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Is Bad Customer Service More Profitable Than Good? (hbr.org)
Two associate professors of marketing recently shared research in the Harvard Business Review about how customer service is structured at at tech, travel, and finance companies:
[O]ur research suggests that some companies may actually find it profitable to create hassles for complaining customers, even if it were operationally costless not to.... We found that these companies screen complaining callers by using a hierarchical organizational structure. This structure, we argue, keeps a lid on the amount of redress customers are willing to seek. In other words, by forcing customers to jump through hoops, the organization helps curb its redress payouts.
As part of our research, described in a forthcoming article in the journal Marketing Science, we interviewed managers of call centers to understand how their customer service organization is structured, and the way it contains redress payouts. We found that most involve at least two levels of agents. The Level 1 agents take all incoming calls and hear each customer's complaint first. These agents are typically limited in the amount of redress they are authorized to offer to the caller...
So what about the idea that frustrating customers has consequences on customer retention and long term reputation? For example, some experts advise companies with upset customers to reach out to them directly to win them back. But, some companies have little regard for their reputation, especially those who control a large market share... companies with few competitors may find it worthwhile to alienate angry customers in order to save on redress costs.... This may help us understand why some of the most hated companies in America are so profitable and why customer service, unfortunately, remains so frustrating.
At one company "Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation...
"This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout."
As part of our research, described in a forthcoming article in the journal Marketing Science, we interviewed managers of call centers to understand how their customer service organization is structured, and the way it contains redress payouts. We found that most involve at least two levels of agents. The Level 1 agents take all incoming calls and hear each customer's complaint first. These agents are typically limited in the amount of redress they are authorized to offer to the caller...
So what about the idea that frustrating customers has consequences on customer retention and long term reputation? For example, some experts advise companies with upset customers to reach out to them directly to win them back. But, some companies have little regard for their reputation, especially those who control a large market share... companies with few competitors may find it worthwhile to alienate angry customers in order to save on redress costs.... This may help us understand why some of the most hated companies in America are so profitable and why customer service, unfortunately, remains so frustrating.
At one company "Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation...
"This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout."
Just call your credit card company and issue a chargeback. One step, 15 minutes. They'll get the hint, I promise.
Yeah, I HOST their covks and balls and get aids, that is the definition of great service imo.
APK
Yes. Yes it is.
Short term bad behavior is profitable. Almost always.
Long term not so much.
It is like going to a restaurant and you get terrible service. You get up and walk out. They will be around for awhile. Eventually enough people will do that same thing. Where as the restaurant that gives good consistent service gets repeat customers and stays in business longer.
Bad customer service saves money because you don't care what happens after the customer exchanges their hard-earned money for your product or service (to the extent this is legally permissible).
Good customer service earns money because that customer is more likely to return to your company for future business, and recommend your business to others.
They may not get the hint, but at least you won't have to pay for whatever good/service that's messed up. I do it regularly, and the big companies have never bothered to dispute any of the chargebacks. I don't remember ever having to do this with a small company.
I don't respond to AC's.
This is why other countries vigorously enforce "fit for purpose" laws and have an ombudsman (government inspector) to examine the practices of monopolistic industries.
you'll probably find that just 7 companies made 80% of the stuff you own. We gave up on enforcing antitrust laws and let companies merge whenever they wanted.
You can no longer "vote with your dollars". At this point the only thing holding them back is a (very mild) threat of government regulation. Even that is viewed as just another minor expense buying off politicians.
I've said it before and I'll say it again, we can change this whenever we want. But it involves some trade offs. People have to become more politically active and their politics have to be more focused on economics.
Also, people have to band together and agree that _nobody_ gets screwed over. One of the chief problems we have is that folks want gov't regulations to protect them and their interests but lose interest (or become actively hostile) to anything that might impose the slightest cost on themselves.
This is encapsulated the the phrase "I got mine, fuck you". That shit needs to stop.
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People love to be abused.
