How Good Does Customer Service Have To Be? The Answer Will Surprise!
It’s the secret large companies know and customer service advocates don’t. How good does customer service have to be so as not to negatively impact business?
Q: You’ve often said that customer service is neither a right belonging to customers or an article of faith tendered by companies, but a business tool to achieve business results. How “good” does customer service have to be to make an impact on the company’s business results?
Robert: First we have to qualify the answer with an “It depends”. If a business works at the high end of niches, or in specific niches, such as the hospitality industry (hotels, restaurants), service becomes far more important, and customer service levels, and the customer experience must reflect that the customer is paying primarily for spectacular customer service.
However, in most other businesses, and particularly in some kinds of industries, customer service quality can be quite low, or even abysmal before it actually affects business.
Q: Can you give some examples of business situations where customer service levels needn’t be high?
Robert: Sure. Generally, large niches/industries where there are only a few viable competitors. For example, telecommunication — cell phones, cable and satellite television, land line telephones, is the most obvious answer. Banks, too.
It’s not that customer service is irrelevant here, but that there are forces that operate to keep customers where they are.
Q: That last bit sounds like a good topic for a later interview, but for now, how do you know all this? Do you have data to support this position?
Robert: I think so. If you take a look at the companies ranked in the WORST TEN on customer service, year after year, you’ll see that most of the companies repeat year after year. You’d think that if they were being severely damaged by customers’ perceptions, they eventually fade away, sort of like a customer service Darwinism effect, but they don’t. Companies like Comcast, and Verizon are always badly related, yet they continue to produce profits.
Q: But that doesn’t fit in with common sense. We hear all the time that unsatisfied customers tell 20 or 30 people about their experiences, and that social media is used to share complaints. Or that surveys consistently show that most people will stop doing business with companies that offer poor customer service. How does this all fit together?
Robert: Some things don’t make common sense because common sense relies on only limited understanding. To understand how customer service works we need more than superficial understanding of how people make decisions. First, all of the points you try to make reflect what people SAY, not what they DO. People SAY they tell 30 or however many people. People SAY they stop doing business with lousy customer service companies. When asked people put forth evidence of how they want to be seen, and it happens that most people want to be seen as strong and decisive. In most cases the customer bark is worse than the bite. It’s more the rule than the exception that customers may say a good deal, and threaten to take their business elsewhere, and often don’t do that at all. Which is why companies that save money on customer service continue to do well.
Some things don’t make common sense because common sense relies on only limited understanding. To understand how customer service works we need more than superficial understanding of how people make decisions.
Q: So you’re saying much of the complaining is hot air?
Robert: In a way. People mean it when they say it. It’s just that their actual choices/behavior are influenced by many variables/forces and customer service is just one of them. Here’s an example: A young couple with a baby run out of Pampers. Their last visit to Walmart (perpetually ranked badly on customer service) ticked them off no end, the customer experience being ruined by lazy staff, long lines, indifference and items being unpriced and hard to find. They vowed never to return, and believe you me, they meant it.
But now, it’s a rainy night, only a week after. Both parents are tired. Is Dad going to go to the competition located 5 miles away or to Walmart which is half a mile away? Is Dad going to spend 20% more on the diapers at the competition? Of course not. He’s heading to Walmart because its convenient and for the better price. Convenience and price will almost always trump customer service woes provided the woes aren’t “all that bad”. Dad might grumble, but he’s going to Walmart.
Or consider bad service with cable or satellite television. Have you ever switched television systems and dealt with having to get new hardware? Only to find out the new provider is just about as bad as the old, terrible provider? Most companies in these niches have equally poor customer service. Customers give these companies huge leeway, even while grumbling, before they’ll pull up stakes.
Q: There’s a lot to think about here. I hope we can talk about this more in the future. Since our time is up, do you have a bottom line statement on this, pardon the pun?
Robert: Yes. I don’t want to encourage poor customer service, or tell businesses they should be sloppy. I’m trying to debunk the “common sense” views about customer service’s impact on business results. It’s a lot less than you would think. The effects exist, but simply aren’t as powerful, aren’t nearly as powerful as is claimed.
It doesn’t take much for people to complain about customer service, but it takes a whole lot to get people to stop doing business with a company. Convenience, habit and price usually trump poor customer service.
