I am getting geared up for teaching my service operations elective this fall. I was consequently intrigued when a colleague forwarded a New Yorker essay to me on the “crisis” in customer service (Are You Being Served?, Sept 6). The article unfortunately is fundamentally disappointing. It begins with discussing the response to Steven Slater, the irate Jet Blue flight attendant, and noting that customer service workers are “frustrated … with stagnant pay, stressful working conditions, and obnoxious customers.” It then moves to observing that “everyone knows that the contemporary customer is mad as hell, too—fed up with inept service, indifferent employees, and customer-service departments that are harder to negotiate than Kafka’s Castle” before asking “When it comes to customer service, it seems, people are unhappy no matter what side of the counter they’re on. Why can’t we get it right?”
The analysis that follows then isn’t much. Yes, customer service is generally managed as a cost center, and that is going to put a premium on efficiency over pampering. Yes, companies are usually eager for growth and that means they are going to be scouting for the next customer as much looking after the ones they have. But that all seems old hat. One of the most basic frameworks in service management is the service profit chain. It is built off the idea that customer loyalty is the driver of profitability. It’s a useful way of thinking about some issues but I have been sorely tempted to drop it from my course because by the time I have students in the elective they are so tired of hearing this point. I start by noting that loyalty matters and they roll their eyes and start to doze off.
So what then is the way out of this customer service crisis? First, I am not 100% convinced that there is a crisis. I had a range of customer service jobs in high school and college and never found them fulfilling and wonderful. They were saddled with limiting employer rules and policies that frustrated workers and peeved customers. If worker and customer satisfaction has fallen over time, I suspect that it has as much to do with shifting employment patterns and rising customer expectations. When I was working front-line customer service jobs, it was not unusual for those jobs to be staffed by high school students who knew they would be moving on to better higher, better paying jobs in due time. Now those jobs (selling shows, bank teller) are not filled by high school kids but by grown ups with responsibilities and there is no clear hope that they will move on to better positions.
At the same time, customers can do so much more for themselves it really raises the bar of what they expect when they get to dealing with a person. I can do more banking transactions for myself from my computer than I could do for customers as a bank teller back in the Reagan administration. I can now find information on virtually any product online before I go and deal with a salesperson. Not everyone might see that as an advantage but self service (especially remote self service) of basic transactions is fundamentally very very convenient. Doing the legwork to learn about products before going to Best Buy or a car dealership may be time consuming but we are willing to do it because it levels the playing field. Yes, we might have believed we were getting better service from the local Chevy dealership when we went in with nothing more than we had read three months ago in Consumer Reports but we also could have been left with a nagging feeling that we got taken. Legwork prevents that.
I think that there’s a lot to be said for being good at delivering routine basic services. As a recent HBR article puts it (Stop Trying to Delight Your Customers, Jul-Aug):
Consumers’ impulse to punish bad service—at least more readily than to reward delightful service—plays out dramatically in both phone-based and self-service interactions, which are most companies’ largest customer service channels. In those settings, our research shows, loyalty has a lot more to do with how well companies deliver on their basic, even plain-vanilla promises than on how dazzling the service experience might be. Yet most companies have failed to realize this and pay dearly in terms of wasted investments and lost customers.
Another take on this is that is many firms due the plainest vanilla pretty well and it raises consumers hopes on how other interactions will go. Pretty much any bank offers online banking and ATMs. Virtually all of those will handle basic deposits and transfers. A customer can then handle most of her transactions pretty easily. But that raises the question of why the last 10% of transactions can’t be as easy as the first 90%. From the firm’s point of view, however, what’s left is the hard stuff and that work was never as easy and problem free as the first 90%. That’s true even if the work hasn’t migrated to self-service channels. The available IT support for transactions has increased enough that a large chunk of interactions are easy for an agent to execute but that still leaves the last 10%. It is also worth noting that smoothing the easy stuff is not a path to strategic advantage. If every bank can run an ATM network well, that becomes a requirement of the business, not a point of differentiation.
That all makes sense if one focuses on transaction-oriented businesses like financial services. One can question whether that still applies if one looks at “high touch” services that necessarily involves more interaction with front-line staff. The poster child here is the airline industry. I am not sure there is another business where people uniformly perceive such a decline service.
Unarguably, air travel is not as pleasant as it once was. The question is whether that reflects companies not carrying about customer service or just an inevitable evolution of the market. I think that one can make the case for the latter. In virtually every other service, multiple formats have coexisted. You have had the Ritz and Holiday Inn. You have had McDonalds and fine dining. For much of the history of the airline industry, you have had a much more one-size fits all approach to service. Here is how this blog’s favorite executive puts it (Ryanair’s O’Leary: The Duke of Discomfort, Sept 2, BusinessWeek):
O’Leary believes that the way airports are designed to handle baggage is a cumbersome vestige of a bygone era, dating to the years between world wars when the only people flying were the likes of the Vanderbilts and Roosevelts. “They were switching out of the presidential suite on the cruise ships, where they had a whole team of flunkies with white gloves who carried their bags, and onto Pan Am, where they expected the same thing. Well, sorry. It’s 2010. Carry your own bag.”
Over time, customers will adjust to different levels of air travel. No one seriously complains that the Holiday Inn is not as nice the Four Seasons. People understand the trade off and they will eventually come around on airlines. The real question on airlines may be how many levels of service the business will support. At the moment, at least in the US market, there is a race to the bottom. Everyone appears to see their future as being the Motel 6 of the sky. No one seems to be testing whether there is money to be made as the Marriott of the air.
A final point before leaving this post. The New Yorker article fails to note examples of firms that possibly break the mold and offer above average service. One example might be American Express. In their call center handling small business clients, they have done away with scripts and given agents far more time and discretion in handling calls (Making the Call for Themselves, Aug, Workforce Management). However, the move away from regimen to discretion has been paired up with a number of other changes:
In addition to giving employees greater autonomy, the company has revamped recruiting, upgraded training, established new career paths and developed a sophisticated pay-for-performance system. That system, in turn, depends on a new method of employee assessment tied directly to customer satisfaction surveys, meaning that reps like Tate are under constant scrutiny.
The payoffs to this have been significant:
So far, this combination of exacting metrics and more sensitive employee relations has paid off in lower turnover and top-flight service. Indeed, American Express has earned J.D. Power & Associates’ top ranking for customer satisfaction among credit card issuers for three years running.
This raises some interesting issues. In the short-term, there is a trade off between efficiency and handle time. You need fewer agents when each transaction takes less time. However, over the long-term, costs increase and quality suffers as turnover increases. How then should a firm balance employee satisfaction, turnover and efficiency? That’s an interesting research question.