Call me old fashioned but I remember when we had to support IE 6 and write ancient code and screw 70% of people with modern browsers all to protect 10% of customers. Why? Would you tell 1 in 10 customers to fuck themselves? Of course not!
Same principle I apply when I used to consult or treat coworkers. If they do not like doing business with me then I should be fired. Plain and simple as work is a privilege. Customers are a privilege too not a right or a cost. Don't take care they will leave and go to a competitor who will.
http://saveie6.com/
I think that part of what you're describing comes down to people's inherent laziness, and their love of all things convenient. People have to be willing to do some things that are not as convenient as other things (ie: go to a store, and not buy from Amazon). I'm not sure that Americans will ever do this.
I don't respond to AC's.
In my country (Portugal), most people own a smartphone plan with pretty much "unlimited" minutes (from 500 to the thousands). These minutes include calls to most numbers, including other phones and landlines.
You would figure company support numbers would be landlines, right? And indeed they are based on a landline, but practically every single support number in Portugal sits behind paywall so-called Blue (808-prefixed) and Unique (707) numbers in order to keep customers looking for support in check. No only support, to be honest - every single company that previously did business through phones but transitioning to web-based measures, such as banks, mail/package services or even food delivery are pretty much using this tactic.
And of course, there are the smart-ass tech companies, such as Dell or our 3 ISPs. Dell has a great shenanigan, and I believe this one is international - they ask you to input the Express Code of your product for faster service, when in reality this will almost always put you last in line. If you ever had complications calling Dell support, next time try not putting in anything, even after they offer to "explain" where the product is, and you will be picked up almost immediately after. Local ISPs on the other hand have a nice tactic - they don't even offer phone support anymore (THE IRONY!), force you through a ticketing system where your sent messages are NOT kept for review, and they will always reply BY PHONE!!! What a great way to prevent contract liability. I had to set up a reminder every 6 months to ask my (whatever current) ISP when my current contract ends, because ending contracts early here is a thousands of Euro affair and we only ever have negotiating power when not under a contract.
"In San Francisco, the worst restaurants are at Fisherman's Wharf, and along Grant Street in Chinatown." - Bill, you again have zero idea what you're blathering about, lol. Go on for 12 instances of "blood plasma is sterile" next, eh?
You know nothing about these topics, why invent bullshit to fill the gap in your day? Go do something productive, educate yourself with actual information.
The worst restaurants in SF are mostly in the T-loin, the south-central-eastern border areas, a few in Chinatown, a few in the Sunset, and all but 2-3 in the Fisherman's Wharf area are actually quite good, if overpriced.
Chinatown in particular has seen an explosion of fine dining options in the last decade, as have the "tourist areas" around Union Square. The only "bad" restaurants are the cheapo greasy spoons that don't care, or chains.
Your rant is wrong, but I don't expect you to admit your assertions don't match reality. After all, you claimed blood plasma was stable like 12-25 times in a row even after being corrected, with links.
Stop blathering bullshit, find some integrity before you die.
This is (part of) the model that insurance companies use. _Especially_ healthcare.
They design computers nowadays to scratch their own itch, not their customers' needs.
Hence loss of replaceable components, headphone jacks, and the like.
And it took the professors how many decades to figure th
now we need to go OSS in diesel cars
"This may help us understand why some of the most hated companies in America are so profitable and why customer service, unfortunately, remains so frustrating."
I spent a few years working at Comcast. I know...I know...
We were routinely hounded about being more customer centric, improving customer experience, etc.
But at the end of the day, all they seemed to really care about were "did you prevent a truck roll". There was much lip service paid to improving customer experience, but what people were measured by were truck rolls and revenue.
Companies set up hoops for their customers to jump through knowing many won't put in the effort. Calculated effort. Many examples are possible. I bet companies mail out hardware they know is defective in some way knowing that a certain percentage won't take the time to ship it back. When I was ordering a new laptop a few months ago I had to ship 2 of them back because of bad pixels.
