New Customers and Poor Service
By Tom Ryan
James Surowiecki, the author of Wisdom of Creeds, believes
a fixation on new customers is ultimately the root cause of poor customer service
levels across corporate America. But he also said it’s a natural tendency
for management to do so.
In his column for The New Yorker, Mr. Surowiecki
tackled the topic of customer service as Jet Blue flight attendant Steven Slater’s
temper-tantrum a few weeks ago drew widespread attention to stressed-out service
workers. At the same time, the shabby treatment of customers was underscored
last year by Dave Carroll, whose guitar was broken by United Airlines luggage
handlers. A song by Mr. Carroll about the incident has generated more than
nine million views on YouTube.
Mr. Surowiecki said most companies have a “split
treating customers. Many execs describe customer service as “essential to
success.” They are also aware of how the internet can cause widespread damage
to a firm’s reputation. Ultimately, however, the return on investment around
customer service is often lagging.
“Customer service is a classic example
of what businessmen call a ‘cost center’ — a division that piles up expenses
without bringing in revenue,” wrote
Mr. Surowiecki. “Most companies see it as tangential to their core business,
something they have to do rather than something they want to do. Although some
unhappy customers complain, most don’t — one study suggests that
only six percent of dissatisfied customers file a complaint — and it’s
tricky to quantify the impact of good service.”
Part of the problem is
the challenge of measuring and quantifying customer service improvement. And
with an overall push for greater efficiencies and savings, managers often trim
front-line staffs and take other steps to minimize costs in serving existing
customers. At the same time, more marketing dollars are allotted to reach new
customers to drive top-line growth.
“The consultant Lior Arussy calls this the ‘efficient relationship paradox’:
it’s only once you’ve actually become a customer that companies
put efficiency ahead of attention, with the result that a company’s current
customers are often the ones who experience its worst service,” wrote
Economically, Mr. Surowiecki said focusing on the new makes
little sense since it’s more expensive to acquire a new customer than
to retain an existing one, especially as customers are showing less loyalty
to sticking with businesses.
Discussion Questions: Why do you think so many companies fall short in the
customer service area despite a stated commitment to it? How does a company keep
a healthy balance between addressing new and existing customers?