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5 Top Reasons Why Companies End Up Incurring High Cost on Customer Satisfaction

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High Cost on Customer Satisfaction

Customer Satisfaction is the key to the growth of any business. A business grows on the goodwill it generates and one of the factors that add up to get a goodwill is customer satisfaction. Without satisfying a customer your business wouldn’t get a good word of mouth and thus will make it stagnant and at times dipping too. But, on scrutinizing the situation, it is discovered that satisfying a customer is not only a difficult task but, eventually incurs a huge cost of customer service than intended, especially the mid-sized companies. The start-ups obviously have a lot of pressure to gain positive reviews through customer satisfaction but on the similar

But, on scrutinizing the situation, it is discovered that satisfying a customer is not only a difficult task but, eventually incurs a huge cost of customer service than intended, especially the mid-sized companies. The start-ups obviously have a lot of pressure to gain positive reviews through customer satisfaction, but on the similar lines, mid-sized IT companies also don’t end up financially happy with the customer satisfaction they generate. Here are top 5 reasons why mid-sized IT companies incur a huge cost on customer satisfaction:

1. Satisfying a Hysteric Client

Satisfying a client is completely different from satisfying a hysteric client. The difference lies in just one word- ‘pressure’.

When dealing with a client we do have pressure but that amounts to- meeting the deadlines, client’s approval, maintaining the quality standards etc. But after a lot of revisions, the situation becomes tense as the client starts to question the abilities to deliver the project as intended, adding pressure.

Under this pressure we try to communicate more and more, trying to find a way to assuage the disgruntled client. This over communication eventually adds the cost to the project reducing the bottom line.

Client Satisfaction

2. Non-Billable Extra Work

At the time of giving the quotation to the client, we calculate the bottom line, cost, and the profit percentage and freeze the charges/hour. What is not considered is the revisions.

Revisions could be due to client’s requirements or due to the glitches from
developer’s side. If it is due to the latter one, the revisions become un-billable hours as these changes for patching things up are not entitled to be charged from the client.

These non-billable hours add to the cost of the project making it an expensive deal.

Non-Billable Hours

3. The Client May Ask for Refunds

It is impossible to fully compensate a dissatisfied client. Although the loss is on both the sides, it is difficult to mitigate the loss of the service provider at all.

Most of something that could be done is- ‘refunding’ a part of fees to the
client. There could be a lot of reasons to resort to this measure, but irrespective of them a refund affects the profits of the project.

The only bright side of giving refunds to disgruntled clients is, you might earn a good word of mouth. And if it does happen, it is by paying a huge cost. This makes customer satisfaction a far-off thing and even retention becomes questionable.

Refund

4. The Ambiguity of Project Requirement

Understanding of the project at the very beginning is important. Deriving clear goals, comprehending client’s needs, charting the deadlines and overall cognizance of the results.

A disambiguation in understanding the requirement slowly piles up in a huge cost with extra communication, non-billable revisions and soaring delays which might make it a loss-making proposition.

 Ambiguity of Project Requirement

5. Project Scope Beyond Skills/Resources

In the rush of bagging projects, companies take up such projects which are beyond the current skill set, resources, and technologies which they have. With an anticipation to acquire them in future simultaneously, it only becomes difficult to cope up with everything.

This is purely taking up a wrong project. A wrong project eventually makes the client disgruntled and the very goal of customer satisfaction is lost.

Project Scope Beyond Skills

Incurring the client satisfaction cost ultimately does not only have financial retribution but also eats up the valuable time which can be put to use to something productive like diversification or simply the business expansion. A mid-sized company may get static with the catch-22 situation of delivering customer satisfaction and then incurring high customer satisfaction cost on rectification. This humongous and unwanted cost could be minimized by making the systems sturdier and stronger which would also result in improved customer satisfaction.




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