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Is Phone-Based Customer Interaction Costing US Companies $61B per Year?


It would come as a surprise to few these days – no one enjoys calling customer service. Millennials, a demographic that will reach 50 percent of the workforce by 2020, would rather “get their teeth cleaned” than call into a customer service line and two of every three consumers prefer to communicate via some form of instant messaging. So why do companies continue to employ these old forms of customer engagement, at an outstanding opportunity cost of $61 billion per year?

Consumers find a traffic jam, going to the Department of Motor Vehicles or public speaking more enjoyable than calling a customer service line, yet companies continue to rely on call centers as prominent vehicles of customer engagement.

While there is nothing intrinsically wrong with call centers, these operations are suffering from severe budget cuts as retailers and other industries face fierce competition, and their customers demand lower and lower prices. This results in over 3 million customer services reps currently overworked in 66,000 call centers across the US.

Even when understaffed, companies are footing a high bill for their outdated communication modes. The average cost per minute for a US in-house customer service call is $1.03. With the average call being 5.9 minutes long and each rep receiving an average 2,202 calls per month, those dollars add up.

Despite the investment in the training and management of this large sector, Forbes reports that in 2016 alone, customer defection costs companies over $61 billion due to poor customer service. Among the primary reasons for customers discontinuing their business was frustration over being redirected to multiple agents and being put on hold for too long. It’s no wonder customers are frustrated when it’s been shown, in a study conducted by ResearchNow, the average person will wait on hold for customer service for a total of 43 days in their lifetime.

Of course, it’s not solely within the realm of customer service, the average person just doesn’t want to make phone calls anymore. Studies show Americans send and receive 5 times as many texts as they do phone calls each day. Among younger demographics, only one of every five interacts via phone calls on a daily basis, but over two-thirds of them use instant messaging, text messaging or social media messaging daily. Even faster forms of communication such as email are not fast enough for our connected society today. Email sits in a distant last place at 6% usage on a daily basis.

Social and instant message based communications facilitated by the mobile web caused consumers to expect instant gratification when communicating in their daily life, so it makes sense they’d expect the same of the companies from which they have purchased a good or service.

And businesses should take heed. Customer service can very much determine revenue. For example, 82 percent of consumers have stopped doing business with a company because of bad customer service. However, on the flip side, 86 percent of consumers are willing to pay up to 25 percent more money for a better customer experience. When customer service is so closely tied to the business success, it is baffling that companies have not yet taken advantage of communication channels that customers prefer.

While companies have attempted small steps to improve their customer service strategy with technology, the friction continues. Voice systems are now equipped with voice recognition, but these systems still lack accuracy rates to work consistently across broad demographics.

Two of every three customers have hung up the phone out of frustration that they could not talk to a real person when calling a customer service line.

Whether the phone interaction is automated or not, companies are still forcing customers to communicate through a channel they don’t enjoy at a pace that is perceived to be too slow.

The ways in which people interact with each other, access information and consume media have rapidly evolved over the last decade and companies have to evolve the way they communicate with their customers. The explosion of the mobile internet, with over 80 percent of the population accessing the internet from their mobile device in 2016, caused a significant shift from phone-based interactions to instant messaging, email, social media, and other channels. The ubiquity of smartphones has brought about a world that is within reach 24/7, and so the attention span of the consumer is getting shorter and shorter to the point where they will not settle for anything less than immediate responses. The ever increasing speed at which people communicate has inevitably caused an increased expectation of what timely service means.

While consumers utilized these technologies relatively fast, enterprises have yet to catch up with systems and processes to accommodate. Instant messaging is here to stay, so it seems enterprises will soon have to make a choice: evolve with their consumers or be left behind footing the $61B bill.


  1. “Crossing The Generational Divide: Providing Customer Service for Today’s Consumers – (, Aug. 2015. Web. 11 Dec. 2016
  2. Hyken, Shep. “Bad Customer Service Costs Businesses Billions Of Dollars.” Forbes. Forbes Magazine, 27 Aug. 2016. Web. 13 Dec. 2016.
  3. “Occupational Handbook Outlook – Customer Service Representatives in the US.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, n.d. Web. 13 Dec. 2016.
  4. “10 Key Call Center Statistics | 2014 Benchmark.” MetricNet Performance Benchmarking. MetricNet, 21 Oct. 2015. Web. 19 Dec. 2016.
  5. “Why Companies Should Invest in the Customer Experience.” Zendesk. Zendesk, n.d. Web. 15 Dec. 2016.
  6. Scout, Help. “75 Customer Service Facts, Quotes & Statistics.” 75 Customer Service Stats and Facts You Can’t Afford to Ignore. HelpScout, n.d. Web. 09 Jan. 2017.

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