Over at the New York Times' small business blog, there's an interesting post about why customer service is so bad. Jay Goltz, a small business owner from Chicago, attempts to dissect the problem. He blames a variety of factors ranging from over-educated sales people to the high cost of health insurance. While his theories are interesting and not altogether ridiculous, I have another to offer. We like bad customer service.
At first glance, that statement seems absurd. Nobody likes bad customer service. But I think that we like what bad customer service provides: cheaper products. Companies right now do not have incentives in place to promote good customer service, because they know that they'll be more profitable if they keep costs down and offer cheap products, because that's what people care more about.
What incentives could be put into place? Companies could pay employees who provide exceptional customer service more. They could also have more training on how to deal with customers and product information. Companies could also have more flexible return or maintenance policies for its products. All of these possibilities have something in common: they will increase costs which will result in more expensive products.
Here's a thought experiment for you. Let's say you have two options for a flight from New York to Miami. Everything about the two flights is identical except for two things: One airline has poor customer service, but offers you a ticket for $50 cheaper. Do you take the more expensive flight in order to secure the better customer service at a higher price?
I use this example, because I've seen it exactly replicated in my real life, especially with airlines. I have had so many problems with a certain airline that I often regret buying a ticket from it. Yet, whenever I go to buy new tickets, its prices tend to be the cheapest. And since I'd rather save some money and put up with bad customer service, I book it anyway.
This illustrates an important point: through consumer demand, we ultimately control customer service. If poor customer service was really bothered us, then we could boycott the worst of the perpetrators. I happen to be one of the few people who sticks to a boycott when I've been terribly wronged, but I think I'm in the minority. (For example, I haven't eaten Taco Bell in more than 10 years after swearing it off due to an exceptionally bad experience.) Most people have a very short memory when it comes to bad customer service, especially when low prices entice them return to the company where they experienced annoyance last time.
Goltz might disagree with me. He writes:
But the customers do notice. When you walk into a store, and there is virtually no help, it's because someone figured out that the company could save X dollars if it cut back the labor budget by 7 percent. When you walk out disgusted and sales go down, the store blames it on the economy or brutal competition. Then the company reacts by having another sale which further erodes profit margins. This cycle eventually results in another failed store.
That hasn't been my experience. Some of the most successful companies from a profitability standpoint also have the worst customer service. Another company with truly heinous customer service I've noticed over the years has been CompUSA. Yet, two decades after I noticed how poorly they treat customers, it's still kicking. So is that airline I hate. So is Taco Bell.
I guess it's not really correct to say that we enjoy bad customer service. Obviously we don't. But we enjoy low prices more than we dislike poor customer service. Companies could put incentives in place to improve customer service, but instead they offer us cheaper products. And despite our complaints, that's how we like it.
Update: As someone pointed out, since most of my problems with CompUSA, it had been acquired by a new company and its customer service may have improved. I haven't used it much since then, so I can't say for sure.
CompUSA bellied up years ago and was liquidated - the name was sold to Tiger Direct.
Taco Bell is franchised so your experience in one can be vastly different from another. This is even more apparent in the hotel "chains" which are really franchises. Your experience in one Holiday Inn can be bad while it's good in another.
Daniel,
I love Jetblue and Midwest and will always fly them if they are an option. Jetblue offers 4 more inches of leg room than American or United, plus free snacks and in seat cable, and the service is, in my considerable experience, far better.
That being said - I know a number of people who don't even bother to price them and just go with whatever expedia kicks out.
For all people complain, when a vendor offers a better product at a competative price, people can't be bothered to switch.
In the case of customer service, there also might be an element of denying that it will happen to you again. Customer service, even from places where service is often bad, isn't always bad, and if you get a cheap ticket with a chance to get tolerable (or better!) service then you're golden.
Certainly in the computer or book trade, it's pretty common to have customers go to a store with good customer service, figure out what they need with the friendly, knowledgeable sales staff, and then go and buy it on-line or down the road at the discount place for a lot less money.
