Bad Customer Service Happens, But You Don't Have to Accept It
Want to create a customer for life? Make sure your customer service operation is always up to snuff and delights the customer as much as possible. Sounds simple in theory, but here are five reasons companies routinely drop the ball on customer service:
1. They focus too much on new business. Most companies work much harder at getting new customers than keeping them, even though it costs about eight times more to acquire new customers. Once the fish is hooked, it goes into a different, less valued bucket. Make sure that second bucket gets loving care as well.
2. They treat customer service as a cost center. Different people work here, often overloaded, usually underpaid and understaffed. It is a natural target for cost cutting. Each small reduction in service may not be noticed in itself, but three successive reductions may be noticed loud and clear by the customer. Whole Foods, in contrast, manages to make food shopping a very customer-centric experience, despite additional costs, such as setting up bike racks and repair centers outside their stores for their cyclist customers.
3. There are few incentives for reporting complaints. It might make the customer reps or their managers look bad. So, often the complaint department is moved to Siberia. Bad customer experiences are shared many more times with others than good experiences. But most people don’t share anything at all. So, the reputational damage of bad service may be small to the firm, which may also explain why subsequent complaints might go unanswered. It is smarter, however, to solicit complaints and treat them as free market intelligence. Try to turn every service error into a valuable teaching moment.
4. They can get away with poor service. In some markets, there may be just a few providers and less competition, so customers have limited options to switch. Further, customers may be locked in or face high switching costs, and their bad experiences may occur just intermittently. If all customers suffer equally, it may become the norm, as well as fun fodder (like the phone company) for late-night comedy. Consumers will often put up with substandard service amid limited options--but only until a new rival comes along who dramatically redefines service.
5. Leaders just aren't focused on service. In many companies, leaders are more focused on improving product features than service quality. In mature markets, however, product features become similar or just standard. The opportunity to shine is greater on the service side, especially because it is harder to assess, deliver, and imitate. But that’s not how most higher-ups think. If only their incentives were tied to customer scorecards: service--and loyalty--will surely improve.
Score your own company in terms of how often each cause above contributes to bad customer service. With this profile in hand, approach customer service anew. Align incentives by putting the customer front and center in all your operations. Walk in his or her shoes and view the complaints as great sources of free information. Also, have senior execs listen in on call-center conversations every week to stay on top of emerging customer trends.
In the old days of Detroit, it was a capital sin to drive a foreign car--your tires would likely be slashed or worse. No General Motors employee would dare drive a Honda or Volkswagen to work (too bad, given that they would have learned a lot). Leaders should instead encourage employees to shop at all serious competitors, test their call centers, visit the websites, and then discuss the good, bad, and ugly compared with their own.
PAUL SCHOEMAKER | Research Director, Wharton School
Paul J. H. Schoemaker is the founder and chairman of Decision Strategies International. A speaker, professor, and entrepreneur, Schoemaker is research director at the Mack Institute for Innovation Management at Wharton, where he teaches strategic decision making. His latest book is Winning the Long Game: How Strategic Leaders Shape the Future.