Ever wondered, what a bad customer service costs your business?

1. Costs of Dissatisfied Customers
By Nitin Binhani
nitinbinhani@gmail.com
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2. Agenda
Are Your Customers Raving or Cursing You?
Why Customers Defect?
Effects of Customer Defections or Churn

3. Are Your Customers Raving or Cursing You?
Satisfied
Customer
• A dissatisfied customer will share his/her bad experience to 10-20 people. In contrast, a
satisfied shares with only 2-3.
• In social media, s/he could influence up to 3000. Remember, at least 70% of buying depends
on the ‘word of mouth’ factor.
• As many as 95% of dissatisfied customers won’t complain to you, but would simply leave
and never come back.
Various Sources
Dissatisfied
Customer
vs.

4. Why Customers Defect?
When
• Thus, “price” is not the main reason for customer churn; it is actually the poor quality of
customer service.
• Over 70%of buying experiences are based on, how the customer feels they’re being treated.
• A customer is 4 times more likely to defect to a competitor, if the problem is service related
than price or product related.
• 95%of dissatisfied customers won’t complain, but would leave & never come back.
• 55%of customers would in fact pay extra for better service.
Various Sources
• 17% will leave you after a single service mishap
• 40% will leave you after two blunders
• 28% will leave you after a third mistake
Why

5. Effects of Customer Defection or Churn
• Most corporations lose 50% of their customer base within 5 years, thereby risking its very
survival.
• It costs 5 – 7 times more to acquire a new customer than retain an existing one. Average
conversion rate is mere 1%from all promotions sent to new prospects.
• The probability of selling to an existing customer is 60 – 70% higher, as compared to selling
to a new prospect, which is a mere 5-20%.
• In comparison, ‘loyal’ customers are worth 10 times more than their first purchase.
Various Sources
• High ‘new customer’ acquisition costs
• Low conversion rates
• Long conversion cycle
• Nil profits / loss due to high costs & low revenues

6. Thank You
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