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Cutting customer service can be penny wise, pound foolish

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[By Zhou Tao/Shanghai Daily]

Is customer service a lost art, or are today's customers harder to please?

On the one hand, moments of tear-your-hair-out frustration are commonplace - from shopping in stores where sales associates are nowhere to be found, to dealing with salespeople unable to help locate a sought-after item, to encountering repetitive robotic voice messages that never lead to a live customer service rep.

On the other hand, the rise of 24/7 help desks, ubiquitous pop-up bubbles on shopping websites that offer assistance, and the ease with which consumers can dress down businesses in 140-character tweets, have arguably made companies more attentive - and accountable - than ever before.

"We are more demanding," says Peter Fader, professor of marketing at Wharton and co-director of the Wharton Customer Analytics Initiative. "We have a 'customer is king' mentality, and we have come to expect world-class treatment. We want everything to be easy: simple customer returns, constant telephone access to the company and perfect products in every color. We're just spoiled, plain and simple."

Despite technological advancements that ostensibly make customer service better, the United States' national level of customer satisfaction has not budged much since the mid-1990s. According to the American Customer Satisfaction Index (ACSI), consumer contentment stands at 75.8 on a scale of 0 to 100. In 1994, when the index was created, consumer satisfaction stood at 74.8.

It seems that even in the land where "The Customer Is Always Right," many shoppers aren't happy. A Consumer Reports survey last year reported that nearly two-thirds of respondents said they had walked out of a store in the previous 12 months because of poor service. Among consumers' chief complaints: 71 percent mentioned an inability to reach a human on the phone, while 65 percent cited rude salespeople.

The economic downturn is partly to blame, according to Frederic Brunel, a professor of marketing at Boston University School of Management. Customer service is driven by what people are willing to pay for goods and services, he says. "Since the crash, customers are more price sensitive and have put pressure on companies to compete more in this area. That often comes at the expense of service."

Consider the plight of the airline industry. Customers are accustomed to paying what is, at face value, a relatively inexpensive fare for a flight. But airlines have not been able to maintain the same level of service for those fares. To compensate, they have added new fees for checked baggage and on-board meals. Many have also replaced human customer service associates with computer-automated call centers. This trend began before the recession, but the prolonged slump has exacerbated it. "The airlines are trying to align what, when, where and how much to deliver with the amount of revenue they can get," Brunel notes.

In a financially constrained environment, companies are increasingly tracking usage of their products in order to segment service delivery. "Because there is more information available, the dollar sign on each customer is much clearer," says Brunel. "Companies provide a different level of service to a different class of customers. Hotels and airlines do this best, as they have loyalty programs involving different tiers of customers ranked in terms of status: gold, platinum, diamond, what have you. The airline knows if you travel 100,000 miles a year with them. " If you do, "you get better service. You get to the front of the queue. You get priority screening at the airport. You get to check bags for free. You get a complimentary glass of wine. You are pampered."

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