Ultimate Software's Blog

The High Cost of Low Service

A couple weeks ago, I discussed the importance of customer service and shared Kelton’s 2016 findings that nearly 7 out of 10 HR decision makers reported they’ve regretted their HCM provider choice, predominantly due to poor service. The study concluded that the majority of respondents agreed that customer service is as important as or more important than product functionality, but only 35% believe their current provider is doing well with partnership. It’s clear that organizations aren’t meeting their consumers’ expectations, but how much is customer dissatisfaction really costing U.S. businesses?

It turns out, about $62 billion per year in lost sales.

Lost sales from existing customers.

That’s $20 billion per year more than in 2013—about a 51% increase in just three years. The 2016 NewVoiceMedia study found that nearly half of respondents reported switching to competitors explicitly due to service concerns, and most of those had switched more than once.

Changing workforce demographics may be partly responsible for the significant uptick in direct revenue loss. Millennials ranked themselves three times more likely to switch providers based on service issues than baby boomers did, so it seems younger customers are simply less willing to put up with poor service. But what exactly constitutes poor service? According to the study, the most common reasons for switching were: feeling unappreciated, unhelpful/rude staff, being passed around to multiple people, not being able to speak to a live person, not being able to get answers, and being put on hold for too long.

It’s worth noting that the above figure does not include additional revenue loss stemming from negative word-of-mouth and price sensitivity. Moreover, 60% of people share their negative experiences with other consumers, often on social media and online review sites with a large potential reach. Also consider that approximately two-thirds of consumers are willing to pay substantially more for products if they believe the company provides excellent customer service.

Great service significantly impacts the bottom line, nurturing loyal customers who are easy to retain and inclined to naturally promote their experiences to peers. At Ultimate Software, we enjoy these benefits as a direct result of our commitment to putting people first. As part of that commitment, 84% of our employees are focused on improving the customer experience, and we prioritize service initiatives—such as our unique collaborative support model, which significantly decreased inquiry resolution time for customers.

In an industry where most respondents have had service issues with their current providers, we stand proud with a 95% customer satisfaction rate. We place a high value on our customers, and it shows. Our customers value us in return.