I promised my wonderful editor, Ben, two things about this week's
article. I would try to keep it shorter than some of my
recent articles, and I would disguise the names of the guilty
parties, so we won't have to pretend we don't speak English when
the attorneys call.
I have wanted to write about the subject of bad customer service for many months, but the obstacle is always the same. Other than ranting on ad infinitum about a subject that everyone can agree is a problem, is there a way to make money from customer service, whether bad or good?
Let's find out!
Where do I even begin on the subject of bad customer service? The incompetence, the rudeness, the lack of caring about one's job or the customer -- it's just rampant, and getting worse all the time in America. It stems from so many factors, such as minimal employee training, job dissatisfaction, corporations taking desperate measures to save money, a lack of loyalty and morale between management and employees, a declining education system, and even poor parenting!
You see it on your trip to the local fast food joint, where the young "workers" are too busy discussing their social lives with each other to pay attention to what the boring old customer needs. So they forget your drink, or give you a hamburger when you ask for chicken, or hand you back the wrong change. Then when you point out the mistake, you get a blank stare instead of an apology.
So you decide to eat in better restaurants, but even then your food is cold, overcooked, or too salty, or you sit there waiting for service that never comes. One time in the popular breakfast joint, Danny's (Hey Ben, notice how I changed the name there?), my wife and I sat at a table for 25 minutes without getting so much as a glass of water. Then the manager sashayed over, smiled, and said, "How is everything?" She was sorry she asked.
Recently I visited the big department store that's in every
mall. Hint: This store has been in business over 100 years
and has a famous catalog. I went there to buy a weed whacker
for my yard. I find the one I want, take it to the cashier,
and everything so far is cool. But then as she is ringing up
the sale, the cashier asks me for my phone number. Uh
oh. I politely tell her that I NEVER give out my phone number
to stores. She snarls, "Well without a phone number, I can't
complete this transaction!"
So I suggest that she put HER phone number into the computer. Well, she is not particularly fond of that idea and becomes even more surly with me. So now the fun starts. I tell her the store has no right to my private information. That falls on deaf ears. I tell her that I no longer have a telephone, but she is undaunted. Finally, I hint that I will be glad to wait (while holding up the line) while she calls the manager, so we can really discuss this problem at length. Somehow she then finds a way to complete the transaction without having to put my phone number into her computer. I leave the store steaming, vowing to never return. But where will I buy my lawn equipment?
Ever had this experience? You open your mail and discover there's a $37 error on your phone bill. So you call BT&T, and the automated system takes over:
"Welcome to BT&T, where you are highly valued as a customer."
"Press one for English".
"Press one for phone service, two for billing, three for Internet".
"Enter your 10 digit phone number" (of course, when you finally get a rep, they will again ask for your phone number).
Then you wait on hold for at least 10 minutes. After 10 minutes, you get a very pleasant woman, but with a foreign accent so thick, you can't understand what she is saying. You explain your problem, and you finally realize that she is saying it is not her department and she will have to transfer you. You start to protest, but it is too late, she is already gone. After 30 seconds of insipid music you hear a click, and you realize that you have been cut off.
It's a daily battle. You know the company that delivers
the nice packages in less than 24 hours? My wife tells me
that twice she has ordered labels from that company, and twice the
labels have arrived with mistakes in the printing.
Incompetence destroys company profits!
Last night I walked out of the well known store that sounds a lot like "Office Cheapo", having returned there for the third time to resolve an order for business checks that they screwed up. First they entered my order for a check register as "light bulbs" in the computer, then the guy who wrote my order put it on the wrong form, then the manager delivered my order to the wrong address, and finally the binder that was supposed to come free with the order wasn't free. But the final straw was the salesman saying that he would not charge me to re-order what I had already paid for, but had never received.
I walk out, determined to never go back there again either. Good Lord, I'm running out of places to shop! So I ask myself, if my family and I are having these customer snafus so often, are others having similar experiences?
The answer of course, is YES, and all you have to do to see how bad it's become is do a web search for complaints against any major company. You will be amazed at the number of disgruntled customers in America today. One web site asked readers to detail their worst customer service experiences, and received over 3,000 responses in less than 24 hours.
And the number one reason that people post their stories on these consumer complaint web sites is because nobody in the company is willing to resolve the complaint after the error is made. Nobody listens, and nobody cares.
I have wanted to write about the subject of bad customer service for many months, but the obstacle is always the same. Other than ranting on ad infinitum about a subject that everyone can agree is a problem, is there a way to make money from customer service, whether bad or good?
Let's find out!
Where do I even begin on the subject of bad customer service? The incompetence, the rudeness, the lack of caring about one's job or the customer -- it's just rampant, and getting worse all the time in America. It stems from so many factors, such as minimal employee training, job dissatisfaction, corporations taking desperate measures to save money, a lack of loyalty and morale between management and employees, a declining education system, and even poor parenting!
You see it on your trip to the local fast food joint, where the young "workers" are too busy discussing their social lives with each other to pay attention to what the boring old customer needs. So they forget your drink, or give you a hamburger when you ask for chicken, or hand you back the wrong change. Then when you point out the mistake, you get a blank stare instead of an apology.
