I was interested to read about a BDO report, (read it here) written by the Economist Intelligence Unit which, for the first time has unveiled the impact of poor customer service on businesses worldwide.

The report shows that businesses admit widespread customer service failings are hitting their bottom line:

  • Nearly two thirds of companies worldwide find bottom lines significantly hit by poor service
  • One in four companies have failed to invest in customer service in the past two years

The survey of more than 800 senior business leaders around the world reveals that almost two thirds (59%) of all companies admit that a customer service failing has had a clear, significant impact on financial performance.

The survey also revealed:

  • ghandiA quarter have lost customers as a result of poor customer service (27%)
  • Service failings have hit the share price of one in seven companies (15%)
  • 23% have had to compensate customers due to poor service
  • 84% of the companies, surveyed believe that customer service is ‘very’ or ‘moderately’ important to their financial performance, but only a third of companies (36%) currently have a strategy to link service and bottom line.
  • Despite customer service draining profits for many, one in four (27%) businesses have made no investment in service whatsoever in the last two years. In addition, less than a third of companies (28%) have a designated head of customer service on the board.
  • Only a quarter (29%) of business leaders feel being seen to be customer focused is key to career progression. Indeed, employee and other internal issues are taking precedence over customer concerns in nine in ten organisations (89%).

The report also finds that for many companies engagement is still low-tech: 36% of companies use social media to engage customers and just 15% believe social media will become the most important method of engaging with customers – more than a quarter believe its importance in 2020 will be the same as it is now.

Allan Evans, Global Head of Clients and Markets at BDO, said “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, the 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.”


Accountants are ideally placed to help businesses in this area. Those that attended the RAS Boot Camps in the 1990s have been busily imparting to their clients (and other firms’ clients too) everything they learned about customer service. As someone once said “Most businesses don’t actually want an accountant. They want someone to help them become more successful and profitable.”

To me, it makes perfect sense to provide the best service you can to your customers. This will result in the business being more successful and profitable. In February’s Better Business Focus publication, there’s a story about a young manager called Zhang Ruimin took who, 30 years ago, took control of a loss-making fridge factory in Qingdao, China. He was appalled at the low standards of workmanship and quality in its products.  In a dramatic expression of his wrath he gave out sledgehammers and asked factory workers to join him in smashing 76 faulty fridges in front of a large group of shocked employees.

The message was clear – poor quality was no longer acceptable. Since then Zhang has focused on quality, innovation and branding in order to build the company, Haier, into the largest appliance maker in the world with a turnover of over $26billion.  One of elements of Haier’s success was learning from customers. For 4 years running the company has been voted the World’s No. 1 home appliance retailer.  There’s a shed-load of customer satisfaction emerging from China.

Email me at mpollins@bizezia.com and I’ll send you the Better Business Focus publication when it is available.

Martin Pollins
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