(To be fair, I know a few book stores that use Amazon as a sort of 'Books in Print'.)
Most of the stores that offered high customer service that I remember from 15-20 years ago have long gone bust. Good customer service just isn't worth all that much.
If anyone wants to talk about bad customer service, LA Fitness has to be in the top 10 list of the usual suspects. The music is always blasting away as though the place is a disco, not a health club. When I and others have asked the management to turn the volume down, we've been told that it can't be done--corporate policy sets the gain level. Yet when I call corporate headquarters--after being on hold for more than 30 minutes--I'm told to talk to the management. When I've gone back with this piece of information, I was told that if I don't like the music, I should quite and join another club. LA Fitness abandoned its towel policy some years ago, so now people--mostly men--come in, get sweaty, and smear their greasy sweat all over the equipment. Gross. To compensate, the club has Purell sanitizer dispensers scattered around the club. But they are nearly always empty. When I complained to the management about this, I was told the following: "The problem is you people just use too much." When I pointed out that the problem might be that the club simply isn't ordering enough of the stuff, the manager turned and walked away without comment.
In this particular case, Daniel has it all wrong. No one likes the bad service at LA Fitness so that they can enjoy cheap membership fees, for the fees aren't cheap. Instead, they put up with the bad service because the options are so limited. I would submit that this is the case everywhere.
Good customer service is about corporate attitude, and it doesn't cost anything but a little time and consideration. The problem is that, as a nation, we have stopped having respect and regard for other people. We see this in the jerks who cut us off on the highways, the people who fail to signal, those who refuse to return a shopping cart even when the return area is only 10 feet away--and we see it in corporate America. What a shame.
I think Good customer service is about corporate attitude, and it doesn't cost anything but a little time and consideration. and Good customer service just isn't worth all that much.Metlife Annuity
We all vote with our wallets
As long as you (yes you) continue to give money to bad service providers, they will continue to give you bad service in exchange. Like Daniel, I too stick to my boycotts. I also work with a few people who will not shop at Wal-mart, buy a GM car, Fly American, United, Delta, or US Air airlines (no matter how cheap), eat at specific restaurants, etc.
It seems that 20% of the people I know have one business they refuse to give money to. If we, all of us, just stop accepting poor service by only giving our money to businesses we want to survive, the others will go out of business ala Circuit City (a business that most of the people I know chose to boycott in 2008 when they fired employees who they considered "over paid"). Businesses can go away, it happens every day. We all get to decide which ones stay, simply by giving money or not giving money.
If you enjoy living in the lowest common denominator, just keep doing what you do. I vote with my wallet. It might cost me a few hundred dollars per year, but when I see it work (Circuit City is G O N E), I know it the thing to do.
James Williams did get something of value from LA Fitness: good advice. Quit and join another club. If you're unwilling to pay for better service and amenities, stop whining. Fitness clubs are in a competitive business. Take advantage of it.
Follow the advice of others in this thread. Vote with your wallet when faced with poor service/products. What's so hard about that?
I think you make a leap that low price automatically means poor service. And your airline example is a bit narrow- unless you fly for work, how often do you fly? Five, six times a year? Dealing with a poor flight one every two months is managable. Take another example that people incur weekly- shopping at a store like Wal Mart or Target. I've had good and bad customer service at both, yet I'd still rather shop at Target cause it "feels" nicer...and maybe the aesthetic is part of the customer service experince. I do think you make a valid point that people more often than not would rather choose a cheaper product with poor customer service, but only in the short term. Over the long haul, people will cough up pennies for a better experience.
Companies are finding ways to make you pay to get better service. For example:
-I get better service when I am paying full fare economy seats (paid by work).
-If you book through a travel agent, you can get better service from the airlines and certainly from the agent.
-I go to a dentist that demands we pay costs upfront, and then bills the insurance. He charges about 10% more, but I get GREAT service and convenience.