It also help when you essentially have a monopoly so people have no choice but to deal with your bullsh*t and lack of good customer service.
what the author of the original post thinks. Have they never had a customer service job? If they want to know they should get a job in the customer service department of one of these companies.
best buy did this with the hard upsells on stuff
but No Customer Service is a subset of Bad Customer Service.
It also is immensely profitable.
Why bother outsourcing your calls to a third world country (or US state where English isn't even a second language) when you can create "customer" interfaces that are designed to make it impossible to actually access?
Sometimes it's better to cut your losses, toss the offending hardware or software and do some reviews before you re-purchase.
Google for anything but heavily overpaid corporate support is a good example of this. Have you ever found a problem with a Google Service and tried to report or have it fixed?
There are other companies that are basically stealing anything you pay them for customer support.
They can't do anything about your problems, except bump them to "valued third party" support companies, who charge you even more.
Or how high SF retail restaurant rents are, apparently. Bill, you blather the dumbest shit sometimes. No, blood plasma is not sterile. Well maybe yours is, you artificially stubborn and stupid fantacist-asserter.
Profit = (sales) * (profit margin)
so is a function of two variables.
At some point along that scale, profit is maximized The company is happy because it's making lots of profit. The customers are happy because they're getting stuff for cheaper because the company isn't wasting money on excessive customer service.
If you're a naive businessman who thinks you should make sure 100% of your customers are satisfied*, then yes having worse customer service will increase your profits Likewise, if you're a naive businessman who thinks cutting customer service expenses will always increase profit, then no, at some point having worse customer service results in decreased profits. Pretty much everyone who has run a business understands this. These professors would too if they'd spent some time running a business instead of only theorizing about them.
* (The phrase, "the customer is always right," doesn't mean you should give the customer whatever they demand. It means you're better off selling the customer what they want, rather than what you think they should get. In other words, what the customer thinks they want is always right. The phrase has unfortunately been appropriated by abusive customers trying to justify their excessive demands for service from businesses.)
Buying and shopping local is great, in the sense you more directly help your peers keep food on their tables and put their kids through school, etc.
I'm not sure that it helps solve the problem of too many big corporate mergers and too many products made by the same few companies, though?
For example, despite all the prodding and begging for people to patronize our local restaurants, it's being revealed that many of them are really just preparing food that they get trucked in from a big supplier, ready to thaw, heat and serve. So their "specialties" are really just ones created by another big corporation and resold for these places to pretend their own chefs created for you.
I don't think you can avoid buying products made by the "big guys", in most cases. You can sometimes choose to let a small, family owned business make profit off the top of reselling them to you though.
Long-term: no. You will get a very bad reputation and lose a lot of business if or as soon as people have an alternative. But that takes a while. With the focus of the MBA-morons on just the next quarter, they only see the short-term and think they are doing things right.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
... is a moron that will not punish companies.
We saw this in videogames 20 years ago with the rise of "MMO's", aka the idea of not owning the game software you are buying was idiotic and people fell for it. PC rpg's in development were rebranded and became "mmo's" with that steam was forced into half-life/cs in 2004 to steal the fucking game.
The internet has been the greatest force for corproate fraud, theft, mass invasion of privacy and destruction of human culture in all of human history and it comes down to the fact the average person is just subhumanly retarded with money. The fact that many games are now "live services" that games like League of legends and Dota 2 can even exist and survive off people buying skins in a game they don't own and they don't even get the skin, it just sets a flag to display it. Same goes for the latest fortnite craze, stupid skins and chests making them billions in a game the morons playing it don't own or control.
So if anything free market theory proves - crime pays because the average human being is just subhumanly retarded and will just bend over infinitely.
HILARIOUS u ADMIT u have a /. acct & STALK me by UNIDENTIFIABLE ac https://hardware.slashdot.org/... - YOU have ISSUES, lunatic.
See subject & that's the "best ya got"? It proves You WISH you were ME (as your POOR imitation = the sincerest form of flattery).
