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Executive Summary
We studied more than a thousand businesses and what we found is disturbing.
In this white paper, we will show you the unvarnished results and explain why it is costing you money and customers. We will also provide you a solution that will set your business apart from your competitors and attract (and retain) customers.
In a digitally-connected world, customers expect nearly instant answers to their questions regardless of which channel they use to get it. In this key area of customer service, most businesses are failing.
KEY FINDINGS:
- More than 95% of the companies surveyed delivered a customer experience that most customers would consider “average to awful.”
- Less than 1% of companies have excellent omnichannel customer service
- Less than 1% are engaging with their customers on all channels
- Less than 3% of companies asked for feedback on how to improve their customer service.
- Less than 2% of companies are using all customer channels, including email, phone, live chat, and social media.
About the Study
The study started with 1,200 Shopify stores broken into subcategories based on the five largest Shopify categories:
- Luxury Goods & Jewelry
- Consumer Electronics
- Cosmetics
- Sporting Goods
- Apparel & Fashion
Companies were both big and small, but together represented more than $10 billion in aggregate sales.
Each subcategory had a minimum of 200 stores, which were then ranked in terms of their omnichannel customer experience. Secret shoppers surveyed each company’s website to identify all channels of contact (email, phone, live chat, social media, etc.). Then, a customer service inquiry was initiated through each point of contact during daytime business hours and a score was generated based on the response time.
Companies were also given points for following up to make sure inquiries were resolved and if the company solicited feedback on the customer service process.
The Case for Omnichannel Customer Service
Customers today communicate in all sorts of ways. They now have a “digital first” mentality and expect a near immediate response. Social, apps, text, chatbots, and email have become the first point of contact for the majority of consumers. 70% of customers say that “connected processes” are very important to winning their business.1
Customers expect to get the information they want, when they want it, and how they want it. If you’re not providing omnichannel customer service, you are losing sales.
“It’s not just about serving customers in these environments. Your customers are everywhere,” Andy Steur, Co-Founder & CEO of Helpware said. “The marketing funnel doesn’t stop at the end of the purchase funnel. That’s the beginning of customer life cycle management.”
Customers expect a consistent experience across multiple channels, whether it’s taking to someone of the phone, visiting your website, or asking a question on social media. In fact, 73% of customers say they are likely to switch brands if they don’t get that consistent customer service across channels and platforms.2
“If you’re not tending to that customer base,” Steur said. “You are not hearing what they have to say. You are missing an opportunity to create a solution and give them incentive to come back.”
While customer service is expensive to do yourself, it’s critical to your business. In our study, it’s clear most businesses are failing.
What We Found
“Companies spend a lot of time talking about the customer journey,” Steur noted. “But often when they acquire a customer, they fumble.” That message was consistent through all the survey results. Time and again companies failed to execute even basic customer support functions.
Overall, only a handful of companies received Excellent omnichannel customer service rating. This represents less than 1% of all companies surveyed. 31% received an average score and the remaining 68% rated an awful score.
“It cost an estimated $250 billion dollars in advertising revenue to acquire the customers for these companies,” Steur said. “It seems counter-productive to ignore them or treat them poorly once they purchase. Acquiring the customers is the tip of the iceberg. The customer base is what’s under the surface of the water. If you erode that base, the whole thing can sink.”
That’s exactly what the results showed. The overwhelming majority of companies were missing opportunities to retain customers, gain repeat business, and grow loyal advocates.
“In order for these companies to generate billions of dollars in revenue, they spent a lot of money on the front end to acquire these customers,” Steur said. “It doesn’t make sense to let those customers fall through a leaky bucket.”
Customer Service
There’s some good and bad news in this area. 66% of companies earned an Excellent score in communications in at least one channel. However, they also received an awful score in at least one other omnichannel service category. Sporting Good and Consumer Electronics had the highest aggregate scores.
Omnichannel Customer Communication
Few companies are using omnichannel communications tools to interact with customers. Less than 2% were using email, phone, live chat, and social media. The Luxury Goods and Jewelry category scored the best, but only 4.7% of companies in that category reported using all four channels of communication.
This represents a significant amount of opportunity, and a significant competitive advantage for businesses that fix this problem.
Response Times
When it came to response times, scores varied dramatically depending on the channel used. 49% of businesses ranked at the top of the scale, scoring 5 on a 1 to 5 scale when it came to phone inquiries. When responding by email, 33% received top scores, social media response rates dropped to 23%, and only 6.6% of businesses had top scores in live chat.
The Sporting Goods category had the best response time scores across all of the categories surveyed.
Follow-up and Feedback
Only 31 of 1,251-253 of the stores studied followed up to find out if the reported issue had been resolved. That’s less than 3%.
Follow-up for problem resolution was poorest in the Cosmetics category, where none of the 204 companies in the study inquired. Consumer Electronics companies ranked the best, but only 6.7% (15 of 253) of companies did follow-up contacts. Sporting Goods (8 of 348), Luxury Goods and Jewelry (4 of 242), and Apparel and Fashion stores (3 of 204) scored poorly as well.
Keep in mind the survey didn’t score better for a favorable response, but awarded points for any follow-up contact to determine if a problem had been resolved.
When it came to feedback on the customer support process itself, more companies asked for feedback on the process than asked about whether the problem was solved. Still, only 3.5% of companies asked for feedback on the customer support process.
Scoring by Category
There was also a wide range of overall scores by category. The highest scores were in Consumer Electronics, while the lowest scores were in Cosmetics. Only 12 of the companies received an overall score above 20.
