Is Customer Service Broken?
Q: Robert, do you feel that customer service, generally speaking, is broken?
Robert: That may not be the best question to ask, since it’s kind of a simplistic question. Before I get to that, let’s keep in mind that far too often, we only skim the surface in looking at customer service issues, and that simple questions often yield simple answers that turn out to be applicable sometimes, and don’t work other times.
Of course, to answer, it depends on what “broken” means. We know that surveys overall tend to indicate that customers perceive service as getting worse. That’s not to say that there are aren’t fluctuations and that the perceptions go across the board and across industries. For example, if you look at customer satisfaction with airlines or telecoms, you’ll find drops. If you look at customer satisfaction for high end luxury hotels, you probably will find customers generally feel well served.
Q: But generally though?
Robert: I think generally, customer service is in decline, and this will continue, because the root causes of poor customer service aren’t being addressed, and in many ways, cannot be addressed without substantial trade-offs to the customer.
While the overall tone of Robert’s interview is that customer service is broken, and the causes may not be “fixable”, he does indicate that if companies focus on the basics, service can hit levels that increase revenue, and create happier customers.
Q: Can you explain the part about root causes?
Robert: Root causes refer to the underlying causes of something, not the superficial causes, but the causes you MUST address to solve a problem. For example, let’s take a rude airline employee. One superficial cause many people would come up with is that the airline is hiring the wrong people — people who don’t “love” customers. There’s plausible, but it’s not a root cause. To explain why the rude airline employee behaves badly, because you want to fix the problem, you look deeper. For example, is he overwhelmed and frustrated due to staff cutbacks? Has the company created a negative attitude due to removing discretion from the employee to actually solve a problem? Is the environment such that burnout is almost a certainty? Or, perhaps its because the planes are late, the luggage gets lost, and the employee knows the company is screwing up?
Those are deeper causes. If you focus on hiring the right people, for example, and then put them in a context where the best people will burn out and develop negative attitudes, you aren’t any further along.
Q: Ok. You also mentioned trade offs for the customer in order to improve customer service. What do you mean there?
Robert: From the “outside” it will seem like companies, particularly large ones, are greedy and anxious to cut corners on service to increase their profit margins. As a result the “solution” from the outside is simply for companies to “get” (I hate that term but that’s how customer service advocates talk) that they should improve service levels.
From the inside though it turns out it’s not about greed, or at least not as often as people think. Many companies simply cannot afford to put more resources into their customer service because their profits are insufficient to do so. That may sound strange when a company rakes in 200 million dollars a year in profit, but straight profit isn’t the critical factor. What is is the return on investor capital at the share price level for public companies. I’ll cover that elsewhere, but for now, the bottom line is…well the bottom line.
For most (not all) companies, investing more money into customer service will NOT result in better financial performance, so if that’s the case, how can they do it? Well, what they ARE doing is trading off with the customers. For example, airlines are now charging for things they previously provided free of charge on an option basis, presumably so they give more freedom of choice to passengers, and also so they can maintain or improve basic elements of service (e.g. timeliness, better routing, less hassle). Or higher end retail stores will charge more, trading off price for service.
Customer service is NOT free. It’s not about having people smile. It’s way more complex.
Q: But the trade offs make customers mad anyway.
Robert: Yup. I remember a while back challenging people on the #custserv chat by asking them directly how much more they would be willing to pay for better service. Very few people even had the guts to answer, and the few that did claimed customer service is free, and should be “part of the package”. Presumably they want companies to provide better service, keep costs stable or lower them, and somehow stay in business. Doesn’t work.
Q: But there’s good research that says customers will pay more for good customer service.
A: Bad research. Bad data. Horrible interpretations. All that is based on survey data. It turns out behavior and survey results are strongly related. People say things about how they will behave and behave quite differently. The EXCEPTIONS occur in the high end. People, or at least some people, will pay more to eat at a fancy restaurant or go to a high end hotel, at least sometimes. But generally, not true. I published a mini-guide to social media research and why it’s not worth a damn for making business decisions (Giving The Business to Social Media Research
Q: We’re kind of rambling around here. Could you give a synopsis of where customer service is, and how it can be improved?
Robert: Sure. Let me do that in point form:
Customer service overall is worse. Customers want more, but are getting less.
The causes are complex and most people are completely missing root causes, such as overly complex systems that don’t work well, the lack of return on investment in customer service, and the real business issues of customer service, particularly in large companies.
Improvement is unlikely. Some of the root causes are so tied to our economic systems that unless the economic “rules” change, large companies can’t improve the levels of service, at least not enough to matter. It’s interesting that small, tiny companies may succeed in this respect where corporations fail. (let’s leave that for another time).
Q: Final question: So your outlook is bleak?
Robert: Actually, no. Here’s why. It’s quite possible to improve basic customer service, but it means focusing on what REALLY COUNTS, and not wasting resources on what does not count. It means rethinking customer service for THIS millennium. For example, I hate flying, particularly for business. I hate it so much, I drive when I can, and even occasionally decline engagements if I have to fly. It’s not that I’m afraid to fly. It’s that it’s a royal pain in the ass from beginning to end.
Does an airline need to give me free beer, rewards programs, and other amenities? NO. They need to get me from point A to point B ON TIME, every time without losing my luggage while giving me enough space on the plane so I’m not crippled for five days. I’d also like clean air, call me an idiot. On time, and convenient, and comfortable.
In addition, if the travel system, and this includes governments, can lessen time at airports, reduce all the immigration hassles I often experience, they’ll have gone a long way to get me to fly. The company that can promise and deliver BASICS WILL win my business.
I believe that’s where customer service for THIS millennium has to go. I believe companies will eventually recognize this and put their resources into the basic elements of service.
Imagine if one company in a niche actually sets up to be able to answer your call within one minute, consistently, and they deliver. And their competitors lose you in the phone tree. That WILL give competitive advantage. That’s a BASIC.
No amount of bonus points, or frills can compete with basics.
That’s the optimistic part. The part I’m not sure about, let’s say in the above example, is whether, from a business standpoint, it’s possible to do the basics properly. I suppose it depends.
