Why poor customer service can cause businesses to fail

Companies that do not serve their customers properly risk driving them to competitors

- Tan Ooi Boon

It is all too easy to point the finger at exorbitant rental rises from landlords when businesses fail, but it is increasingly apparent that poor service could be a major factor when a firm goes belly up.

A survey by ServiceNow—a specialist in enhancing customer experiences—noted how companies that failed to serve their customers properly can easily drive them to their competitors.

To be sure, rent increases add to overheads, sometimes to an unsustainable level, but the reason for closure is ultimately a drop in customer patronage, resulting in insufficient revenue to cover costs.

After all, when owners set up a shop, they would have factored in rent and other costs when pricing their products. Moreover, whenever business costs go up, it is common for owners to increase prices for their products or services.

Higher prices will usually not deter many customers as long as they are still pleased with the experience and quality of the products they pay for.

But poor service, on the other hand, will cause businesses to lose customers swiftly and is probably the unspoken reason why many businesses here are seeing revenues fall.

It is fair to say that good service here has lost a fair bit of its lustre, with about 40 per cent of customers reporting in the ServiceNow poll in 2024 that they were given shoddy treatment.

Many of us would agree that when it comes to poor customer service, we are not saying that the service providers are rude. Rather, we are mostly turned off by frontline employees who are unmotivated or unhelpful to such a degree that their attitude affects our shopping or dining experience.

It is easy to put the blame on other factors, such as competition from online shopping, but the truth is that owners should take a hard look at how they and their employees have been treating their customers.