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Although 80% of companies with solid customer service programmes in place report significant profit increases, a worrying 81% of companies across the board report that their various customer initiatives have failed during the past three years, costing each company up to £750,000 over that time, and with Europe lagging far behind when it comes to meeting customer expectations, according to a study from communications solutions firm Avaya. This article is copyright 2014 The Best Customer Guide.

Fewer than 20% of companies globally are delivering the level of service their customers expect, and the study suggests that European companies currently lag far behind their Asian and American counterparts when it comes to closing the gap between customer expectations and the service they deliver and are missing out on potential profit increases as a result.

Despite the research finding a firm correlation between customer service initiatives and increased profits, businesses are failing to evolve their customer programmes fast enough to keep consumers satisfied. Some 81% of companies with solid customer initiatives in place have seen significant profit increases in the last 12 months.

92% of UK and 61% of German consumers said they would rather spend money with organisations that are easier to buy from, yet only 16% of British and German managers believe customer effort significantly impacts spending satisfaction and retention, and less than half (40% in the UK and 30% in Germany) have initiatives in place to reduce customer effort.

While 80% of companies have put in place projects aimed at improving customer service in the past year, 81% have seen their customer initiatives fail in recent years. Consequently, 66% feel that they have wasted their money on failed customer initiatives and many senior managers are unable to even quantify how much money has been wasted.

In addition to losing money, these failed customer initiatives mean that businesses miss out on the increased customer satisfaction (68%), loyalty (64%), retention (59%) and repeat purchasing (56%) that companies with solid customer experience programmes have reported. Again, Europe lags behind the rest of the world.

In general European businesses place less importance on managing the customer experience. In China and the US, 83% and 73% respectively said they have a customer management programme in place, while in India the figure stands at 72%. This is in sharp contrast to Europe, where only 55% of British and German companies do.

In India three-quarters of business managers say customer experience management is very important. The US (59%) and Brazil (59%) also view it as very important, but fewer business managers in Germany (33%) and the UK (39%) feel this way.

The study found that 31% of organisations that do not have a customer management programme in place attribute its absence to a lack of appropriate technology. A further 37% said they are being held back by the fact that different parts of the business own the customer experience.

"Lacklustre customer service is inexcusable in a digital world where customers are king," concluded Garry Veale, president for Avaya in the EU. "When it is so closely linked with customer loyalty and increased profits, and with cost-effective and easy-to-implement software and services available to companies of all sizes, there really is no excuse for not having a comprehensive programme in place."