Companies often celebrate when customers “come back” after having left for a presumably cheaper option. But this return shouldn’t be a story of vindication. It’s a sign of failure.
When that customer left, they made what appeared to be the financially responsible choice, only to incur higher costs later in disruption, inefficiency, and risk they never saw coming. Here are common reasons for underestimating the cost of switching vendors:
- procurement focused on price because price was the only clear metric
- the incumbent never quantified the value of the services being provided
- internal stakeholders lacked the information to advocate for the relationship
This isn’t a customer problem. This starts as a communication problem caused by unquantified value. The issue sits with the very team tasked with earning the loyalty of the customer that just left.
When customer service fails by being invisible
Many companies believe that great service speaks for itself: responsiveness, expertise, and reliability strengthen relationships and justify premium pricing. Yet most organizations make one critical mistake: they never quantify the financial value these services create for customers.
Switching vendors is expensive—operationally, financially, and organizationally. When service is treated as an intangible perk rather than a measurable value driver, decision-makers don’t have the important information needed to accurately assess the cost of switching. Their decision to leave was logical based on the information they had, it’s just incomplete.
As a result, when customers evaluate alternatives, they focus on the one metric that is easy to compare—price—and miss the broader economics of the relationship. This leaves customers making decisions that often cost far more than they save, and it leaves suppliers frustrated when loyal clients defect for seemingly irrational reasons.
Customers aren’t irrational. They simply lack the information needed to make an informed choice.
How companies undervalue their own customer service
In a decade of helping organizations implement value-based pricing, I hear this all the time:
“We don’t charge for customer service. It’s part of our brand and allows us to command a premium.”
What follows is usually a list of differentiators:
- Faster response time
- Deep expertise
- Proactive insights
- Fewer issues and quicker resolution
But when asked what these services are worth in dollars to the customer, very few companies can answer with numbers.
The problem isn’t that service should be unbundled and priced separately. The problem is that if you don’t quantify value, customers can’t include it in their decision-making. And when YOU ignore your value, the customer will too.
Case example: Commodities distribution and the cost of disruption
One client was a major supplier of a commodity. Pricing in commodity markets vary by pennies between suppliers due in part to cost transparency. But the risk of supply disruption is also a key concern as a missed shipment could cost a customer millions in lost production. Our client had a unique upstream visibility that drastically reduced that risk.
By quantifying the value of a differentiated supply-chain service in financial terms, the company helped buyers recognize that the lowest price alternative carried significant supply exposure.
Once buyers understood this risk in dollars, they often chose the higher-priced, more reliable option. It wasn’t loyalty; they chose it because the math made sense.
When value is delivered to the wrong person
Another common challenge happens when the people who benefit from service aren’t the ones making the buying decisions.
In one case, a premium supplier offered extensive engineering support to ensure their component integrated seamlessly into a customer’s larger system. Engineers loved the partnership. But procurement, responsible for supplier selection, had no interaction with the service team and little visibility into its impact.
As a result, the supplier’s premium price looked unjustified on paper—even though the engineering support reduced failure rates, accelerated time-to-market, and prevented costly rework.
When value isn’t quantified and communicated to the decision maker, it might as well not exist.
The path forward: Make service value visible
Companies don’t need to charge for customer service to benefit from it. But they do need to:
1. Quantify the financial impact of service
- Cost savings from reliability
- Revenue protection from avoided downtime
- Efficiency gains from expert support
- Reduced risk exposure
2. Communicate value in the language of the customer’s business
Executives respond to reduced risk, increased throughput, fewer delays, and lower operating costs.
3. Deliver value messaging to the actual decision maker
Procurement needs to understand service impact. Users can validate value quantifications and champion your solution, but they can’t be the only audience.
4. Integrate value into pricing and sales conversations
When service value becomes part of the business case, price stops being the only thing that matters.
The real disservice is letting value go unmeasured
Customer service creates enormous financial benefit—but only when customers can see it.
By failing to quantify that value, companies inadvertently encourage customers to choose lower-priced, higher-risk alternatives. And when those decisions inevitably backfire, both sides pay the price.
If we want customers to make decisions that truly serve their interests, we need to stop assuming our value is obvious, and start making it undeniable.
