Do Brands Really Profit From Terrible Customer Service?

Have you ever been on hold with customer service and think to yourself, “Are you guys trying to be so terrible?” Well, new research suggests that it might not be such a silly question after all. In today’s episode, you’ll see how some companies are actually profiting off of terrible customer service.

According to recent research spotted at the Harvard Business Review, most customer service call centers strategically keep costs down by forcing customers to jump through hoops.

The authors, Anthony Dukes, Associate Professor of Marketing at the University of Southern California’s Marshall School of Business and Yi Zhu, Assistant Professor of Marketing at the University of Minnesota’s Carlson School of Management, suggest that companies use hierarchical org structures with at least two levels of agents to limit their redress costs.

This tiered structure allows them to save money by a) limiting what can be approved by lower-level agents and b) wasting enough of our time so that only the persistent will get the maximum possible redress payment.

The authors point to industries like airlines, internet, cable, and telephone service providers as examples where a lack of competitors can amplify this effect due to lower competition, which is also why the same companies have among the poorest reputations for customer service among all brands.

If the thought of hassling your customers to save a buck appalls you, then you’re in good company. Let’s dig into this week’s topic.

Increasing Profits Without Decreasing Service

Asking a marketer to limit how much service a company can provide is like asking grandma to take it easy on the butter when she makes her famous homemade cookies. It’s just not the way we think.

And yet, we do have a responsibility to make sure our campaigns deliver the best possible ROI for the brands we serve. Thankfully, you can have your cookies and eat them too.

Believe it or not, there are actually ways to cut customer service costs without sacrificing customer experience.

Here are three ways you can create a more profitable brand and serve your customers at the same time.

#1 Task Completion & Customer Satisfaction

The first way to make customer service more profitable is to reduce the need for it in the first place.

Instead of trying to withhold service from a 80 out of 100 customers, what if you could reduce the people who needed service to 20?

This is why customer experience management strategies are becoming increasingly important.

Even the most basic programs that track and measure brand favorability, customer satisfaction and task completion for a brand will uncover 80-percent of the issues that drive its customers crazy in a very short amount of time.

And once you’ve pinpointed the problem, the next step, obviously, is washing it out.

Removing the barriers to customer satisfaction can be simple or difficult depending on the situation, but doing so can reduce the demand on customer service and save the company tons of money without sacrificing service.

#2 Streamlining Your Processes

Step two in saving money while serving customers is to map out your customer service processes.

It might seem basic, but it’s standard procedure for management consultants when engaging with new clients.

What seems like an efficient process on the surface can end up with hundreds of inefficiencies that all add to the Cost to Serve a customer, which is another important customer service metric to watch.

Once you’ve created a flow chart of your current processes, you’ll see all sorts of jagged edges that can be smoothed out.

Re-engineering your customer service processes to be more efficient might sound boring, but it will leave you with a system that works for both the customer and your bottom line.

#3 Automating Customer Service

Our third and final tip for making customer service cheaper and better is to automate some, but not all of your customer service interactions.

Chat bots are all the rage right now, but it’s important to make sure you’re automating the right parts of the customer experience.

According to LiveChat, the average time to respond to a B2B support chat is 36 seconds. If a bot can’t facilitate your customers’ needs in about a half a minute, it’s probably best to skip automation and go with the human touch.

So there you have it… three ways that you can save money and have excellent customer service.

What do you think? Will brands continue to profit from poor customer service or will it catch up with them in the long run? What are your favorite ways to balance the costs and benefits of creating an excellent experience for your customers?

Share your thoughts in the comments and you might contribute to our overhead by winning a new hoodie.

Author: Josh Braaten

CEO - Brandish Insights

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