European businesses admit customer service failings are hitting bottom line

The survey of senior European business leaders reveals that almost two thirds of European companies admit that a customer service failing has had a clear, significant impact on financial performance.

Despite customer service draining profits for many, one in four businesses have made no investment in service whatsoever in the last two years. In addition, less than a third of companies have a designated head of customer service on the board.

Only a quarter of business leaders said their company aims to exceed the expectations of their customers in the things that matter most to them. Indeed, employee and other internal issues are taking precedence over customer concerns in over 90 per cent of organisations .

The report also finds that for many companies engagement is still low-tech: 35 per cent of companies use social media to engage customers and just 14 per cent believe social media will become the most important method of engaging with customers – a quarter believe its importance in 2020 will be the same as it is now.

Allan Evans, Marketing, Sales and Clients Partner at BDO, said “The battle for customer growth and retention is going to be fierce in every market and sector. For many, it’s a fight for survival and competitive advantage is key. Companies are right to focus on quality, value, price and innovation but not to the detriment of service quality”.

“Boardrooms are blinkered – even with clear evidence that poor service is hindering profitability, businesses are failing to invest in, track or apportion sole responsibility for service. We’re calling for more companies to put service on the boardroom agenda and have a clearer focus on the link between service quality and the bottom line. Only then will companies be able to develop clear and effective strategies to make a return on service.”

Monica Woodley, the EIU’s Managing Editor, commented: “It’s clear many businesses find themselves in a service catch 22 situation. Companies intuitively seem to understand customer service impacts financial performance, but they are unsure how to make a clear link with the bottom line. So they don’t prioritise service at a board level because they don’t fully understand it and they don’t fully understand it, because they don’t prioritise it. More businesses need to take action now to break this service cycle or risk losing out to competitors.”

Jo Causon, Chief Executive of the Institute of Customer Service, added: “Financials tell the CEO where the organisation has been, but customer satisfaction data gives good indications of where it is going. Today’s findings confirm that companies must be vigilant about regularly reviewing the metrics they use to measure customer service. If they don’t, it is impossible for Boards to measure the impact that service makes to bottom line and ultimately take action. A genuinely aligned, joined-up organisation sees customer service as a key part of its strategy and sees service, and the delivery of service, in every aspect of its business.”