Poor customer service costs typical FTSE 100 over £100m annually in company profits
29th March 2012 - Companies can now estimate the cost to their business of delivering poor service following the launch of a new financial modelling tool ‘Value of Service Calculator’ from workforce management specialist Cognito.
The tool provides organisations with the ability to model increases in revenue, reductions in cost and the overall improvement in profits that service excellence can drive. It is based on reductions in revenue from lost customers, the cost of replacing customers, opportunities to charge premium prices, market opportunity cost and customer on-sell value.
The calculator prompts companies to enter a set of key business data, including existing company revenues, profits, levels of customer dissatisfaction and churn measures, and the cost of new business.
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It then allows the company to apply their desired percentage improvement ratios for excellent service and then calculates the resulting benefits. The results show that even a small improvement in service output metrics can translate into a double digit increase in profits - for some companies this could deliver increases of 25% in revenue and over 100% in profits.
“These calculations are particularly poignant given the recent YouGov survey which showed 60% of UK consumers believe customer service has either stayed the same or deteriorated over the past three years,” said Jonathan Chevallier, Strategic Development Director at Cognito. “I’d urge organisations to test this approach to prove that customer service doesn’t just cost companies in complaints, it costs them in hard revenue and profit if not delivered properly.”
To calculate your organisation’s potential gain or loss when it comes to customer service, click on the following link http://www.cognitomobile.com/servicecalculator/.
Founded in 1992, Cognito has approximately 20 years experience of mobile workforce management. It was the first company in the UK to be awarded a licence to run a radio network for data transmission and today it provides leading UK service organisations with strategic and innovative mobile solutions, ensuring they deliver consistently superior service, whilst lowering operational costs.
Cognito offers customers a uniquely intelligent workforce management platform, FieldForce IQ; the first field service management solution to combine Performance Management tools with advanced scheduling and intelligent workflow in one integrated platform. It enables organisations to automatically track and schedule jobs, control service delivery at the level of the individual worker and through its real-time view of operations provide visibility, insight and the ability to take action. This combination ensures the optimisation of workforce service and productivity and the delivery of benefits across the entire service organisation.
Its customer base comprises ambitious organisations with large and mid-sized mobile workforces - 100,000 customers across the UK are served by a Cognito-powered service engineer every day. It clients include Konica Minolta, Lovell Respond, npower hometeam, Baxi Heating and Addison Lee.