Customer Service – the Good, the Bad, and the Ugly

Le client n’a jamais tort – César Ritz (1850-1918)

Fastest Way to Lose Customers - click for full infographic

Regardless of language or adage used, customers are the lifeblood of any business. Without customers, there is no business. How is it that businesses lose sight of this? Sometimes customers are taken for granted and are not part of a company’s core values. Other times, as organizations and processes grow in complexity they loose sight of the customer. And quite often teams don’t take sufficient time to look at themselves from the customer’s perspective.

As shown in the infographic above, it is really about the customer experience if 68% of lost customers leave due to poor treatment. It doesn’t matter whether your product or service is consumer focused (groceries, clothing, electronics, medical, legal advice, etc.) or industrial (semiconductor capital equipment, wafer test probe cards, nuclear power plants, etc.). The only difference may be the time scale and the magnitude of the relationship.

I know plenty of industrial customers who loathingly purchased products from Company X since there were no other suppliers who could meet the requirements. Company X historically was well known for its high prices and arrogance based upon their technically superior products. But I can assure you that these “customers” did everything in their power to enable the competitors. The competitors not only drove the price down, they developed more cost effective technology and have since taken significant market share. Company X is no longer the dominant supplier and their stock is now trading below their cash balance after many quarters of significant losses.

Management teams should regularly step back and take a look at their products and markets from their customer’s perspective. In addition, they should regularly audit processes and immediately make corrections especially when a customer takes the time to complain. Various statistics are reported that over half to upwards of 96% of dissatisfied customers don’t complain – they simply take their business elsewhere.

With values, it is often more illustrative to describe examples of behavior than attempt to describe the value itself.

The Good – or should I say “Excellent”?

  • Nordstrom – Much has been said about their legendary service starting with the tales told in Peters and Waterman’s In Search of Excellence. I am a big fan and know from personal experience that they simply over deliver on service. Three years ago I bought a new sports coat for a very important meeting. They tailored the coat and I picked it up the day before the meeting. After my meeting, as I was getting in my car in the bright sunlight, to my horror I noticed a one inch pull near the lapel. I immediately called the menswear department to ask what I should do. The salesperson from whom I bought it was not in that day however the salesperson who answered the phone simply said it was “totally unacceptable” when I described the problem. She immediately ordered me a new coat, had it tailored and simply exchanged it, no muss – no fuss – no paperwork, a few days later.
  • Apple – Regardless of the issues with their supply chain and corporate culture, their customer service is tops – both under warranty and under their paid AppleCare programs. Novice to moderate tech savvy friends swear by the “Genius Bar“. The few times I have used their support for very specific technical items, I have been impressed by simply entering your data on the Express Lane and getting a call back within the stated time (never more than five minutes). The people I have spoken to actually had considerable knowledge about the specific issue – these are not your typical call center first level employees. On occasion, they even recommended third party solutions when the Apple solution was lacking. And a big plus – the call centers were all in the US!
  • Charles Schwab – We have used their financial services for several years. Every time David calls, he asks what have they put in their drinking water? They seem to understand your concerns, the first person you speak to takes ownership of your issue – no passing the buck or transferring your call, they do what they say, and they follow up. Plus they are always upbeat and pleasant. David is intimately familar with help desks having managed a back line support team for mission critical data centers and knows how hard its to have employees do this consistently well.

The Bad –

Most of us have had plenty of bad or mediocre customer service – everywhere from restaurants where the server’s smile is forced to the total chaos of the department of motor vehicles (DMV). Sometimes the employees are trapped by silly policy and procedures. Or sometimes the employees simply do not care or are otherwise indifferent to the customer’s plight. These organizations do not necessarily mean to be mediocre, they simply have not helped their staffs to understand the connection between customer satisfaction and the bottom line.

The Ugly –

This category is reserved for the worst of the worst including companies that have downright “customer abusive” policies and procedures. When you have problems with your wireless carrier, just remember their heritage and mentality of “we don’t have to. We’re the phone company.” (See Lily Tomlin’s Saturday Night Live skit for a good laugh when you are next on hold.) They are trying to improve, but they have a long way to go.

