Bad Email Etiquette Costs Businesses Real Money
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Bad Email Etiquette Costs Businesses Real Money 2017

Many checking accounts offer overdraft protection so that if you bounce a check, they cover it until you can make it up. While it’s normal to pay an overdraft fee once in a while if you’re between paychecks, over time, these fees stack up. The average overdraft fee in 2020 was $32.11, according to a MoneyRates.com survey. Social Media Etiquette Tips. You may never be in a position to lose your job or a five-figure settlement because of a tweet, but proper online etiquette is critical for many reasons. Even your personal accounts can be visible to people you don’t know, and your posts and shares, once public, are on the record for a long time. All these options have a tangible cost, and if the hiring timeline slips the cost goes up. It’s important to note here that in-house recruitment teams generally have longer hiring times than agencies or recruitment process outsourcing solutions, on average 12-16 weeks, due to a lack of extensive databases and wider industry contacts. I did a count back in August at our business. We had 169 Reply All emails to all the entire office staff (35 email users). Averaged it against the length of the email, reading speed, average burdened wage, etc. And we were looking at a cost of $175,000/year!!!

Most people know that a bad customer experience will eat away at their company’s revenue. But the price tag attached to those bad experiences is rarely calculated.

It’s difficult - if not impossible - to determine the cost of a bad reputation, but VisionCritical estimates the overall impact of bad customer experiences in the United States is more than $537 billion.

Just typing that feels painful!

Bad customer experience is clearly a common problem, but how does it translate to your small business, and what can you do about it?

PC: VisionCritical

How does a bad customer experience affect revenue?

When a customer has a bad experience with your company, you could lose their business. But the problem doesn’t end there.

Word of mouth is powerful. One unresolved customer complaint can spider web across the Internet like a crack in the windshield of your reputation.

It’s frustrating to spend time and resources fixing issues (especially if it’s the customer’s fault), but allowing problems to go unresolved will undoubtedly result in a costly negative review, either in person or online.

Do you know how powerful reviews are?

93 percent of consumers read online reviews
80 percent of customers won’t buy from companies with negative reviews

Consumers generally trust online reviews as much as recommendations from friends and family. For small business owners who rely on their reputation for providing a great customer experience, bad reviews can be financially devastating.

How? Let’s look at a few industries.

Accounting

Accountants are asked to personally adhere to the highest standards of ethics, but they’re also held responsible for the actions of their current and former employers. You also want to trust your accountant before you decide to work with them.

Perhaps the strongest example of how devastating a loss of trust can be in the accounting industry comes from the downfall of the largest accounting firm in the world, Arthur Andersen LLP.

After being convicted of obstruction of justice in 2002 for shredding and doctoring documents related to Enron audits, the company lost all 1,200 clients, 90% of its employees, and ceased auditing public companies.

They were responsible for an experience that hurt thousands of people. The world found out, and no one trusted them anymore.

The same can happen on a small scale, too. If you make a bad decision that hurts a client, they’ll tell a friend (or several) and neither will work with you.

House Cleaning Services

A common challenge for cleaning companies is the average customer churn rate of 55%. That means they’re losing over half their customers every year.

Since acquiring a new customer costs 5X-25X times more than selling to your existing base, poor customer experiences can easily keep your cleaning service from growing.

Here’s some math to illustrate the impact.

Let’s say you have 100 customers, and each is worth $150/mo, or $1,800/yr. This year you’re going to lose 55 of them, which is $99,000/yr in lost revenue.

The worst part is you’ll spend tens of thousands of dollars to replace the customers you lost, only to lose half of them again next year. It’s a terrible cycle that makes growing difficult.

Restaurants

A study by Harvard Business School suggests restaurants could experience a 9% drop in annual revenue by losing just one star on Yelp. That equates to an 18% difference in revenue between a 3-star and a 5-star rating.

Bad Email Etiquette Costs Businesses Real Money

In an industry with notoriously tight margins, it can be expensive to ensure every customer leaves happy. But restaurants can’t afford to skimp on satisfaction.

A business earning $1 million in annual revenue would lose $180,000 each year if their earnings fell by 18%. That could be the difference between success and bankruptcy.

Hotels

Hotels are incredibly vulnerable to poor reviews. A bad experience can ruin an expensive family vacation, derail a business deal, or even cause health problems. And when those experiences happen, the victims are sure to let the world know.

PC: HospitalityNet

We’re also now seeing reputation dictate room rates. While this can help businesses remain competitive in a landscape that’s seeing increased pressure from Airbnb, several bad reviews related to customer experience can push already slim margins into negative territory.

No one wants that.

Construction and Contracting

A construction company’s revenue is heavily tied to reputation. When consumers and other business owners are shelling out five, six, even seven figures for a contract, they demand to know the work will be done well.

Unfortunately, contracting carries a high price tag and comes with lofty expectations, so when customers are dissatisfied, they may take their complaints to the internet.

According to one defamation suit filed by a construction company against a negative reviewer, the cost of the company’s soiled reputation was worth approximately $750,000.

Ecommerce

The impact of a bad customer experience is easy to calculate for ecommerce businesses (or anyone else selling products online).

80% of people won’t buy from a company with bad reviews. So a company selling five $100 products each day would miss out on $400 daily if four out of five customers left because of bad reviews. These losses would quickly add up to $146,000 in lost revenue annually.

PC: SuperOffice

Hiring and Retention

Most people think of the cost of a bad customer experience in terms of lost business or refunds. That's what we’re focusing on in this article, too, but it also affects who wants to work for you. More than 70% of U.S. workers will not apply for a job at a company with negative press.

The lack of available workers can drive up hiring and retention costs. Companies with a bad reputation will end up paying 21% more in salaries to keep employees on board.

If you think replacing them would be cheaper, one study calculated the cost of replacing an employee earning $50,000 annually to be $10,000,or 20% of their salary.

6 Steps to Protect Your Business from Bad Experiences

The loss of revenue from bad customer experiences and reviews can’t be ignored. Sometimes bad experiences are hard to avoid, but by following these six steps, you can build a digital fortress around your business’s reputation.

1. Plan ahead.

Perform a risk analysis of your business to identify potential customer service problems that could lead to negative reviews or customer defections.

Areas of focus will vary depending upon your industry, but you should consider the following:

Customer inquiries
Negative reviews
Customer service
Billing errors
Property da