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Strategy

Customer Service *Is* Customer Retention

"Do we really need customer service?" If you believe this is a valid question read the following to learn why the fact that big companies abuse customer service doesn't mean that you should too

Adam Fout
12 July 2017

“Do we really need customer service?”

If you read that previous line and felt your heart skip a beat in fury, I’m glad that we’re on the same page…

However, if an alien were to zip on down to Earth and look at how the majority of businesses in the modern world are running their operations, that alien, after abducting a farmer or two, would probably think to itself, “Gee whiz! These guys don’t seem to give a hoot in hell for customer service! Can I offer you a drink Mr. Farmer, sir?”

You see, there are more than a few very large businesses out there that seem to value customer service about as much as they value a basket of rotten eggs.

For example, there’s Comcast, a cable company I pray to nightly, begging them to stay the hell away from my apartment complex.

Then there’s Verizon, another telecom giant that makes people tear out their hair in frustration and take up mountaineering in Tibet on a rather permanent basis.

Let’s not let retail off the hook — Walmart is notorious for having customer service that’s only slightly better than the DMV in Hell (I mean, I assume there’s one there — nothing screams eternal torture like the Department of Motor Vehicles).

The DMV is the place where dreams go to die, get dug up, get beaten with a hose, and get reburied upside down.

Shall I go on? Best Buy sucks, Citibank sucks, literally all the U.S. airlines suck, Wells Fargo sucks, McDonalds sucks, all the hospitals suck…

And yet…

How the heck do these businesses flourish?!

So, what in heckfire is going on here? Why in the world are we seeing so many hugely successful businesses basically ignore customer service and get away with it?

Because success is not correlated with customer service, unfortunately.

Now, some of my examples up there are cheating. The DMV is not a business. Hospitals, though they like to talk and act like they’re private businesses, operate in this weird world of insurance and regulation that kills a lot of the incentive to give a heck about what their customers think or experience.

Also, uh, things like collapsed lungs, shattered knees, or bullet wounds aren’t exactly problems that can be put on hold while you shop around…

But I digress.

The airlines get away with it, at least in the U.S., because they’ve got a strange system of little monopolies all over the place which means that they’re in the “too big to fail” category.

Speaking of which… that explains a lot of what’s going on with the banks — plus, there’s not really a viable alternative (credit unions don’t count — they suck too).

The telecoms? More of the same. Lots of isolated monopolies combined with a government that’s not too keen to see them disappear any time soon.

The big retailers, the big fast food chains… really, the problem here seems to be the fact that they’re just big.

So the Big Guys Don’t Care, but Does That Mean Customer Service Doesn’t Matter?

It certainly seems that way — but the truth is, companies that offer horrendous customer service have a tendency not to last.

Bad customer service is often a symptom of deeper underlying problems.

When you’re the size of a lot of these places, you can get away with bad customer service for a while.

In many cases, these places can get away with it for as long as they want — the DMV is never going to change, it’s never going to go away, and we’re going to be at the mercy of Martha the DMV Overlord for the rest of our days.

But for others, their bad customer service is like an infected wound — it festers, and it can’t last forever.

Eventually, things fall apart.

Though there are many examples throughout the centuries of the fall of giants due to their disregard for customer service (just ask yer grandpappy about W.T. Grant sometime) Blockbuster is my favorite example of how the mighty were laid low by a disregard for customer service, how they simply could not retain their customers because they had burned them too badly for too long when the Big Bad Netflix Wolf came calling.

Blockbuster Was Huge — Then They Just… Weren’t

In the U.S., Blockbuster long dominated the movie rental space — there were a few mom-and-pop-type movie stores, but for the most part, Blockbuster did what it wanted.

And what it wanted, apparently, was late fees.

It wasn’t technology that killed Blockbuster, but the fact that they were huge jerks. When someone finally came along and offered a viable alternative (without those pesky late fees), Blockbuster’s customers disappeared in droves and never came back.

Let me remind you of how bad it was, in case you didn’t live through the 90s.

You would go to Blockbuster on, say, a Friday night. You would choose three or four movies, and maybe even a video game (if it was the late 90s), and then you would go home and watch… well, maybe just one of those movies.

And then you’d all watch movie numero dos on Saturday, and little Johnny would play his video game all day on Sunday, and he still hasn’t watched Space Jam, and you’ve still got Grosse Pointe Blank sitting around and you’re probably not going to get around to it today, and little Johnny is begging you to let him hold on to the video game for a week…

And so you want to keep two movies and a game for another week or so, but you can’t, ’cause Blockbuster is a total jerkface, so you have to bring the whole shebang in there and re-rent some of those movies and games, which is a pain.

Or, you just say “Whatever, the late fees can’t be that bad.” Only to get in there next Friday and find out that yes, indeed, they can be that bad. And you try to explain the existential pain of working a 9-to-5 with a whiny brat like Little Johnny at home to a snot-nosed teenager who can’t stop blasting Something in the Way by Nirvana on his Walkman while he blatantly ignores you and you realize that Blockbuster really sucks.

And Then, You Hear About This Thing Called Netflix

It’s this magical service that lets you order movies directly to your house (no idiot teenagers to deal with). That has no late fees (so Little Johnny can keep his video game as long as he wants).

And Blockbuster tries, after you’ve already gone full-throttle with Netflix, to win you back by telling you that, hey, now they sorta have the same service as Netflix, ‘cept maybe they kept the late fees around.

We all know how this turned out.

