Poor Customer Service Costs UK Businesses £37 Billion

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Customer engagement startegy

UK businesses are losing billions of pounds each year as consumers continue to demonstrate their intolerance for bad customer experience. Technology has been driving fundamental changes to the global economy, leaving many companies struggling to hold onto even their most loyal customers.

The speed of transformation to a digital, connected economy has caught many businesses off guard—the changes seen over the past decade have been extraordinary—and survival will depend on a business’s ability to adapt to this new environment.

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Customer engagement may be a new term but as a concept it’s been around since the first merchants and banks of 3,000 years ago. Starting from the Industrial Revolution, the advancement of technology enabled mass production, creating a gap between producers and customers. Fast forward to 2018 and with the online economy thriving, this gap has only deepened. And while the technologies designed to fill this gap are out there, they are still not being properly deployed.

Good customer experience

Within the last decade, the global economy has been fundamentally changed by the employment of technologies to choose and purchase products, and vendors are at different stages in transforming their customer engagement strategy. This is a crucial time for businesses as they race to adapt to the rapidly evolving digital economy while keeping hold of their current customers. Those that don’t invest wisely will pay a significant price.

There is plenty of evidence to show that customers value a product more if it’s accompanied by a positive customer experience. Click To Tweet

Consumer surveys consistently show that complaints are on the rise with customers becoming increasingly fickle in the face of a bad experience. The Ombudsman Services report last year estimated that UK businesses lose about £37 billion every year due to bad customer service. When customers have a bad experience, around a third will respond by spending less on that brand and are more likely to switch to a rival. They are also more likely to complain to their friends, tweet, or leave bad online reviews. The report revealed that the most complained about industry is retail, followed by telecommunications, with energy, transport, and banking coming in third.

Poor customer service not only affects the consumer, but it is also demoralising for the staff on the other end. Systems that leave the customer on hold or require them to repeat information many times over mean that instead of helping serve customers, call centre staff spend most of their time apologising to irate callers and directing complaints. This isn’t helpful and is extremely costly, especially taking into account that many of these customers will not be coming back.

There is plenty of evidence to show that customers value a product more if it’s accompanied by a positive customer experience. This is a trend that will continue and industry analysts say that spending on customer engagement projects is forecast to increase significantly as its influence and value become increasingly obvious.

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Originally published Jun 29, 2018, updated Jan 17, 2023

2 thoughts on “Poor Customer Service Costs UK Businesses £37 Billion

  1. Companies don’t realize that their customers are smarter than ever before. They no longer compare a company to its competitor, but to any great service they have. Service is no longer an option, it’s an expectation. If companies don’t figure that out, that £37 billion will continue to grow.

    1. Completely agree with you Shep. Our mission at RingCentral is to help organisations provide the service and experience their customers now expect through modern and flexible communication solutions. We work with organisations across all industries to free them from technological barriers and help them focus on customers.

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