Social Networking and Customer Service– Is It Important for the Average Business Yet?

Guest Post by Katrina Lake.

TechCrunch recently wrote about this RightNow study that asserts that customer service is especially important since the advent of social networking. While I agree with this assertion generally and have personally benefited from the trend (see my HauteLook post), I’m not sure if this trend is substantiated yet for most businesses, or if this data really supports it even if it is.

The main crux of the article is that “82% of US Consumers Bail on Brands After Bad Customer Service”– meaning, 82% of customers have had at least one customer service experience bad enough to lead them to bail on a brand. But is this really an impressive statistic? Using my Foursquare as a proxy (and I certainly don’t check in at every brand experience I have), I’ve checked into 55 businesses in the past months. 48 were new businesses. Even if you conservatively haircut that by half, that’s 25 new businesses in an average month, 300 businesses year– Is it really impressive that of 300 annual experiences, and over 10K businesses in a lifetime, that 82% of people have had one bad enough to never go back again?

I actually think the more interesting side of this is that a whopping 12% of consumers have NEVER bailed on a brand after a bad customer service. How many brands does the average consumer interact with in a year? A lifetime? And 12% have never bailed? Now that’s amazing.

And what about the link to social networking? The anecdotes– Dell, Delta– can be compelling that big brands should be aware of the potential impact of social networking, but what about for the average business? What % of customers even use social networks for customer service? The study doesn’t say (I suspect because it’s a very small number) and I don’t think the data is there yet to support such broad claims about the impact of social networking on customer service for US businesses as a whole.

That being said, I would love to see data that effectively shows this study’s claim. And even if they can’t support that claim for general populace of businesses, it would have been interesting if this study identified those businesses that have been most affected and be prescriptive to those types of businesses on what they can do to improve their customer service. Clearly, not every business (imagine the only supermarket in a 50 mile radius) is susceptible to customer attrition due to customer service– in order for a customer to be able to be driven away, there have to be reasonably convenient alternatives available for customers to drive away to. It would have been interesting if this study highlighted specific types of businesses with low switching costs and many alternatives that might be at risk—restaurants in urban areas or online retailers, for example– and how they could use social networking to improve their customer service.

I’d love to know– is social networking making it more important for your business to maintain a high customer service experience?

About the Author: Katrina worked at Polyvore, Leader Ventures, and The Parthenon Group before becoming a student at Harvard Business School. She is currently working with a group researching how SMBs use Twitter.