What’s the price of poor customer service? Most companies may not wish to examine the issue, since few are willing to admit they provide less-than-stellar customer service. While providing poor customer service was once simply a business misstep, today, it’s something of a disaster: customer expectations are higher than ever , the economy is leaner (which means customers are choosier about where they spend their money), and the plethora of contact channels means that there are far more opportunities for a company to make mistakes (think social media and mobile apps).
According to new research from Oracle conducted in conjunction with research company O’Keeffe & Company, brands today may be losing up to 20 percent of revenue due to poor customer experiences. The study, "Global Insights on Succeeding in the Customer Experience Era,” interviewed 1,342 senior-level executives from 18 countries in North America, Europe, Asia Pacific and Latin America. The results, says Oracle, yield new insights on the challenges, strategies and lessons learned for succeeding in the customer experience era.
Most companies are at least aware of the stakes. Ninety-seven percent of executives agreed that delivering a great customer experience is critical to business advantage and results (though one can’t help wondering what the other three percent were thinking), and respondents estimated that the average potential revenue loss was for not offering a positive, consistent and brand-relevant customer experience, which is 20 percent of annual revenue.
While there may be awareness, it’s obvious that many executives are still vastly underrating the effects of poor customer service. The study revealed that business executives underestimated the impact of customer experience on behavior. Only forty-nine percent of executives surveyed said they believed customers would switch brands due to a poor customer experience, but a full 89 percent of customers say that they actually have switched brands due to a bad customer experience.
So where are companies going wrong? For starters, it may be due to a lack of awareness of the importance in providing an excellent customer experience. Beyond that, the respondents cited limitations from inflexible technology, siloed organizations, and insufficient investments as the biggest obstacles to delivering the best possible customer experience. Companies simply don’t have enough high quality data accessible for their customer service operations to provide a high quality customer experience. If companies are measuring key metric to track the quality of the customer experience, they may be measuring metrics that are company-facing, rather than customer-facing.
“Organizations must accelerate their planning and focus on executing customer experience programs – or risk falling behind,” said Oracle.
The report recommends a multi-pronged strategy to improve customer service: mapping the customer journey and setting priorities to follow; offering multi-channel choices that are integrated into a single customer record; conducting timely, targeted customer surveys to gauge feedback; using personalized proactive outbound communication to deepen engagement; and fostering a customer-centric culture that transcends internal silos.
“This report demonstrates that organizations around the globe and across many industries are beginning to understand the real business impact of not offering great customer experiences, but are facing execution challenges,” said David Vap, group VP of Oracle, in a statement. “We recommend that organizations map their customers' journeys to identify specific improvement areas that will help them cross the execution chasm. By empowering customers and employees, breaking down organizational silos, and implementing flexible processes and technology tools, organizations can deliver personalized, seamless customer service through the entire experience lifecycle,” he added.
Find the full report here.
In other Oracle news this week, the company has announced it will buy network equipment maker Acme Packet Inc. for $2.1 billion. The acquisition, said Oracle, will put it in a position to compete with Cisco Systems Inc. in moving data securely over internet networks. The deal is Oracle's biggest since it bought Sun Microsystems in 2010 for about $7 billion. The company bought nearly a dozen companies in 2012, including Eloqua Inc. for $810 million in December.