So you decide to eat in better restaurants, but even then your food is cold, overcooked, or too salty, or you sit there waiting for service that never comes. One time in the popular breakfast joint, Danny's (Hey Ben, notice how I changed the name there?), my wife and I sat at a table for 25 minutes without getting so much as a glass of water. Then the manager sashayed over, smiled, and said, "How is everything?" She was sorry she asked.
So I suggest that she put HER phone number into the computer. Well, she is not particularly fond of that idea and becomes even more surly with me. So now the fun starts. I tell her the store has no right to my private information. That falls on deaf ears. I tell her that I no longer have a telephone, but she is undaunted. Finally, I hint that I will be glad to wait (while holding up the line) while she calls the manager, so we can really discuss this problem at length. Somehow she then finds a way to complete the transaction without having to put my phone number into her computer. I leave the store steaming, vowing to never return. But where will I buy my lawn equipment?
Ever had this experience? You open your mail and discover there's a $37 error on your phone bill. So you call BT&T, and the automated system takes over:
"Welcome to BT&T, where you are highly valued as a customer."
"Press one for English".
"Press one for phone service, two for billing, three for Internet".
"Enter your 10 digit phone number" (of course, when you finally get a rep, they will again ask for your phone number).
Then you wait on hold for at least 10 minutes. After 10 minutes, you get a very pleasant woman, but with a foreign accent so thick, you can't understand what she is saying. You explain your problem, and you finally realize that she is saying it is not her department and she will have to transfer you. You start to protest, but it is too late, she is already gone. After 30 seconds of insipid music you hear a click, and you realize that you have been cut off.
Last night I walked out of the well known store that sounds a lot like "Office Cheapo", having returned there for the third time to resolve an order for business checks that they screwed up. First they entered my order for a check register as "light bulbs" in the computer, then the guy who wrote my order put it on the wrong form, then the manager delivered my order to the wrong address, and finally the binder that was supposed to come free with the order wasn't free. But the final straw was the salesman saying that he would not charge me to re-order what I had already paid for, but had never received.
I walk out, determined to never go back there again either. Good Lord, I'm running out of places to shop! So I ask myself, if my family and I are having these customer snafus so often, are others having similar experiences?
The answer of course, is YES, and all you have to do to see how bad it's become is do a web search for complaints against any major company. You will be amazed at the number of disgruntled customers in America today. One web site asked readers to detail their worst customer service experiences, and received over 3,000 responses in less than 24 hours.
And the number one reason that people post their stories on these consumer complaint web sites is because nobody in the company is willing to resolve the complaint after the error is made. Nobody listens, and nobody cares.
Whatever happened to "The Customer Is Always
Right?"
In Fred Reichheld's book, "The Ultimate Question: Driving Good
Profits and True Growth", he calls these transactions "Bad
Profits", meaning that the company makes or saves money, but
simultaneously loses any future relationship with the
customer. In the past, the unhappy customer could hurt
the company's reputation by telling maybe 6-10 friends,
relatives, or colleagues about his experience. But these
days with dozens of Internet sites flourishing about bad
customer service, the unhappy customer can detail their
nightmare transactions to tens of thousands of people. If
even a third of them decide to not do business with that
company after hearing the complaint, that's a lot of business
to lose. Reichheld says that just a five percent increase
in customer retention will yield a 25-100 percent improvement
in profits.
To be fair to people who work in customer service, it is true that there are customers who will try to deceive a company, in order to get something for which they are not entitled. But I think the large majority of complaints are valid, and certainly the people who go to all the trouble to detail their story or post warnings on the Internet must believe they are in the right.
Does bad service = poor long term stock performance?
Since bad service is always felt as a subjective experience, I don't think there has ever been, or could ever be an objective study done on this question. But let me tell you about two electronics stores. One I will call "Circus Town" and the other "Great Buy". When you walk into my local "Circus Town", nobody greets you at the door. There are about 50 televisions turned on and they are blasting so loud, you have to shout to talk to the person next to you. The lighting in the store is very poor. It's a large store and you wander around, looking for what you need, but nobody ever approaches to ask if they can help you. You just feel like you want to leave as quickly as possible.
By contrast, when you walk into "Great Buy", the store is well lit. A polite young man or woman welcomes you at the door. There are sales personnel in each section of the store, and they ask you how they can be of help. They are friendly and explain things that you need to know in simple terms. The sound level in the store is normal, and you feel like you can think about what you're purchasing in a calm, relaxed atmosphere.
The stock of the "Circus Town" store sold for about $60 per share in 2000. Today it sells for $2.17. By contrast, the stock price at "Great Buy" recently closed above $39. They routinely beat earnings expectations. So what happens to stores like "Circus Town"? Why do they crash and burn?
It's simple. Poor management.
Does upper management even visit their own stores? Do they ever hire mystery shoppers to give them feedback about the buying experience? Do they train their staff in customer relations skills? I seriously doubt it. Instead, I have read that "Circus Town" is even cutting its experienced sales staff, and replacing them with cheaper new workers, as if that is going to fix their problems!