More recently, I ran in to a very abusive software company. The software products are very good – they work exceedingly well and have all the features you might want. As a customer you either pay for a monthly subscription or a slightly discounted yearly one. My yearly subscription ended in December and seeing the charge on my credit card, I decided I should drop the subscription since I was no longer using the product. I went to the website and found there is no button or form to fill out to cancel the service. It turns out you need to contact customer support. And the answer they give you is sorry, no refunds since you failed to cancel thirty days before my renewal date per their terms and conditions:

9.2 Annual Subscription by Credit Card. In the event that Your subscription to the Service is for a year and the payment is by credit card, PayPal charge or direct debit, Your subscription will automatically renew at the beginning of each subsequent anniversary year unless You or XYZ give prior written (including email) notice of non-renewal at least 30 days prior to the expiration of Your current year subscription. Upon any annual renewal, the payment arrangements in place for the prior subscription year shall remain in place, unless You and XYZ agree otherwise

This gem is buried within an eleven page, 6300 word terms and conditions page that is provided via a link when you sign up. (And when was the last time you did more than quickly skim a T&C document when purchasing software?) They don’t even provide you with an email – like many reputable firms do – that reminds you that your subscription is about to automatically renew.

The answer did not change even after escalating this to a support manager and directly emailing the president of this publicly traded company  – no refund, not even a pro-rated refund (for 11 months). A quick Google search turns out they have been pulling this sham on many people with numerous complaints to the Better Business Bureau. After indicating that I had considered buying one of their more expensive subscriptions (for web collaborating software) but would not based upon this experience, they did finally offer to “work something out”. Too late, they have just lost another customer and I am no longer recommending their software to anyone. Bottom line, I do not tolerate businesses that have policies that are simply unreasonable.

In today’s age of social media, one upset customer can have a significant audience and their complaints can influence many potential customers. An extreme example of this is David Carroll’s United Breaks Guitars video which went viral and has 11.5 million (yes, million) hits on YouTube. I’m sure that this is publicity that United would rather not have. Mr. Carroll has turned these “lemons into lemonade” and received a big boost to both his music and speaking career and helped to co-found a website for consumer complaints.

What do the Good companies know that the Bad and the Ugly haven’t figured out? It is that customers who are satisfied are better customers – they form long relationships (brand loyalty) and spend more. One survey claims that “the best customers outspend others by ratios of 16 to 1 in retailing, 13 to 1 in restaurants, 12 to 1 in airlines and 5 to 1 in hotels and motels.” And as Company X found out, dissatisfied customers will do what is necessary to become satisfied even at your company’s expense.

Therefore, you owe it to yourself to benchmark your company against the best in your industry and the world’s best companies in regards to customer satisfaction. Do you know what your customers think of your company and products? Do you proactively ask for customer inputs and are you truly listening to your customers? After looking at everything from your customer’s perspective, what should be changed? What else can be done to exceed expectations and delight your customers? In the end, success and happiness comes from happy customers.

As César Ritz, Harry Selfridge, and Marshall Field said best: the customer is always right!


Full disclosure: I’m long on Nordstrom (JWN) and am thinking of shorting the offending software company.


One thought on “Customer Service – the Good, the Bad, and the Ugly”

  1. Wonderful post Ira. Its not about the answering a customers question its about understanding the problem and helping to solve it.
    I recently experienced Apple’s policy with the recall of the original iPod nano. I purchased this 6 or 7 years ago when they first came out as a Christmas gift for my son…… roll forward a few years and I get the nano back and load my music etc. Been using it for a few years and a letter shows up from Apple indictaing that the Nano may be recalled due to a potential hazard with the battery. The serial number falls within the range of poteially defective products so I receive a box, prepaid to ship it to Apple.

    The Nano is returned to Apple and 2 days before Christmas they send me the replacement – a new 6th generation nano with 6Gb of memory – the original had only 1Gb. I was blown away that Apple took this approach – I have shared tsi story with anyone who listens because it is simply incredible that so long after the warranty ran out they stodd beind there product – no pro-rating of the value, no cost adjustment …. a simple 1 for 1 replacement.

    Re the telephone company – I could not agree more. The service model is unsustainable and we watch as one company after another fails. I think a better comedic sketch and one which still makes me laugh is Elaine May and Mike Nichols … Check it out ..

    Or perhaps the scene in the movie falling down — I cannot look at a menu and see images of food without thinking about this

    Now how do we get those who work for us in the federal government to understand the idea of service whether it is the DMV or any of the the other “agencies”. When we realize that we pay their salaries it just adds insult to the injury.

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