What are Customer Service Costs?

A Customer Service cost is considered to be any Cost that the company would not have incurred if it’s Service experience were perfect. Costs of Customer service can be categorized as:

a. Costs of Good Customer Service (CGCS)
b. Costs of Bad Customer Service (CBCS)

CGCS are visible and observable Costs designed to ensure that a business will invest in Customer service and make the customer experience pleasurable. The Costs incurred are aimed at preventing, monitoring and correcting poor service to customers.

CBCS are invisible and hidden incurred as a result of failure. They occur as a result of failure to prevent, monitor and control poor customer service.
Quantifying hidden costs is extremely complex, if not impossible, hence organizations must dig deeper into their bag of strategies to unearth these costs and prevent their generation. According to a CICRM Research (2022), 10% of organisations spend more than 30% of turnover on costs of Customer service failure.