Poor Customer Service: More Costly Than You Think

By Bob Krummert

Let’s skip the usual platitudes about customer service and jump straight to the relevant risk/reward proposition: Two new surveys have uncovered the drastic effect poor service now has on restaurant operators. It turns out that disgruntled customers can cost you a lot more than merely losing them as repeat customers.

First, the reward. According to a survey that appeared in the American Express Global Customer Service Barometer, customers have become so dissatisfied they’re willing to pay, on average, a nine percent premium to businesses that treat them right.

“Especially in these this tight economic environment, consumers are focused on getting good value for their money,” says AmEx’s Jim Bush. “Many consumers say companies haven’t done enough to improve their approach to service in this economy, and yet it’s clear they’re willing to spend more with those that deliver excellent service—suggesting substantial growth opportunities for businesses that get customer service right.”

There it is—a competitive edge you get by simply providing good service. Presumably, your restaurant has been doing this all along.

Now let’s consider the risk part of the equation. It’s true that customers are pleased by competent service and seem willing to pay a little extra when they get it. That’s the upside. On the downside, poor service now produces two negatives. Not only will displeased customers not eat in your restaurant again; they’ll also broadcast details of their unsatisfactory experience far and wide via social media.

And there are a lot of displeased customers out there. Their high level of dissatisfaction is the big takeaway from customer service management firm Empathica’s recent survey of 11,000 U.S. consumers. The company found that in the second quarter of 2010, 62 percent of all consumers said customer service was getting worse. That was a big change over the in-itself-staggering 55 percent who said they felt this way in the firm’s first quarter survey. Read more about that study here.

These surveys produced other key findings that relate to customer service. One applies to future spending decisions. The Amex study found that your customers are much more likely to give your restaurant repeat business (81 percent) if they have a good service experience than to never do business with you again after a poor one (52 percent.)

Another is how well your restaurant’s reputation fares in online reviews. AmEx found that nearly half (48 percent) of consumers always or often use online reviews to see what others have to say about a company’s service reputation. And here’s the kicker: customers give greater credence to negative online reviews than positive ones (57 percent and 48 percent, respectively).

“The internet has made service quality more transparent then ever before,” Bush points out. “In the online space, positive recommendations are important, but people often give more weight to the negative. Because consumers can broadcast their views so widely online, each and every service interaction a company has with its customers becomes more crucial. Developing relationships with customers, anticipating their needs and resolving any issues quickly and courteously can help make the difference.”

These surveys are telling operators there is a lot of bad customer service out there and that news about it spreads fast on the Internet. So what can you do to make sure your customers have a positive experience at your restaurant? We suggest following the advice of Susan Reilly Salgado, managing director of ace restaurateur Danny Meyer’s learning business, Hospitality Quotient.

“Service is all about the technical delivery of the product,” she says, “while hospitality is about how guests feel during that transaction. Hospitality happens when guests believe you are on their side.”

Do your guests feel like your waitstaff is on their side? If so, service is so bad elsewhere that your place is really going to stand out, and customers will use social media to get the word out that it does.