Bad Customer Service? Its profitable.

Companies lie to us all the time. They fail too; everyone makes mistakes. But in December last year Marketing Science journal published a paper demonstrating that at least some companies knowingly supply bad customer service after failing their customers in order to exploit them for further profit.

If this seems shocking – it shouldn’t. It’s all too familiar. The company fails and you phone up for a refund or a remedy and are faced with an automated voice menu, then put on hold, and finally if you do get to speak to an agent you’re told they aren’t authorised to provide a refund and won’t help you.

Customer Service is usually behind automated services and being put on hold.

So you call back, and ask to speak to the manager. And that, it turns out in the paper — is the trap. And the point. The research suggests that some companies may actually find it profitable to create hassles for complaining customers, even if it were operationally costless not to.

Most if not all first line customer service staff are restricted in offering real redress, and in many cases are not authorized to provide refunds. Their job is to politely but firmly turn you down and discourage you from calling back. The people who DO call back are clearly serious about seeking redress but – crucially – can afford the time and call cost and the hassle cost of pursuing the company.

That’s why most women, minorities, the elderly, the anxious, the stressed, and those in real trouble don’t call back. They can’t afford to – and the company wouldn’t want them to anyway – after all if they succeeded the payout would be much larger. Better to deny them and let them suffer in silence. And yes, this is discrimination.

What makes this worse is that most customer service lines cost the customer money. They don’t want to turn you away quickly, they want the customer to count the minutes as they tick by, and realize they are draining their minutes, their battery, and their account by daring to ask for money in return. And it’s not just the apparently disreputable companies which do this – banks, insurance firms, estate agents, tech firms, large stores, and the list goes on.

American customers spend, on average, 13 hours per year in calling queues. According to a 2010 study by Mike Desmarais in the journal Cost Managementa third of complaining customers must make two or more calls to resolve their complaint. And that ignores the portion who simply give up after the first call. They can’t afford the hassle cost.

In fact, according to a 2017 survey by Customer Care Measurement and Consulting the Carey School of Business at the Arizona State University, over three quarters of complaining consumers were less than satisfied with their experience with the given company’s customer service department.

But companies don’t care. They know they aren’t providing the service they promised, and if they can keep their profits from failing their customers by failing to provide good customer service then so much the better for them. The key point here is that it is deliberate whatever they may say in public, any company with a tiered customer service department prefers filtering out customers rather than serving them.

United Airlines has developed a reputation for poor customer service.

Consider United Airlines, among the lowest ranked of major airlines on customer servicewhich claims to offer a “level of service to our customers that makes [United] a leader in the airline industry”. This is in line with surveys over time that show United Airlines customers rate their customer serve as generally bad and even becoming worse. Despite promises companies make to treat people well, we don’t believe them, and rarely act surprised when they fail.

How it works

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.

For example, one Indian call center that serves the seller of language learning products forbade Level 1 agents from offering any monetary refunds. These agents could only offer replacement items or provide information on the status of an order.

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 from the call centre manager, or Level 2 agent. 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.

Companies get away with this because they believe they have a stable market position and prefer to alienate customers they have failed rather than pay to provide decent service. The best way to deal with them is to hold them to account.

How to respond

There are a few strategies that help:

  1. Ask if the agent is authorised to give a full refund as your first question.
    • Most people are far too cautious and give up control. Knowing you need to speak to a manager means you can be transferred and save time and money by speaking to the right person quicker.
  2. If there is an automated message saying that ‘the call may be recorded for training or verification purposes’ when you speak to an agent calmly ask the agent to confirm if the call is being recorded, and if it is or might be then state you are recording the calls, and all details of the call for documentation purposes.
    • Accountability is power. Take the person’s name, their official role, their manager’s role, and ask them to confirm if they have the level of training and authorization required to deal with your refund request.
  3. Ask for a total of the amount you’ve spent with them as a customer during your time with them. It is your right to know how much they have cost you to date. You can and should also ask if they’ve factored in the cost of calling them, and lost time and revenue in having to deal with the issue the company has created.
  4. Ask for their public liability insurance details – all registered companies must be insured if they fail the public, and getting those details means you can always make a claim against that insurance firm if the company fails to satisfy you. Failing to have public liability insurance is illegal. Failing to disclose those details is also against the law in the UK and the USA. This is will convince them almost immediately that a full refund is a better option than stalling.
  5. Check if they are owned by another company or holding group and phone them as well. Companies are always accountable to their bosses and owners, and those people do not want trouble on their doorsteps if their assets are failing.

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