Companies scoring 20 points or more overall by category
- Consumer Electronics (3)
- Cosmetics (0)
- Luxury Goods & Jewelry (5)
- Sporting Goods (4)
- Apparel & Fashion (0)
Failing Costs You More Than Just Your Current Customers
A bad customer experience results in 59% of your customers leaving.3 55% of those customers end up going to a competitor.3
People don’t just stop doing business with you when they have a bad experience. They tell others. Social media makes it easy to share stories. We’ve all seen examples of bad customer service that went viral. It’s a nightmare for businesses – whether the customer was justified or not. Not only do you lose current customers, but you scare away potential new customers.
The flip side is true as well and here lies the opportunity. 52% of consumers say they will continue to do business with you if they have a positive customer experience, and 51% will recommend your company to others.4 That means getting your best customers to do your marketing for you.
“Taking revenue and instead of spending it on ad networks, invest in your customers,” said Steur. “By investing in your customers, they become your network and your champions.” That’s what true influencer marketing is all about.
92% of consumers say they trust referrals from people they know.5 Their friends are an unbiased source that will always outrank your marketing efforts. Once that friend does business with you, the lifetime value for that new referral customer is 16% higher than non-referrals and churn reduces by 18%.6
Word of mouth is still one of the best forms of advertising, but it rarely happens by accident anymore.
Returning Business
The key to growth for most businesses is getting customers to continue to purchase and stay as customers. Poor customer service is a sure way to drive them away.
Keeping them, however, pays huge dividends in a number of ways:
- It costs 5-25 times as much to attract new customers versus keeping an existing one7
- Existing customers are 50% more likely to try new products or services8
- Returning customers spend, on average, 31% more than new customers8
- Increasing customer retention rates by 5% increases profits by a minimum of 25%7
“Customer support is an opportunity to engage your customer again,” said Andy Steur, Co-Founder & CEO of Helpware. “That engagement reinforces your value and can make them a repeat customer. For e-commerce sites, it means more business. Returning customers spend, on average, 31% more than new customers at retail sites.8
For SaaS (Software as a service) companies, it’s that engagement and value that keeps them on the platform longer.
Recommendations
- Review your own customer communications channels and note what’s lacking from first contact, to problem resolution, to process feedback (Email, Live Chat, Phone, Social Media, App)
- Conduct your own “secret shopper” campaign and reach out on every channel to see how your team responds
- White board your customer journey throughout their life cycle and every touch point in your system
- Create an infrastructure that allows for shared data from your customer service team, your product development team, and marketing teams
- Empower your team members to solve problems quickly and incentive customers to return and spread the word
- Consider outsourcing your customer support, marketing, and back end support to minimize people costs and increase efficiency
“In this digital transformation,” said Steur. “It’s critical to understand life cycle management. Customer support is not a cost center. It’s part of a marketing department to grow your business.”
How did your company rank?
To find out how your company ranked or to get the full data set, drop us an email.
About Helpware
Helpware specializes in customer service, marketing support, accounting support, and sales operations/on-boarding customer support. It is “outsourcing done right.”
We call it “embedding” where we provide you with resources that are 100% dedicated to your business. We embed our team into your company’s workflow. You have daily one-to-one communication with your resources, just like you would with any of your team members, and we become an extension of your team.
Our goal is to free-up your team’s time so they can focus on high-value tasks.
Methodology
Selection
More than 1,000 companies that use Shopify were sampled from each of the five largest categories on Shopify. Companies were sorted by category in groups of 200-300.
Contact Information
Contact information for each company was pulled from company websites.
Email Test
Customer service inquiry was sent via email between 9am-1pm PT. One email attempt was made per company.
Phone Test
Customer service inquiry was sent via phone between 9am-1pm PT. A dialpad was used so the incoming phone number was a US number. One phone call was made per company.
Social Media Test
A customer service inquiry was sent via all social channels listed on the company website, mostly Facebook. One contact attempt was made per company.
Customer Care Follow up Test
A company received points for this test if the company followed up with the customer to ensure that their inquiry was completed.
CSAT (Customer Satisfaction Test)
A company received points for this test if the company followed up with the customer to ask for feedback on the customer service process.
Scoring
Businesses were awarded a score on a 1 to 5 scale with 5 being the highest for the following categories:
- Email Support
- Phone Support
- Facebook / Customer Service Agent
- Live Chat
- Customer Care Follow up
- CSAT (Customer Satisfaction Test) process feedback
Citations
1 Salesforce Research. Across All Customer Touch Points, Companies Face a New Connected Mandate. Retrieved from https://www.salesforce.com/research/customer-touch-points/?d=cta-body-promo-28
2 Rosler, Peter. Is Your Business Communicating with Customers in the Right Way in the Digital Age? Retrieved from https://www.inc.com/peter-roesler/is-your-business-communicating-with-customers-in-t.html
3 James, Daniel. 59% of Customers Don’t Return After a Bad Customer Service Experience. Retrieved from https://www.business2community.com/customer-experience/59-of-customers-dont-return-after-a-bad-customer-service-experience-01306480
4 Dimensional Research. What is the Impact of Customer Service on Lifetime Customer Value. Retrieved from https://www.zendesk.com/resources/customer-service-and-lifetime-customer-value/
5 Nielsen. Personal Recommendations and Consumer Opinions Posted Online are the Most Trusted Forms of Advertising Globally. Retrieved from http://www.nielsen.com/content/dam/corporate/us/en/newswire/uploads/2009/07/pr_global-study_07709.pdf
6 Wharton School of Business. Referral Programs and Customer Value. Retrieved from https://www.ericstownsendmarketing.com/wp-content/uploads/2010/09/referral_programs1.pdf
7 Harvard Business Journal. The Value of Keeping Customers. Retrieved from https://hbr.org/2014/10/the-value-of-keeping-the-right-customers
8 Saleh, Khalid. Customer Acquisition Vs. Retention Costs. Retrieved from https://www.invespcro.com/blog/customer-acquisition-retention/