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Poor Customer Service

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Business Studies

We've all experienced poor customer service. The issue can be small like waiting in a long queue or bigger such as receiving a completely different service than expected. Whatever the case negative experiences leave us deeply unsatisfied and hesitant to use the same service again in the future. Keep reading to learn more about poor customer service and its negative consequences!

Poor Customer Service: Meaning

Poor customer service happens when customers receive an unpleasant, inadequate, or incorrect service from a business. This can result in dissatisfaction and put them off using the same service ever again. Appalling services also lead to negative reviews that might destroy the business's reputation.

Poor customer service refers to inadequate service that leads to customer dissatisfaction.

Common issues facing businesses with a 'bad service' image include the difficulty in attracting new customers, loss of revenues, or additional costs if customers request refunds.

Example of poor customer service

To illustrate poor customer service and its consequences, let's consider an example in a restaurant:

A restaurant fails to manage its bookings properly, which results in double bookings and incorrect timing of table availability. This causes customers to wait longer than expected. Instead of reassuring the waiting customers, the staff are unhelpful and inattentive. To add to the problem, the restaurant has trouble replenishing goods in time, leaving some customers waiting for nearly two hours without getting served before leaving.

Unsurprisingly, the restaurant receives a lot of complaints. Some customers left reviews that they would never return back to the restaurant and advised future diners not to go there. In time, it becomes harder for the business to attract new customers and now it is on the verge of closing down.

As you can see in the example above, poor customer service destroys the business's public image and results in business failures. The sad thing is that all these problems could have been avoided if the business has invested more in training its employees.

Causes of poor customer service

The causes of poor customers service can be internal or external. Here are the four most common ones:

Poor Customer Service: Businesses make too many promises

A business making too many promises can lead to high expectations among customers, meaning if the business is unable to deliver those promises, customers will be disappointed. As an example, if a business promises next-day delivery if customers order before 6pm, but cannot keep up with it consistently, consumers may be disappointed. To avoid poor customer service, companies should not make promises they cannot keep or invest more resources to ensure the promises are kept.

Poor Customer Service: Ineffective resource management

Even if a business has the resources to attain its promises, but is unable to manage its resources properly, it may not meet customers' expectations and cause customer dissatisfaction. For example, even if there is enough staff on a shift in a busy restaurant, if they are not managed properly or allocated to do the right duties it may cause customer disappointment, perhaps due to the slow service and unclean tables, among many others.

Poor Customer Service: External influences

Bad customer service can occur due to external influences. For example, if certain passengers are travelling with small children in an airplane, and they are loud, it can result in an unpleasant experience for passengers that are sitting nearby. It's not under the business's control, however, businesses could avoid this by making a seating plan dedicated to families with small children if they have enough resources.

Poor Customer Service: Insufficient communication

Businesses can disappoint customers if they do not communicate transparently with them. As an example, if a concert starts 30 minutes late and this is not communicated to the customers in advance, it can lead to customer disappointment. On the other hand, if the company has informed consumers in advance, it may not have caused as much disappointment as consumers will probably have expected the delay and may have arrived at the venue later.

Poor Customer Service, Causes of poor customer service, StudySmarterFigure 1. Causes of poor customer services, StudySmarter

Consequences of poor customer service

Poor customer service can lead to various consequences, from customers not returning to the business to a damaged reputation due to bad reviews. Let's have a look at some of them:

Customer dissatisfaction

If customers are dissatisfied with the business service, they may not return to buy from the business in the future. This can cause a loss of sales and incur more costs for acquiring new customers. The cost of new customer acquisition can be five times as expensive as retaining existing ones.1

Dissatisfied customers may also talk about their negative experiences to their family and friends or leave a review online. This leads to the next consequence which is the difficulty of attracting new customers.

The difficulty of attracting new customers

To grow, a business needs to expand its market and attract new customers. However, this may prove difficult if the company gets a bad name due to its horrendous customer experience. Without new customers, businesses are likely to fail because they can't make sufficient income to cover day-to-day expenses.

Poor Customer Service: Incurring additional costs

Another way for a business to grow is to retain existing customers. However, this is much harder to do if customers undergo such a horrendous service that they never want to experience it again. To gain back customers' trust, the company will need to pour a lot of money into repairing its reputation.

