CUSTOMER SERVICE - How Does Poor Customer Service Affect a Business?

by Lisa McQuerrey, Demand Media

Poor customer service can negatively impact a business in a variety of ways. This is especially true for small businesses that rely on repeat business and positive word-of-mouth advertising for its success. In addition to running the risk of alienating current customers with sub-standard service levels, chronically poor service can impact the business’ potential for attracting new customers as well.

Loss of Current Customers

Poor levels of customer service can cause you to lose even the most forgiving of customers. Consumers tend to do business with a company because it’s convenient, it’s a habit, or they’re looking for particular product or service that’s hard to find elsewhere. Even these stalwart customers can be turned away by inferior levels of service.

Loss of Potential Customers

Poor customer service has the potential to cost your business customers before they even buy a thing. When new patrons walk into a business and find themselves ignored, talked down to or subjected to long lines and uneducated employees, they might head for the door before they even reach for their wallets. Anything that makes it challenging or unpleasant for a person to do business with you should be cause for alarm, warning you that your service levels need improvement.

Loss of Future Customers

Customers who experience poor service levels often tell their friends and family members about the bad experience to warn them away. This will cost your business potential customers. People will have already formed a negative opinion of your business before ever setting foot in your door.

Loss of Reputation

A reputation for poor service can be hard to shake. It can keep other businesses from partnering or working with you. It also can turn away good employment candidates who might assume that if customers are treated poorly, employees are treated badly as well.

Loss of Employees

Even poor-performing employees don’t like to be yelled at or scorned by unpleased customers, which can result in high turnover among your workforce. it is costly and time consuming to constantly have to advertise for new workers, then screen and train them. Customers might start to wonder why your business can’t retain staff members and question the management practices of your business.

Loss of Profits

Poor customer service typically results in fewer customers, which translates into lower sales and profits for your business. This can initiate a vicious cycle in which a company tries to save money on staffing or customer service training, which makes service levels spiral downward even further. A company that can't keep pace with the financial demands of running a business faces increasing operating debt and ultimately, a loss of the business.

by Lisa McQuerrey, Demand Media