The cost of bad customer service

There are two types of costs that can be attributed to ‘BAD SERVICE’:

VISIBLE costs; for example:

• cost of complaints handling
• ombudsman issues and compensation
• re-work
• cost of incorrect invoicing
• commission paid to sales people for services later cancelled or compensated
• absenteeism and staff attrition
• Poor ‘word of mouth’ requiring increased defensive advertising resulting in higher customer acquisition costs etc…
  

And, INVISIBLE costs, for example:

• multiple contacts and hand-offs to deal with a single issue or complaint driving increased Customer Service FTE
• hidden Activities to deal with poor service problems
• lost sales due to lack of confidence in company service standards and ability to meet requirements
• lost revenue based the lifetime value of the customer when ‘churn’ is caused by service issues,etc…

The saying is: Quality is Free. Investing in Service Quality makes good business sen$e.