Netflix won. No one went back to Blockbuster because Blockbuster was universally hated.

(Redbox won, too, but the story was the same — they provided a service that people wanted, a service that Blockbuster was unwilling to provide until it was far too late.)

Blockbuster didn’t lose to new technology.

They lost because they were so crappy for so long that they could only survive as long as the deck was stacked in their favor.

The Big Guys Have a Lot of Momentum Behind Them, but It Will Run Out One Day

And when that happens, they’ll bleed customers like you won’t believe.

I promise you that, one day, many of the monsters that rule today will go the way of the dinosaurs. Walmart reigned supreme for a long time, but today it faces challenges left and right — customer-service focused companies like Amazon are giving it a run for its money.

Big companies like Comcast or the U.S. airlines have a lot more going for them than mere size, but they, too, are not permanent fixtures in the landscape of the world. Air travel may be the fastest, most convenient way to travel long distances and across continents now, but that won’t always be the case.

TV may still hold sway over a large portion of the population, but that, too, cannot last — cable TV is already dying a slow death. And the providers who are comfortable, who aren’t willing to adapt, but more importantly, who have angered just about every customer they have while ignoring what those customers actually want, are going to pay hard, when their customers finally get a viable option to go elsewhere.

Because, at the end of the day, if your customers are only being retained because they have no choice but to work with you, a disruption to your market will send you into a death spiral — that may very well be what’s happening with Walmart right now.

As long as Walmart treats their customers like crap (which is a symptom of the fact that they treat their employees and their suppliers and distributors like crap), only momentum will keep them from failing.

I’m rooting for Amazon on this one.

Customer Service Isn’t Just Being Nice — It’s Providing What Your Customers Want

And if your customers don’t want what you have, if they’re stuck working with you or buying from you because there’s just no other option, they’re going to leave the second someone comes along who offers what they actually want.

Customer service isn’t just about being nice and treating people the way you want to be treated (what a concept!) — it’s thinking about the needs of your customer, from a product or service level, and trying to fill those needs.

It’s a holistic approach to the customer experience. It’s a smile on your face and something valuable for a loyal customer, but it’s also research into their needs. It’s a business built around fixing someone’s problems (not making something and then trying to sell it).

The best example I can think of to illustrate what this looks like is the iPhone.

For years — for decades — customer service in the telecom industry focused on making sure people’s phones worked.

Apparently, they all assumed that we were just happy as clams with our brick Nokia phones.

And then, Apple announced the iPhone, a revolutionary device that allowed the user to store their music on their phone.

Oh, and it was also a smartphone with a touchscreen, which was super cool at the time, and you could get apps and such, and that was great…

But what mattered the most was the music.

You see, someone finally realized what customers wanted. They didn’t want to carry around an MP3 player and a phone.

They wanted both of them. Together.

Someone at Apple was thinking of what the customers wanted, not about what they thought was best or cool or neat or whatever.

Perhaps unsurprisingly, this ended up also being what was most profitable.

And say what you want about AT&T, but they were the only carrier to have iPhones for years. Apple and AT&T both saw an opportunity to provide customers what the customers wanted.

I can guarantee you that there are people who are still customers of AT&T, who still buy Apple when they get a new phone, because, long ago, they purchased the very first iPhone on the only network that provided it.

Here’s the funny thing — there were other phones that had music on them! But none of the companies providing those phones understood how much customers craved the music-and-phone combo (and the ability to easily download songs and put them on such a phone) the way Apple and AT&T did.

These two companies understood all of it. They weren’t just providing something that people wanted, but they were going a step further — looking at how to make the experience of music on a phone as awesome as possible, which included the easy download of songs directly to the phone and the integration of the phone with a music management program (iTunes).

They positioned the iPhone and marketed it with this experience at the forefront, and both companies are still riding the wave of that success today.

Other companies couldn’t see past the phone. They thought the phone was all that mattered —that the music was a secondary thing. They couldn’t imagine that people would care more about their music than the fact that they could make calls.

The product that won was the product that brought music to the forefront and made it easy to download and listen to.

The companies that won were the companies who listened to their customers.

Good Customer Service Is Sticky — And so Is Bad Customer Service

At the end of the day, customer service is customer retention. Customers who have received bad service, who have to deal with companies that are likely never going to change the way they’re doing things until forced to, who are consistently treated poorly, rudely, or even just neutrally, those customers are not going to forget the way they’ve been made to feel.

The second someone comes along who offers a product or service that does what they really want, they’re going to disappear — and they’re not going to come back.

By the same token, customers who are treated well, who experience over-the-top customer experiences, or, probably more importantly, who just get issues resolved quickly and professionally and who are regularly offered the products and services they want, whose needs are clearly being thought of by the R&D department…

Those customers are going to stick around for a long, long time.

So ask yourself this.

Are we thinking of our customers’ needs?

Are we doing our best to keep them happy while also trying to create products and services that do the things our customers really want them to do?

Or are we relying on low prices or high quality to win?

Because if price or quality is where you intend to compete, you better have a damn good plan to keep it up for the long haul.

It’s hard to stay on top when you’re a jerk.

And everyone will cheer when you fall.

Want some more customer retention ideas? Then read this article on customer retention techniques by my all-time-favorite social media guy Sam Hurley (trust me, it’s worth the read).

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Adam Fout

Adam Fout, resident content sorcerer at Blue Steele Solutions, turns blogs and social media accounts into marketing machines for your business. In his free time, he writes strange bits of fiction and posts them on his blog.

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