Topic(s): Employee Engagement Customer Experience CX & Business Strategy

3 customer service mistakes and why they hurt your company’s profitability

For many companies, the customer service desk is the beating heart of customer interactions. No matter the industry you’re in, your customer service desk needs to be reliable, agile, and solution-driven. Still, it is often seen as a department that eats up money, rather than one that can boost profitability.

But how exactly can you make your customer service desk more profitable? In this blog post, we’ll look at some underlying issues and mistakes that prevent your customer team from doing their job in the best possible way. Improving these pain points will help you turn customer service into customer success.

 

Press 1 for a frustrating experience

To be honest, no one really looks forward to having to contact customer service. When you think about it, that is weird. Organizations hire agents to help customers, still, it seems to be one of the most frustrating experiences a customer can have.

But what if we told you that often the agent isn’t the real issue? Let’s reverse engineer the ‘frustrating customer service desk experience’. For this, we would like to look at a concept called the service-profit chain. Shortly put it says that if you have the right processes in place, your people are able to do their jobs better, and so they will make customers happy. In turn, those customers will come back for more, boosting your profitability.

So if you want to make customer service more successful, you need to ask yourself how are your people doing? Do they feel supported? Do they have the right tools to do their job? And there often lies the issue. A lot of the time the right processes aren’t in place. Many decisions that are taken regarding customer service to make it more profitable, have the opposite effect, and will leave you losing money.

 

Mistake #1: Minimizing complaint handling time

When you’re working at or are in charge of a customer service desk, one of your KPIs will be ‘number of closed tickets’. To hit that target, customer service gets incentives to minimize complaint handling time. This defeats the purpose of the customer service desk, as your agents are there to help customers, not brush them off as quickly as possible without a satisfying solution.

Why not encourage your agents to listen to customers instead? Only when they know the full story, they get a chance to solve a customer issue. A bad experience turned into a good one will have a positive effect on customer satisfaction. And satisfied customers make you money, whereas disgruntled customers will churn. According to Heskett, dissatisfied customers register a 30% higher intent to leave than satisfied customers. And Murphy & Murphy estimate that a 2% increase in customer retention has the same effect on profits as cutting the costs by 10%.

 

Mistake #2: Cutting down on agents

A lot of the time, customer service desks are either understaffed, or they are one of the first departments in which people are laid off to reduce payroll costs. This leaves a small team to handle a lot of complaints, leading to high workplace pressure, which increases employee turnover. This affects your profitability in two ways, because:

  • Constantly having to hire, replace, and train new employees is a very expensive process. As a 2017 report by Employee Benefits News stated: “It costs employers 33% of a worker's annual salary to hire a replacement if that worker leaves. In dollar figures, the replacement cost is $15,000 per person for an employee earning a median salary of $45,000 a year.”
  • Stress in the workplace leads to a decrease in profitability, and according to Fred Reichheld, “in most service jobs, the real cost of turnover is the loss of productivity and decreased customer satisfaction.

We know that investing in employees isn’t the quick-and-dirty way to generate revenue. However, in the short-term, it can heavily impact employee retention and once you have a solid team, the revenue will follow too.

 

Mistake #3: Implementing bad tech

As an attempt to take away pressure from agents and decrease waiting times, many companies implement AI bots on their website that should be able to take care of simple issues. If they don’t work, however, this is a recipe for bad customer service. Not only do chatbots feel more impersonal, but they can also be annoying when they do not get your question and point you in the wrong direction time and again. When a customer is already dissatisfied, you want to make their life easier, not harder.

The same goes for IVR menus. In theory, an IVR menu makes sure that you end up with the right person for your question. In practice, they are often tedious, contain too many steps, and leave you pressing ‘other’ because there isn’t an option for your particular issue. And then we’re not even talking yet about the long waiting times or the fact that the agent isn’t able to help you after all.

How does this impact your bottom line? According to Kolsky, 84% of consumers are frustrated when the agent does not have information. Kolsky also found that 66% of consumers who switched brands did so because of poor service. So, frustration leads to churn, and churn hurts your growth.

 

To wrap it all up

Everyone has a track record of bad experiences with customer service desks. Still, the agents deserve more credit than they get. Our frustrations as a customer can be linked to a multitude of defective processes. The truth is that agents often lack the tools and support to do their job properly.

If you support your agents, be it with training, tech, or more troops, they will be happier to do their job. This will lead to lower turnover and higher employee satisfaction. In turn, they will deliver better service, leading to happy customers. And happy customers come back for more (repeat purchase), stay longer (retention), and are more likely to recommend you to peers (referral). And that is where profit is made.