We Prefer Bad Customer Service

Over at the New York Times' small business blog, there's an interesting post about why customer service is so bad. Jay Goltz, a small business owner from Chicago, attempts to dissect the problem. He blames a variety of factors ranging from over-educated sales people to the high cost of health insurance. While his theories are interesting and not altogether ridiculous, I have another to offer. We like bad customer service.

At first glance, that statement seems absurd. Nobody likes bad customer service. But I think that we like what bad customer service provides: cheaper products. Companies right now do not have incentives in place to promote good customer service, because they know that they'll be more profitable if they keep costs down and offer cheap products, because that's what people care more about.

What incentives could be put into place? Companies could pay employees who provide exceptional customer service more. They could also have more training on how to deal with customers and product information. Companies could also have more flexible return or maintenance policies for its products. All of these possibilities have something in common: they will increase costs which will result in more expensive products.

Here's a thought experiment for you. Let's say you have two options for a flight from New York to Miami. Everything about the two flights is identical except for two things: One airline has poor customer service, but offers you a ticket for $50 cheaper. Do you take the more expensive flight in order to secure the better customer service at a higher price?

I use this example, because I've seen it exactly replicated in my real life, especially with airlines. I have had so many problems with a certain airline that I often regret buying a ticket from it. Yet, whenever I go to buy new tickets, its prices tend to be the cheapest. And since I'd rather save some money and put up with bad customer service, I book it anyway.

This illustrates an important point: through consumer demand, we ultimately control customer service. If poor customer service was really bothered us, then we could boycott the worst of the perpetrators. I happen to be one of the few people who sticks to a boycott when I've been terribly wronged, but I think I'm in the minority. (For example, I haven't eaten Taco Bell in more than 10 years after swearing it off due to an exceptionally bad experience.) Most people have a very short memory when it comes to bad customer service, especially when low prices entice them return to the company where they experienced annoyance last time.

Goltz might disagree with me. He writes:

But the customers do notice. When you walk into a store, and there is virtually no help, it's because someone figured out that the company could save X dollars if it cut back the labor budget by 7 percent. When you walk out disgusted and sales go down, the store blames it on the economy or brutal competition. Then the company reacts by having another sale which further erodes profit margins. This cycle eventually results in another failed store.

That hasn't been my experience. Some of the most successful companies from a profitability standpoint also have the worst customer service. Another company with truly heinous customer service I've noticed over the years has been CompUSA. Yet, two decades after I noticed how poorly they treat customers, it's still kicking. So is that airline I hate. So is Taco Bell.

I guess it's not really correct to say that we enjoy bad customer service. Obviously we don't. But we enjoy low prices more than we dislike poor customer service. Companies could put incentives in place to improve customer service, but instead they offer us cheaper products. And despite our complaints, that's how we like it.

Update: As someone pointed out, since most of my problems with CompUSA, it had been acquired by a new company and its customer service may have improved. I haven't used it much since then, so I can't say for sure.