- Go to a specialty retailer with higher end stuff, and you will get great service. Again, you pay for what you get.
Zappos!
In some cases there is a much more nefarious explanation for bad service.
It's been argued that some service providers have designed their customer service systems to accommodate and reward high end customers and to ignore the complaints and problems of ordinary users. Technology oriented companies and cell phone companies have been the worst offenders.
I have some sympathy for the notion that you pay for what you get, but when it comes to basic decency and fulfillment of one's obligations to a consumer, this strategy just sucks, and I've read about (and occasionally experienced) this strategy on numerous occasions.
To give you a counter-example:
Home Depot vs Ikea, the #1 and #3 purchasers of lumber in the world.
In the last year or so, Home Depot has vastly improved its customer service. Their employees are, for the most part, helpful and pleasant. They will take back anything - dead plants, items you may have broken.
Ikea rarely takes anything back - and even if something's unopened or if they themselves damaged it, they'll still make you wait half an hour. Staff are generally not helpful, won't own up to mistakes, and generally carry an "I don't give a f-k" attitude around the store.
And who's cheaper? For the same products, it's a wash - Ikea sells more cheap Target junk (but Target beats them on customer service there.) As they say in Japan, good customer service is basically free - so there's no reason to think that bad customer service lowers prices.
I have lists and lists and lists of companies and people with whom I will never work again. Part of that is the industries I'm in (theater & marketing) but it's also just good common sense. RCN? Their bad customer service ended up costing me more than $1000. I should have just paid that $1000 over the course of a year and gotten Comcast (which also has bad customer service but not the epic level of RCN)
The only credit card company I will ever patronize is AMEX, because they're the only one that has ever treated me with any respect when I deal with them.
I think this applies in an interesting way to cell phone carriers. One time I saw a guy from T-Mobile give a talk, and he was saying that--given that, in the US, T-Mobile is a relatively small player compared to ATT and Verizon--T-Mobile's best and most inexpensive way to gain a competitive advantage was to focus on customer service, which was rated horribly for every competitor (improving customer service is a lot cheaper than, say, building more cell towers to compete with Verizon). And I think you see this move often in industries with notoriously bad customer service: for example, look at how Virgin Airlines is setting itself apart from the competition.
Moreover, I would just add that in a lot of industries improving customer service isn't just achieved by higher salaries or better training--sometimes major IT overhauls are required, for example creating a unified database such that the customer service rep can access all the information that is needed to help with the customer's issue. There are engineering considerations too: customer service needs to be an explicit consideration when designing a complex system--you need to build in the ability to gather information about a specific customer, and be sure that all relevant data is logged and easily accessible somewhere. If care is not taken in the initial design, you could end up with legacy issues that prevent good customer service from taking place, and that are very expensive and risky to fix/overhaul.
Finally, a big factor in customer service quality has to do with the product's quality in the first place: the best customer service is the kind you don't need. Create an airline with few delays and a smooth check in process and you won't have customer service problems. Create a well-designed product that has few bugs and failures and you won't have customer service problems. So perhaps another reason why customer service is given short shrift is because resources are better directed towards improving the product's quality and reducing the need for customer service in the first place.
I don't buy this argument for most products. Customer service is something we want to avoid. It is like the fine print that nobody reads before they sign up for something.
Good customer service works for future sales. For instance, Costco has a great return policy as does Nordstrom Department Store. The reason they can afford such good customer service is because they rely on repeat business and they sell a wide variety of products. What that means is that these retail outlets can make their own deals with manufacturers. If a product is defective, they have leverage over their supplier. They also have very explicit return policies. Also, JC Penny's and Sears have better than usual customer service.
One characteristic of a Nordstrom or Macy's return is that you go right back to the department where you bought the product. They usually hire capable sales staff, so it is reasonable to conclude that they are good at customer service.
But when a product doesn't deliver what you expected, and that was by design, then you have found the typical situation that produces bad customer service. The basic idea is that you didn't understand just how bad the product was, or how limited the service. Sellers can't provide customer service for such products, because the profit strategy requires selling and resisting refunds or giving away something for free just because the customer didn't understand the terms and conditions.
