Customer Experience News & Trends

6 customer service mistakes that can (and did) destroy business

Great customer service will lift up any company. But poor service will drive it to the bowels of business hell even quicker. 

Some companies have historically and publicly struggled to recover from poor customer service decisions and mistakes. Some have never recovered from a major gaffe. And some have actually even built an empire by learning from one mistake.

Of course, the key today is to avoid customer service mistakes because in today’s world, everyone’s watching on the web. Mistakes go viral, and bad policies are called on the carpet online.

Nothing new here

Bad word-of-mouth can destroy businesses — and it’s not exactly a new phenomenon. Some of our examples of what not to do date back decades, long before the Internet and social media, when a story was shared over gimlets and chicken croquettes in the cul-de-sac — proof that bad customer service can ruin a business no matter how big or small or its place in time.

Negative word gets around much faster than positive — whether the news travels through hand-written letters, operator-connected phone calls, at happy hour, in email or on Twitter. In fact, 95% of the people in a new Zendesk survey said they share bad customer experiences with others. Only 87% share their good-experience stories.

While the same percentage of people probably shared those kinds of stories with neighbors, friends and family in the mid part of last century, they only reached a select few. Nowadays, the audience size is limitless with the advent of the World Wide Web. Either way, poor service stories are destructive to businesses.

And if you think one bad experience won’t hurt business, you’re wrong. In the same Zendesk study, about 40% of customers said they avoid companies for two or more years after a bad experience, and tell their friends, family and colleagues to avoid it, too.

Here’s where six companies went wrong in providing an ideal customer experience, how it cost them customers or the entire business, and — most importantly — how you can avoid their mistakes.

Insulted customers

You’d think this would be a rule that shouldn’t even have to be spoken, written or repeated. Yet, there are businesses and employees who are supposed to be customer service professionals who forget that courtesy under all circumstances is a must for success.

That rule slipped the minds of an employee and manager at high-end Australian retail store GASP and created a nightmare experience for one potentially new customer. When the would-be customer decided against a purchase, the clerk mocked her weight in person. The customer sent an email to the store manager, complaining about the rude service.

Rather than apologize, the manager responded, praising the salesperson and telling the customer to “side step” their store in future shopping trips so as to not waste the sale team’s time. When the email went viral, you’d think GASP would back down, even apologize. Instead, the manager sent an email to the local paper saying they didn’t want the business of certain clientele.

A Facebook page titled “We hate GASP” went up. Business went down since the 2011 incident.

Lesson: Never, ever be rude to customers. Putting it in writing will only make it worse.

Gave every customer the good deal

The New York Times upset subscribers when it sent a message to millions offering a discount to renew their subscription. You’d think a discount offer would excite customers, but in this case, a customer service gaffe did the opposite.

The email was meant for just 300 subscribers who recently canceled subscriptions. When it hit closer to eight million in-boxes, long-time, loyal subscribers were upset the same special incentives for recent dropouts weren’t meant for them. On the bright side, employees did apologize for the error.

Lesson: First, in addition to checking that you’re sending the correct information to customers, check that you’re sending it to the right customers. And always honor new-customer incentives and promotions for loyal customers who ask for them.

Created too-good-to-be-true policies

Customers love no-risk-for-them policies. They’ll stick around nearly forever if the product’s good, the service is reasonable and there’s no risk for them to continue the relationship.

But in an effort to make customer-friendly policies, what some companies actually end up with are too-good-to-be-true policies.

Example: Blockbuster Video hyped no late fees. It had new competition to deal with in the form of Netflix (which eventually had it’s own bout of customer service issues) and Redbox. But Blockbuster’s, late fees remained in the form of replacement fees. If a movie wasn’t returned soon after its scheduled return date, customers were charged the entire cost of the film. If they then returned it, they were refunded the money minus a $10 restocking fee.

Customers went into an uproar over the policy, and authorities in 48 states ended up investigating the company for more than bad policies. Blockbuster eventually had to reimburse states more than $600,000 due to investigations. Since then the company has filed for bankruptcy and closed more than 500 storefronts.

Lesson: Make customer-focused policies — but be sure they don’t just seem friendly. Be totally transparent. The best bet might be allowing front-line sales and customer service pros flexibility in administering policies. Train them to take charge and do what’s best for customers in unique situations.

Failed to recognize limits

While we’re talking about creating customer-focused policies, we should remember a once-powerful retailer that gave its customers a little too much — and treated its employees poorly when management made some bad decisions.

W.T. Grant was a variety store empire from the early 1900s to the late 1970s, when it collapsed. When Grants started to struggle in the leisure-suit days, executives incentivized employees to offer and issue company credit cards to every customer — regardless of their ability to actually pay it off. Store managers who failed to meet their quota for credit card sign-ups were intentionally humiliated at company functions — by serving them beans instead of steak, cutting their ties cut off or hitting them with a pie in the face.

Sure, customers made out like bandits on this deal: Many took credit cards, racked up big charges and never paid the bills. Result: W.T. Grant ended up $800 million worth of debt and fell apart.

Lesson: Offer customers good deals, and give employees incentives for getting customers on board with your deals. But check the books first. Know that a product, service or promotion will make financial sense before offering it.

Set the wrong expectations

Customer service is all about expectations. Customers expect certain things from a company based on past experiences with it or because of experiences with similar businesses. Plus, they almost always believe what they’re promised

That’s why Best Buy disappointed legions of customers and turned off many more from ever being customers. The electronic dealer that once dotted every shopping mall from coast to coast offered incredible Black Friday deals to online shoppers a few years ago. Customers were ecstatic to get Christmas shopping done early and on budget. That is until Best Buy alerted many just days before Christmas that they were out of stock and would not be able to deliver the products by Christmas.

Online complaints skyrocketed. Customers called Best Buy “the Grinch Who Stole Christmas.” A company official called it an unacceptable delay between order confirmations and cancellation notices. But that wasn’t enough to pacify the throngs of upset customers, as Best Buy still didn’t come close to delivering on what it promised and what, most importantly, customers expected.

So where’s Best Buy now? It will likely close hundreds of stores this year after a 38% one-year decline in stock performance.

Lesson: Under promise, over deliver — but don’t, under any circumstances, do the opposite.

Sold faulty goods (but at least stood by them)

Full disclosure: This is a customer service mistake that turned out to work really, really well.

Leon Leonwood Bean was an avid outdoorsman who sold rubber boots out of the basement of his brother’s apparel shop in 1912. He offered a money-back guarantee to any customer who wasn’t satisfied with the boots he sold. Of the first 100 orders he took, 90 pairs of boots were returned because the leather tops separated from the rubber soles.

You’d think the story would end here — bad product, giving everyone their money back, end of story. And the truth is, refunding his customers nearly put Bean out of business.

But he did the right thing and stuck by his first customer service policy, fixed the issue and sold more boots. Today, L.L. Bean still offers that money-back guarantee. The Maine retailer, which grew its business through catalogs, a few storefronts and eventually the Internet, has been known to replace decades-old boots and apparel. It’s grown to $1.4 billion in annual sales.

Lesson: Stick by a good customer service policy. As long as you offer good products, supported by dependable people and policies, customers will overlook occasional mistakes.

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