Calculating the Cost of Customer Neglect

Understanding and tackling “the $75 Billion problem” plaguing U.S. Businesses

Customer experience is in the midst of a crisis. An existential threat to businesses and brands. Although this threat is playing out in real-time and in plain sight, it is largely invisible to a lot of people who work in customer service. It’s customer neglect, and it could be costing your company millions.

Or billions.

Research Shows that Neglect is a Costly Problem

In their most recent Serial Switchers study, NewVoiceMedia estimated that U.S. companies are losing $75 billion per year due as a result of bad customer experiences.

In late 2020, Simplr commissioned a consumer ecommerce study to understand shoppers’ expectations, attitudes, and behaviors related to the upcoming holiday season. As part of this study, we also wanted to explore the concept of customer neglect, and we ended up with some interesting (and worrying) findings:

• Of the 750 consumers who participated in that study, one-third reported having been left hanging or ignored by an online retailer’s customer service, while 10% said they weren’t sure. What this tells us is that too many companies are letting poor CX lead to experiences of customer neglect. 
  
• Half of respondents said they were likely to tell a friend or post social media about a poor customer service experience, and 55% said they are likely to leave a negative review of a retailer based on poor customer service. What this tells us is that consumers aren’t very forgiving of brands and retailers’ CX transgressions, and they are more likely than not to make their frustrations known.
  
• Four in 10 respondents reported that they have decided to stop shopping with a brand or retailer altogether because of a poor customer service experience. What this tells us is that the “silent killer” of customer neglect is absolutely affecting companies’ revenue and customer lifetime value metrics.

In a subsequent study, Simplr and a third-party research firm “mystery shopped” 652 ecommerce companies over the Black Friday-Cyber Monday period in 2020.

Based on the levels of customer neglect our research detected—stemming from issues ranging from delayed and nonexistent email responses to unhelpful and unavailable chats—we arrived at a finding that stunned us. Based on the results from that mystery shop study, crossed with SimilarWeb Pro insights and data from Simplr’s customer service platform, we were able to estimate that many companies are missing out on up to $20 million per year due to customer neglect.

So, could your company be leaving up to $20 million on the table each year due to challenges that can be traced to your department? Let’s see.

Calculating the Cost of Neglect

How can you know the cost of customer neglect at your company? Unfortunately, it isn’t as simple to calculate as an easy 1, 2, 3. But we have developed a formula for estimating lost revenue due to customer neglect in the chat channel specifically, and you can use this to run different scenarios that make sense for your business.

Here’s how it works:

• Step 1: Take your average monthly website visitors and multiply that number by 0.75%, which is the average rate at which we see website visitors engaging with customer service chat. If you know your company’s actual visitor-to-chatter rate, feel free to swap that number in the place of the 0.0075 for a more accurate assessment. The result you get in Step 1 is your average monthly chat-seeking customers.
  
• Step 2: Multiply the result you got in Step 1 by 63%, which is the average percentage of neglected chat-seekers according to our research chats (for example, when chats are too slow, when resolutions are unsatisfactory to customers, or when a company doesn’t offer chat at all at a time when the buyer is shopping). Again, if you know your company’s rate for unsuccessful chat engagement to be different, feel free to swap that number in the place of the 0.63. The result you get in Step 2 is your monthly average number of neglected chat-seekers.
  
• Step 3: Take the result you got in Step 2 and multiply by your average purchase price. The result you get in Step 3 is your total estimated monthly cost of customer neglect in the chat channel alone.

Frightened by Neglect? Keep Reading

We hope that you can see just how easy it can be for the financial impact of customer neglect in one situation, in one channel, and over the course of just one month to spiral into the industry-wide $75 billion problem we introduced at the beginning. And we trust that, regardless of what your own calculations show, you’d agree that any dollar left on the table is one dollar more than you’d like to leave behind.

You didn’t really think we’d leave you in a cold sweat without offering a solution to the customer neglect problem, did you? Order or download Experience is Everything to learn how customer experience leaders like you can eradicate neglect with NOW CX.