Instead of WASTING your life STALKING me by UNIDENTIFIABLE anonymous posts OR IMPERSONATING me (since you WISH you were me)? Make a Wheel https://isc.sans.edu/forums/di... as I have that gives users more speed/security/reliability & anonymity NATIVELY doing more for less vs. ANY single 'solution' out there!
* LASTLY - the ONLY time you start IMPERSONATING me vs. STALKING me by UNIDENTIFIABLE anon posts is WHEN YOU ARE OUT OF "downmodpoints" I can easily NULLIFY by REPOSTING my posts RUNNING YOU DRY of them after you ABUSE them - I must've already, lol!
APK
P.S.=> I know WHY you do it though (out of "butthurt angst", lol): I've BLOWN YOU AWAY so many times under your MANY alter-ego SOCKPUPPET /. accounts FAKENAMES you're out for "revenge" only to have EGG ON YOUR FACE yet again https://tech.slashdot.org/comm... + STILL YET AGAIN, lol https://it.slashdot.org/commen... ... apk
the companies that you see having the worst customer service often have little to no competition. The worst offenders here being Cable TV/ISPs. Often there is one or two providers available for a given address, so the Cable provider is of the opinion that the customer has to come to them if they want service. So treating them like crap doesn't lose them anything.
On the flip side, you look at the larger internet sales companies. There are fifty people selling the same product, and normally within fifty cents of everyone else. So if you get a crappy customer sales experience, you will take you next purchase down the road to someone else.
Good customer service is about triage and customer retention. If a customer has called customer service, you have already lost money on the sale because you have to pay a service rep to help this customer out. That help could be anything from hand holding, an exchange, refunds or gift cards. If the customer walks away from the customer service experience saying "This company fixed the problem in a pain free way and didn't complain or make my life difficult. I'd try them again." then you have a chance at another sale. If the customer is thinking "I got my refund but I had to pull teeth and sit on the phone for an hour", then that customer is going to reduce their shopping at that store and tell their friends about it.
In environments where the customer service rep is instructed to stymie or frustrate the caller: The short term goal of keeping the customers money is fulfilled. The long term goal of getting more of the customer's money fails. This adds to the fact that the customer service rep does not bring any perceived value to the customer.
So in a low competition environment, customer service sucks, because it is seen as not needed. In a high competition environment, customer service helps retain customers. Improved customer service takes a long time to see results; it can take months or years to see the results of a loyal customer base that is willing to pay an extra quarter on a product because they trust that customer service is not going to screw them if the product is wrong.
Architectural plans are like computer source code with a couple of differences: You only compile once.
not just upsells on upgrades and addons from geek squad, but flat out lies on products.. "yea, this amd a6 is just as fast as that i3 and costs 50 bucks less.".. bull-fucking-shit... it just had a higher profit margin and your warehouse is overflowing in them, so you pushed it harder.. never mind the fact it's only half as fast.
Who is paying him for this bullshit, and more importantly why? It serves no purpose.
you can go to the far ends of your city and odds are you're buying from those same 7 companies. Short of joining a commune you're stuck.
And it's not like you have a choice. The company you did business with for 20 years gets bought out by a mega conglomerate again, you're stuck.
Whether you buy from Amazon, drive down to Walmart, Target, Costco, whatever. The stuff you buy is made in one of a few factories by a few companies.
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mean that big companies can product massive amounts of goods with relatively few employees. One of the major problems our country is having is all those small businesses. The jobs they create tend to be lower pay then the factory jobs they replaced. At best they make an ok living for the owner. Plus the disperse the work force making Unionization difficult if not impossible. You end up with a bunch of poorly paid workers with no connections and no ability to lobby for better pay.
It's why we're at levels of wealth inequity not seen since the 1930.
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At this point, I'd guess that Comcast has not received more than $10,000 from me, since I kicked them to the curb for their poor customer service. I can't even begin to estimate the amount they've lost from my telling others of their poor service, and recommending alternatives.
n/t
Really HBR? It took a study for you to figure this out?