To be fair to people who work in customer service, it is true that there are customers who will try to deceive a company, in order to get something for which they are not entitled. But I think the large majority of complaints are valid, and certainly the people who go to all the trouble to detail their story or post warnings on the Internet must believe they are in the right.
Does bad service = poor long term stock performance?
Since bad service is always felt as a subjective experience, I don't think there has ever been, or could ever be an objective study done on this question. But let me tell you about two electronics stores. One I will call "Circus Town" and the other "Great Buy". When you walk into my local "Circus Town", nobody greets you at the door. There are about 50 televisions turned on and they are blasting so loud, you have to shout to talk to the person next to you. The lighting in the store is very poor. It's a large store and you wander around, looking for what you need, but nobody ever approaches to ask if they can help you. You just feel like you want to leave as quickly as possible.
By contrast, when you walk into "Great Buy", the store is well lit. A polite young man or woman welcomes you at the door. There are sales personnel in each section of the store, and they ask you how they can be of help. They are friendly and explain things that you need to know in simple terms. The sound level in the store is normal, and you feel like you can think about what you're purchasing in a calm, relaxed atmosphere.
The stock of the "Circus Town" store sold for about $60 per share in 2000. Today it sells for $2.17. By contrast, the stock price at "Great Buy" recently closed above $39. They routinely beat earnings expectations. So what happens to stores like "Circus Town"? Why do they crash and burn?
It's simple. Poor management.
Does upper management even visit their own stores? Do they ever hire mystery shoppers to give them feedback about the buying experience? Do they train their staff in customer relations skills? I seriously doubt it. Instead, I have read that "Circus Town" is even cutting its experienced sales staff, and replacing them with cheaper new workers, as if that is going to fix their problems!
Upper Management at "Circus
Town"
Ok, the point is, when you are considering buying stock in
a company for the long term, after you check out their
fundamental and/or technical analysis, take the time to
investigate their customer service, as well as the customer
service of their competitors. Chances are good that
whatever your experience, it will be similar to what others
feel about the company. Declining customer service
can ultimately lead to poor earnings and a mediocre to
dismal performance by the stock.
Another good example of this is the performance of the large Home Improvement Store that IS NOT Lowe's (LOW). A $65 stock in 2000, today it sells for about $23. Ask a couple of contractors if this major home store is as good as it was a decade ago, and after they stop laughing, listen to what they say. Then ask a couple of long term employees of the store for their views. In the meantime, Lowe's stock has outperformed this main rival with the declining customer service by over 100% in the past 10 years. No wonder most of the people with whom I speak say the customer service is far superior at Lowe's.
Caveat: An exception to the bad service = bad stock price rule is where there is a monopoly. My cable company, whom I will call "Comcrud" has had dismal customer service and excessively rising prices for years, but until recently there was nobody else in my area as an alternative. From 2002 to 2006, their stock even doubled. However, welcome competition may now be on the way with Verizon FIOS.
Poor customer service can be a major cause of declining sales, or it can also be the result of a company in decline where worker morale is suffering. Either way, when you see it repeatedly in the same company, you know that is a company whose stock is best avoided, or even shorted!
If readers would like to (briefly) share their worst customer service experience, feel free. It may help others to think twice about their investments. Meanwhile, the next time you have a really bad customer service event, don't yell, don't scream, and don't cry. Simply remember that we have total power as the American consumer. We can make a company, and we can break a company. Just stop conducting all business with that company, tell everyone you know about your bad customer service experience, and seriously consider shorting their stock!
Another good example of this is the performance of the large Home Improvement Store that IS NOT Lowe's (LOW). A $65 stock in 2000, today it sells for about $23. Ask a couple of contractors if this major home store is as good as it was a decade ago, and after they stop laughing, listen to what they say. Then ask a couple of long term employees of the store for their views. In the meantime, Lowe's stock has outperformed this main rival with the declining customer service by over 100% in the past 10 years. No wonder most of the people with whom I speak say the customer service is far superior at Lowe's.
Caveat: An exception to the bad service = bad stock price rule is where there is a monopoly. My cable company, whom I will call "Comcrud" has had dismal customer service and excessively rising prices for years, but until recently there was nobody else in my area as an alternative. From 2002 to 2006, their stock even doubled. However, welcome competition may now be on the way with Verizon FIOS.
Poor customer service can be a major cause of declining sales, or it can also be the result of a company in decline where worker morale is suffering. Either way, when you see it repeatedly in the same company, you know that is a company whose stock is best avoided, or even shorted!
If readers would like to (briefly) share their worst customer service experience, feel free. It may help others to think twice about their investments. Meanwhile, the next time you have a really bad customer service event, don't yell, don't scream, and don't cry. Simply remember that we have total power as the American consumer. We can make a company, and we can break a company. Just stop conducting all business with that company, tell everyone you know about your bad customer service experience, and seriously consider shorting their stock!
The consumer has the final say!
84 votes
Thank you for voting!
Comments:
meyer
11/2/2011 3:15 AM
what's a subscriber for a tycoon publ'n, i.e., the TAM seminar, who has a problem in receiving complete audios of the archived lessons, and has called and e-mailed re the problem numerous times, and not gotten the problem solved to do? No