March 19, 2024

Small Business Advice

Exceeding customer's expectations may not be as important as you thought

The main thing is to make sure your customers don't have a bad experience. Bad customer service has a much larger impact than great customer service.

Jerry Osteryoung | 12/22/2014

"Although customer service can do little to increase loyalty, it can (and typically does) do a great deal to undermine it." ~ Mathew Dixon, Karen Freeman and Nicholas Toman

FBMC Benefits Management

For so many years, business owners have believed the most important thing in creating loyal customers is exceeding their expectations. The theory is that customers who feel really good about your business become strong advocates for it, and those who are unhappy just quietly fade away.

In real life, however, we know that upset customers go out of their way to harm your business. In addition to deciding not to use your company again, they will also tell other people about their bad experience.

A few years ago, I got so fed up with the customer service at a cable company that I switched to a satellite TV service. Now, I use my experience with the cable company as examples in my speeches, and I am constantly recommending the satellite company to friends. I would have tolerated customer service that was less than stellar, but I will not put up with bad customer service.

The Customer Contact Council (CCC) recently conducted a study of 75,000 customer service events. They found that those who had a positive experience told 10 people, where those who had a negative experience told 10 or more. Ultimately, their findings showed that 25% of customers who have a positive experience will say positive things about the business. Alternatively, 63% of customers who have a bad experience will say negative things about the business. Clearly, bad customer service has a much larger impact than great customer service.

Customarily, studies like these use the Net Promoter Question, which is “How likely would you be to recommend our company to your friends or family?” They use this question to measure how effective a company’s customer service is, and this metric assumes that the most satisfied customers are the most loyal. However, the CCC study shows that just being satisfied does not make a customer loyal, and at the end of the day, loyalty is what every firm should be after.

So what does build loyalty if not customer satisfaction? I believe it is making it easy for the customer to get assistance with issues.

I recently bought a swinging chair for my patio from Overstock.com. When it arrived, the package was damaged, but when I called them up, they told me they would send out a new chair right away and how to handle the return of the damaged chair. It was all very easy, and I only had to speak with one person. This was my first experience with Overstock.com, and they made me a loyal customer on my first order.

The point I am making is that rather than focusing on exceeding customer expectations, a more important goal is to make it easy for customers to resolve problems. Many businesses fail their customers in this area. According to the CCC study, the primary culprits of bad customer service are having to re-explain an issue, expend large amounts of effort to explain a problem and being transferred.

Now go out and rethink your customer service experience. If it is not easy for customers to get your assistance and remedy problems, it may be time for an overhaul.

You can do this!


Jerry Osteryoung is a consultant to businesses - he has directly assisted over 3,000 firms. He is the Jim Moran Professor of Entrepreneurship (Emeritus) and Professor of Finance (Emeritus) at Florida State University. He was the founding Executive Director of The Jim Moran Institute and served in that position from 1995 through 2008. His newest book co-authored with Tim O'Brien, "If You Have Employees, You Really Need This Book," is an Amazon.com bestseller. He can be reached by e-mail at jerry.osteryoung@gmail.com.

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