What about customer retention, reviews, PR, and FTC complaints? You might be able to batter down customers if you have monopoly status, but even then you just paint a target on your back.
Narrator: they didn't want your $, and it was not 10,000. Also, nobody listened to the suberranian voice that came from your parents' house. You overestimate your importance by about four orders of magnitude.
Isn't this similar to the scheme in the book 'Rainmaker' by John Grisham? To flatly deny the service and then create unnecessary loops to delay things intentionally.
Health insurance companies are masters of this. They are great at denying claims. (It is part of our deny-care health care system, but that is too long to discuss here.) Sometimes you get different answers about the same policy, or you are told that something is not covered when it is.
Unfortunately, when health insurance companies engage in the behavior, it can cost hundreds, thousands, or even hundreds of thousands of dollars and cause financial ruin. Even worse, delays can cause additional suffering or even death.
They piss you off over and over and over until you give up and hang up. Or they wear you down until you take a package deal you don't want paying too much. Or they fix it with a lower price and you are happy, then it jumps up to twice the original amount you were paying after 3 months. I hate this company.
'nuff said. Fuck them and there no good "promises."
"National Security is the chief cause of national insecurity." - Celine's First Law
Many people simply have no alternative to comcast, they know the service sucks and is overpriced but the alternative is dialup.
http://spamdecoy.net - free throwaway anonymous email - avoid spam!
With web-based systems for this (maybe even the phone ones too), how many customer RESPONSES could be automated? As in, if I have a complaint with company X, could their customer support maze be completed with simple scripting? Could a company actually be damaged by the reimbursement/warranty claim likelihood suddenly getting to 100%?
Anyone got a good test subject?
-This signature is strictly to prevent comments ending with questions or propositions.-
".....We don't have to." Lily Tomlin, 1976.
Never let a lack of data get in the way of a good rant.
Customer service is a branch of advertising, which is professional lying. Services like religion consist of nothing but lying, and, of course, politics.
I had DirecTV service many years ago. I actually liked it. But then I sold my house and moved into an apartment which faced north, so that it was technically not possible for me to get DirecTV satellite dish service there. So I cancelled.
But DirecTV still sent me advertisement after advertisement in the mail. I called them many times asking them to stop. They would say they took my name off their list, but I would still get barraged by ads. Finally, I got to one customer service rep who told me it was not DirecTV's fault I was getting the ads; rather, it was the post office's fault!!! The DirecTV ads only stopped after I moved out of state.
But I posted my story online, dogging DirecTV, a service I had once enjoyed. Apparently, a lot of other people were unhappy with DirecTV's practices too. Now DirecTV's market share has been falling year after year. So, as long as there is competition (or choices like cord cutting), bad customer service does hurt companies.
I've worked closely with legal and HR for years and call center topics appeared regularily.
The real reason has nothing to do with the customers. Those 1st line call center agents are the lowest rank of the corporate ladder, many of them are temp workers, lots of them are badly educated and need absolutely everything spelled out for them. No surprises there, it's not exactly the kind of job someone eager for a career and personal development would choose.
From the company perspective, they simply don't want to give these people who barely care which company they work for too many options to hand out freebies. Many of these people just want to get the call over with, because they are rated by number of calls handled and such KPIs. So if you give them a shortcut such as giving a customer a refund and be done with it, they will routinely take it, even when they shouldn't. That's why they have low limits of what they can hand out, and the more pricey decisions go to a 2nd level where you have more qualified, better trained and more interested about the company (e.g. not temp workers) people.
Assorted stuff I do sometimes: Lemuria.org
If there were a law recognizing excessive hassle -e.g. anything > 1h- to be compensated at professional tariffs, then SP's behavior would change in a heartbeat.
Perfectly reasonably IMHO. Such law is prone to lobbying during conception.
