Bad customer service: What it really costs your small business (and how to fix it)
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Posted: Thu 5th Sep 2024
7 min read
As a small business owner, you know every opportunity counts. Yet many businesses underestimate the damage that bad customer service can cause – often until it's too late.
Growth strategies typically focus on creating new products, expanding a service or moving into a new market.
But sometimes the most effective way to increase profits is by improving how you treat the customers you already have.
This blog breaks down what we mean by bad customer service, the impact it has on a small business and how to improve the experiences you're giving your customers.
What is bad customer service?
Bad customer service is when a business fails to meet a customer's expectations. It can happen in a range of ways, such as through:
long waiting times
unhelpful responses
broken promises
issues that go unresolved
For a small business like yours, every interaction matters. A single negative experience can lead to you losing a customer, getting a bad review or even suffering damage to your reputation. And that can spread quickly.
Examples of poor customer service
Ignoring a customer's complaints
Taking a long time to respond to a query – or not responding at all
Staff who are unfriendly or dismissive
Breaking a promise you've made about the quality of service
Failing to follow up on a matter when the customer is expecting you to
Understanding and fixing these gaps is vital if your business is going to see success in the long term.
The hidden cost of poor customer service
When you lose a customer, you also miss out on a sale. But that's not all. Losing a customer often means losing future revenue, referrals and brand loyalty.
Here's how poor customer service eats into your bottom line:
Customer churn: Dissatisfied customers leave – and rarely come back.
Fewer referrals: Happy customers recommend you to other people, while unhappy ones warn them off.
Lower lifetime value: It costs five to seven times more to gain a new customer than to keep one you already have.
Reputational damage: Online reviews can make or break your brand, especially when you're a smaller business.
Even worse, many small businesses don't realise they're losing customers because of poor service – because dissatisfied customers often leave without saying a word.
Why good customer service is a growth strategy
While a large part of improving your customer service is about keeping people happy, it's also crucial to how your business grows in the future. This is due to the following factors:
More customer loyalty: Satisfied customers come back more frequently.
Further opportunities for upselling: Loyal customers are more open to new offers.
Cheaper marketing: A referral from a happy customer costs you nothing – but carries a lot of weight.
Resilience against price changes: Devoted customers stay with you, even when your prices go up.
VIDEO: How to master cross-selling and upselling
Discover what effective cross-selling and upselling are, understand their impact on your business and learn the skills you need to sell successfully:
What really good customer service looks like
Whether you're selling a product or a service, excellent customer support involves a number of different touchpoints. Here's where to focus your attention:
For product-based businesses
Fast, reliable delivery
Clear product information and easy instructions
Simple returns and exchanges policies
Responsive support by phone, email or live chat
For service-based businesses
Keeping promises and meeting deadlines
Delivering more than expected
Offering unexpected extras or bonuses
Following up after you've provided a service
Customers will pay more for a better experience. Delivering that consistently can set your small business apart.
How to improve if you've provided bad customer service
If your business has received complaints or had some negative reviews, don't worry! You can easily turn things around. Here's what to do:
1. Train your staff
Everyone inside your business who comes into contact with customers should understand how to handle complaints, show empathy and find ways to resolve issues. Regular customer service training can make all the difference.
2. Use technology smartly
Make your website mobile-friendly and easy to navigate. Set up a live chat or help centre (essentially an FAQs page) to answer common questions. Use automation to follow up on orders, feedback or abandoned carts.
3. Learn From customer feedback
Don't dismiss complaints – they can be invaluable! Each one tells you where your service can improve. Even better? Reach out to dissatisfied customers and sort out their problem. It's one of the fastest ways to rebuild trust.
4. Develop a culture that's focused on customers
Make customer service one of your business's main priorities. From sales to support, every team member should have everything they need to deliver a great experience.
Measuring customer service performance
You can't improve what you don't measure. Track metrics like:
customer satisfaction scores (CSAT)
Net Promoter Score (NPS)
response times
the rate at which people buy from you again
how long it takes to resolve complaints
Setting measurable targets keeps your team focused and accountable.
Be the brand customers love
Ask yourself:
How do I want customers to feel after interacting with us?
Would I recommend my own business if I were a customer?
Am I solving problems – or creating new ones?
If you're not sure, it may be time for a rethink.
Final thoughts
Customer service is one of the most powerful (and affordable) growth tools at your disposal.
When done right, it builds customer loyalty, encourages repeat business and earns you word-of-mouth referrals that money can't buy.
And when it's done poorly? It'll cost you far more than just a few lost sales.
If you're wondering how to improve your customer service, it's simple: listen, learn and level up. Every customer is an opportunity – not just for revenue, but for reputation.
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