In cases where the business provides wrong information or sells customers incorrect or damaged objects, it also has to do a refund on customer requests. This incurs more costs for the company.

Poor Customer Service: Losing revenue

Overall, bad customer service can lead to businesses losing their revenue. Without enough income to sustain itself, the business will face the risk of closure.

Poor Customer Service: Poor reputation via word of mouth

Another negative outcome of bad customer service is poor reputation due to negative word of mouth.

Word of mouth is one of the most trusted forms of communication in business. It outperforms many popular marketing channels including TV commercials, print ads, and social media.2 People are more likely to purchase items recommended by friends and family or ones that have positive reviews on the Internet.

Word of mouth (WOM) is a form of spoken communication where people share information about your business. It is basically free advertising by customers who are satisfied with your products or services.

Negative experiences, however, can lead to bad word-of-mouth that destroys the company's reputation. This is because people often exhibit 'a negativity bias' - the tendency to remember unpleasant experiences vividly and gossip about them. In fact, according to research, if your business receives one negative review, it will take up to 40 positive customer experiences to undo it.2

Poor Customer Service, Consequences of poor customer service, StudySmarterFigure 2. Consequences of poor customer service, StudySmarter

Signs of poor customer service

In this section, we shall look at the signs of poor customer service. Here are three tell-tale signs customers may get a bad experience at a business:

Poor Customer Service: Inflexibility in regards to appointment times

Today people are living busy lives. They have jobs, families and many other personal commitments to attend to. Businesses that offer only a few appointment times per day can cause inconvenience to the customers and result in an overall negative experience. For example, if someone needs to get a COVID-19 test for their travel but there are only a few time slots in a nearby test centre, it can create a nuisance as they have to travel further away to get tested.

Poor Customer Service: Unfriendly welcome

The first thing a customer should experience when encountering a business is a friendly welcome. Suppose a customer enters a hotel that they have booked without being greeted or being smiled at, this is a sure sign of poor customer service. The unfriendly welcome can make customers feel offended and thus they may not return to the hotel. Rather than ignoring guests, the hotel receptionists should smile, greet them warmly and ask how they can help.

Poor Customer Service: Long wait times

Businesses that let customers wait a long time before getting assistance are bound to offer a bad service as well. When customers hold on to the phone or wait in-store for too long they can get frustrated and hang up or leave before using the service. This results in a loss of sales and negative word-of-mouth. To reduce customer wait times, the business should ensure sufficient staff and hire temporary workers during peak hours.

Overall, we can see that the causes of poor customer service can be both internal and external. Whatever the cause, poor customer service tends to cause a negative experience and result in people not using the service again. In the long run, this can lead to business failure. To stay in the market for a long time, it's important for companies to recognise signs of poor customer service and address them before it's too late.

Poor Customer Service - Key takeaways

  • Poor customer service refers to inadequate service that leads to customer dissatisfaction.
  • Poor customers service can be caused by businesses making too many promises, inefficient resource management, external influences, and insufficient communication.
  • The key consequences caused by poor customer service are customer dissatisfaction, difficulty to attract new customers, incurring additional costs, and losing revenue.
  • The three common signs of poor customer service include inflexibility in regard to appointment times, unfriendly welcome, and long wait times.

SOURCES

1. Taylor Landis, "Customer Retention Marketing vs. Customer Acquisition Marketing", outboundengine.com, 2021.

2. Jon Tan, "Why Word-Of-Mouth Is The BEST Marketing Tool You Have", referralcandy.com, 2015.

3. Andrew Thomas, "The Secret Ratio That Proves Why Customer Reviews Are So Important", Inc.com, 2022.

Poor Customer Service

Poor customer service refers to service that leads to customer dissatisfaction. Poor customer service can cause many problems such as the difficulty of attracting new customers, loss of revenue, as well as additional costs the business may incur if customers request refunds.

A few examples of poor customer service are insufficient booking management resulting in double booking and longer customer waiting times than expected. Another example is ineffective staff management resulting in delays, unclean facilities (eg. if we are referring to a catering business) and lack of customer support when needed.

Poor customer service can be the result of many things. The key ones are: businesses make too many promises, inefficient resource management, external influences and insufficient communication.

The key signs of bad customer service are inflexibility in regards to appointment times, unfriendly welcomes and long waiting times.

The key effects and impacts of poor customer service are customer dissatisfaction, difficulty to attract new customers, incurring additional costs and losing revenue.