I hadn't the slightest objection to his spending his time planning massacres for the bourgeoisie... (P.G. Wodehouse)
I give each company exactly 1 chance to fix problems or I reverse charges though my bank.
I've gone to court over it and won with both times.
My hero is the guy that foreclosed on a Wells Fargo building after they didn't pay him back.
...to contact my State Attorney general regarding the Comcast Broadcast fee.
And they also bail on companies that have crappy customer service. This article is missing a lot of market variables.
I think in general customer service is there, but many would rather trash talk or give terrible reviews then actually address the issue to the company. You see this all the time in tech forums, people just complaining but haven't even contacted CS. As if complaining on a forum will get you noticed by a company rep. Maybe sometimes, but direct contact explaining your issue has always worked for me. I generally get good results and fixes. People are paid to help, but ranting and being a jerk isn't going to grease the wheels of the CS rep.
When you get bad customer service, make it unprofitable. Contact them again and again, deluge them with emails, until it costs them more to give you bad service than good. Don't just take it in the face, give it back. Escalate to someone whose hourly wage is significant. Open a case with the BBB. Share your story on social media. Do everything you can to be a total pill. Otherwise, they'll just keep doing it.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
How fucking obvious does it have to be to not require "a study"?
Any fucking idiot knows that putting up hurdles causes people to give up in frustration.
FUCKING DUH!
Apple
At this point, I'd guess that Comcast has not received more than $10,000 from me, since I kicked them to the curb for their poor customer service.
Is kicking Comcast to the curb worth downgrading to satellite or cellular with its 10 GB/mo cap? Is it worth quitting your job, selling your house, and seeking employment and a house in a different city where an ISP other than Comcast offers affordable home Internet service with a cap more than 100 GB/mo if any?
... the Comcast Method.
But if they're a vegan at a steakhouse they won't ever be pleased, you can either try to make water not wet or have one token vegan dish and blow them off.
Steakhouses have buffets for precisely this reason. If a group is all eating together, and a minority are vegan, the minority are less likely to veto a steakhouse if it has a decent salad bar.
If you cheat and don't actually put in effort and time you will have lower costs and more profit. Fuck the customer, its the American way.
This is ridiculous. There's lot's of remaining capacity for people to vote with their wallets. What prevents this from working (much of the time) is the collective action problem: in the moment of truth, the vast majority of the consuming public dials into the narrowest of all "what's in it for me" explanatory frames.
Many people actually prefer to purchase from apex predators, because then you are certainly among the "in" crowd (soon to become an "inn crowded" into a manger of dung and straw, but this takes actual foresight to suss out).
I never purchase anything of personal significance from an apex predator without a premeditated exit strategy.
It takes actual work to rise above tribal heuristics. If everyone else does this work, then you don't have to. Hence evolution has not designed us to reliably do this work.
Looks like Betteridge has finally met his kryptonite.
Best wishes, Sir Ian: it was nice while it lasted.
Does nobody remember how AOL handled things?
http://www.nbcnews.com/id/1030...
The only alternative for Internet access in my town is Frontier, which has even worse customer service track record than Comcast.
After fighting with them for two weeks to get service set up to my new residence, even Comcast's customer service with their four appointment windows during working hours looks good in comparison. Even if they show up late, it's better than them not showing up at all. Twice.
Of course it's profitable to screw over your customers. Higher prices and lower costs is the golden goose.
That's exactly the kind of thing a free market is supposed to curtail. Competition should be able to take customers by offering better services.
But of course, the market is, in many cases at least, working as designed. For every person who loses out on their complaint, there are 100 or 1000 people happy to be paying 0.05% less for the goods and services they purchase by not having to "subsidize" the people who got screwed.
"Hi, I've moved. My new address is sou3t0phgnwopihpn."
*bills keep getting sent to old address*
"Hi, I called before to change my address to sou3t0phgnwopihpn." "No you didn't" "Okay, can you change it now?" "We'll need your current address" "It's sou3t0phgnwopihpn." "That doesn't match our file *click*"