the immense importance of creating positive customer service experiences, they should now.

Companies in any industry - but especially in those ultra-competitive industries such as media and communications – must be customer-centric in their approach. Investing in customer service as if it were new product development is essential in today’s business landscape.

And for those that do heed the warning, there is revenue to be gained from this knowledge. Companies that provide good customer service find that 66% of their customers are more loyal, 65% are willing to recommend them to other people, and 48% are willing to spend more money than they already do with that company, according to the NewVoiceMedia survey.

In part two of this series, I detail ways that media and communication companies can adjust their customer service strategies to produce more positive results.


projekt202 is the leader in experience-driven software strategy, design and development. We have a unique and established methodology for understanding people in context — we reveal unmet needs — which drives everything we do. This leads to a crisp, clear understanding of the customer, which shapes the design and development of new solutions and experiences. We have the expertise, teams, skills and scale to deliver sophisticated software solutions that improve any and all touchpoints across the user journey.

projekt202 has spent over 15 years bringing to life and to market compelling experiences through our Experience Strategy & InsightUser ExperienceSoftware DevelopmentMarketing & Analytics, and Program Management practices. Our talented team has delivered emotionally-rich and intuitive solutions for global brands and clients such as 7-Eleven, Capital One, Dell, Mercedes-Benz Financial Services, Neiman Marcus, Samsung Electronics, and The Container Store, among many others.

projekt202 has offices in AustinChicagoDallas, San Francisco and Seattle.

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