Wait! You though you owned that copy of _1984_? Oops, we're sorry. Better luck next time.
My favorite cartoon on this subject pictures a guy sitting in a bank talking with his account manager. The manager explains, "You can't have any of your money because you have what we call a 'You can't have any of your money' accounts."
It is very easy to teach this type of customer service. When in doubt, apologize and do nothing else.
Good customer service is a bonus--a pleasant surprise. Not something I seek out, ever. Every time I go to Walmart I think, "this is a nightmare. I will never come here again." And then I'm back the next weekend, because I saved $50 on my grocery bill. I walk out of that store thinking "awesome!" because I saved so much money--and that last "awesome" impression is the one that will make me go back.
Good customer service is a privilege of the wealthy--the people who can afford to make purchasing decisions based on that criteria.
I think it's also important to keep the kind of business at issue in mind. Part of the reason airline customer service is so atrocious is that airlines have been having huge problems the past few years, so there is no real threat of new entry (when the existing firms are going bankrupt, there isn't much incentive to enter a market). Same to some extent with the big box stores like Best Buy and Comp USA - with Circuit City's collapse, the market doesn't look particularly good for potential entrants.
On the other end of the spectrum, restaurants tend to have pretty good service because it's extremely easy to enter (except, apparently, in DC) - the cost of entry is pretty low, you don't need a whole lot of space, etc. So you get decent service and people genuinely make decisions of where to go based on service.
Some of the most successful companies from a profitability standpoint also have the worst customer service. Another company with truly heinous customer service I've noticed over the years has been CompUSA. Yet, two decades after I noticed how poorly they treat customers, it's still kicking.
In the 1990's CompUSA had about three-hundred stores at its peak. Now it has TWENTY-FIVE and is still in the process of liquidation by Gordon Brothers Group, LLC! So, the only kicking I see at the retail level is the occasional twitch of the persistent vegetative state that is CompUSA as it continues its liquidation.
Unhappy customers due to their lousy customer service was one of their downfalls. My personal story was their refusing to take back some defective RAM I bought there that day. I even had the receipt. They, essentially, accused me of taking my bad RAM and swapping it for their good RAM.
I never shopped there again. Instead I went to strict Internet on most of my computer purchases and for emergency purchases I went to the local "big box" office supply stores. Not only were they usually cheaper (even after shipping), but I never had a problem returning bad products.
NO! WE DON"T LIKE BAD SERVICE!
I think it was Circuit City that fired most of its senior (and most expensive) sales people a year or so ago, in a cost cutting move. Of course the entry level help they hired as replacements brought little value. Sales went down, and the stores shuttered their doors several months ago.
Customer service has many elements, and people's perceptions depend on their weighting of these things. People will make judgments based on the overall value they perceive. Or they will make completely random choices.
Customer service can mean:
Being treated politely
Having a good return policy
Encountering knowledgeable staff who assist your purchase
Encountering any staff at all to assist at all
Convenience
etc
About 20 years ago while in school I had a part time job working for a major department store. This company had just gone through converting as much of its work force as possible to part timers like me, who lacked the years of experience in specific product segments that our predecessors had. On some shifts I might be covering two departments other than my own.
At the time I wondered why anyone shopped there. We were selling the same major brands that everyone else did. Our return policy was much better, but much of what we sold would have been 15% or 20% more expensive than a discounter.
Walmart was emerging but nowhere near its death star dominance but the writing was on the wall. I expected that the marketplace would move to a point where there really only two types of stores: huge discount big box stores with great prices but no knowledgable staff, and specialized boutiques with specialized and available staff - and high prices.
What blows my mind now is the people who don't understand the tradeoff, the Faustian bargain we have made with the gods of retail. You paid $3 for it at Walmart and it broke and you want to return it and are then irate because there is a long wait at the customer service desk?