Final Poor Customer Service Quiz

Question

What is the definition of poor customer service? 

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Answer

Poor customer service refers to the service that leads to customer dissatisfaction. 

Show question

Question

Can you give an example of poor customer service?

Show answer

Answer

For instance, if a restaurant fails to manage its bookings properly, this may result in double bookings as well as incorrect timing in regards to table availability, causing customers to wait longer than expected. 


Show question

Question

What are the main causes of poor customer service?

Show answer

Answer

The main causes of poor customer service are:

  • Businesses make too many promises.
  • Inefficient resource management.
  • External influences.
  • Insufficient communication.

Show question

Question

Can you give an example of when businesses are making too many promises to customers?

Show answer

Answer

For example, if a business promises next-day delivery if customers order before 6pm, but cannot keep up with it consistently, this can cause consumer dissatisfaction.

Show question

Question

What is meant by ineffective resource management?

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Answer

Ineffective resource management means that even if a business has the resources to attain its promises, if it is unable to manage its resources properly it may not meet customers' expectations and lead to customer dissatisfaction.

Show question

Question

Can you give an example of how external influences can contribute to poor customer service?

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Answer

For example, if in the airplane some passengers have small children who may be loud this can result in an unpleasant experience for customers that are sitting nearby. 

Show question

Question

What are the main consequences of poor customer service?

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Answer

The main consequences of poor customer service are: 

  • Customer dissatisfaction.
  • Difficulty of attracting new customers.
  • Encurring additional costs.
  • Losing revenue.

Show question

Question

What may be the consequences for a business if customers are dissatisfied with the service?

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Answer

If the customers are dissatisfied with service they may not return to buy from the business again. Dissatisfied customers may also express their dissatisfaction to their family and friends or online, which leads to the next consequence – the difficulty of attracting new customers, and a damaged businesses reputation.

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Question

How can poor customer service lead to the occurrence of additional costs?

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Answer

If the businesses have provided the wrong information to customers, or have sold a wrong or damaged item, it has to provide customers with refunds which can result in additional costs for a business.

Show question

Question

What may be the consequences if the business is struggling to attract new customers?

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Answer

The difficulty of attracting new customers can lead to business loss of revenue or even failures. 

Show question

Question

What are the key signs of poor customer service?

Show answer

Answer

The key signs of poor customer service are:

  • Inflexibility in regards to the appointment times.
  •  Unfriendly welcome.
  •  Long wait times.

Show question

Question

Can you give an example of when a business provides an unfriendly welcome to its customers?

Show answer

Answer

For example, if a customer enters a hotel that they have booked without being greeted or being smiled at, they may feel that the staff are rude.

Show question

Question

How can businesses reduce long waiting times experienced by customers?

Show answer

Answer

In order to reduce customer wait times, the business should manage its capacity and hire more staff if needed.

Show question

Question

Can you give an example of a long wait time experienced by consumers?

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Answer

For example, holding on the phone or in the store for more than two minutes. This may result in consumers hanging up the phone or leaving the store without receiving assistance.

Show question

Question

Can you give an example of when businesses have inflexibility with regard to appointment times?

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Answer

An example of business inflexibility regarding appointment times is if it is only possible to schedule appointments at certain times of the day and it is not possible to reschedule appointments on the same day or week. 

Show question

Question

Word of Mouth (WOM) advertising is ... advertising by customers who are satisfied with your products or services.

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Answer

free

Show question

Question

Negative experiences can lead to bad word-of-mouth that destroys the company's reputation.

Show answer

Answer

True

Show question

Question

Word-of-mouth is one of the most trusted forms of communication in business.


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Answer

True

Show question

Question

What happens if the business loses revenue due to bad customer service?

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Answer

Without falling revenues, the business won't be able to cover day-to-day operations and may have to shut down.

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Question

In cases where the business provides wrong information or sells customers incorrect or damaged objects, it may have to do a ... on customer requests.


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Answer

refund

Show question

Question

What would happen to a customer if customers are dissatisfied with its products or services?

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Answer

They may not return to buy from the business in the future

Show question

Question

Businesses can disappoint customers if they do not communicate transparently with them.


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Answer

True

Show question

Question

Businesses that let customers wait a long time before getting assistance are likely to offer bad service.


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Answer

True

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