
Bad Customer Service Is Profitable - EndXA
https://hbr.org/2019/02/why-is-customer-service-so-bad-because-its-profitable
======
Animats
Perhaps poor customer service should be considered an indicator that an
antitrust breakup is needed. This isn't that far from European Union antitrust
guidelines.[1] See Article 102, which has "limiting production, markets or
technical development to the prejudice of consumers"

This ties in with the EU warranty obligation.[3] A key point in EU law is that
"competition" is encouraged for the benefit of the consumer. US antitrust law
is based on protecting smaller sellers from big ones.

Something to look at if Elizabeth Warren becomes president.

[1]
[https://ec.europa.eu/competition/antitrust/overview_en.html](https://ec.europa.eu/competition/antitrust/overview_en.html)

[2] [https://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=CELEX:12...](https://eur-lex.europa.eu/legal-
content/EN/ALL/?uri=CELEX:12008E102)

[3] [https://europa.eu/youreurope/business/dealing-with-
customers...](https://europa.eu/youreurope/business/dealing-with-
customers/consumer-contracts-guarantees/consumer-guarantees/index_en.htm)

~~~
dantheman
I wouldn't look to the EU for innovation or economic policy.

~~~
anovikov
Exactly. I struggle to see in what we succeed here which is higher tech than
making really good croissants and coffee. Even when we are, it usually happens
in Eastern European states like Estonia who are definitely not drivers of
economic policy.

~~~
Tomte
German companies are huge in industrial automation and manufacturing tech.
It's not just Siemens, there are lots and lots of companies you have never
heard of that are having a significant share of their market niche (or are
outright market leaders), precisely because of their innovative products.

Where Europe has fallen far behind is advertising/tracking "innovation".

~~~
fyfy18
Building technology (not tech-tech, just plain old building materials) is a
lot more advanced and environmentally friendly in Europe too.

Matt Risinger on YouTube has a video series from earlier this year where he
was sponsored to visit Europe to see how things are done differently to his
native Texas. He was amazed by the European tilt-and-turn windows which have
been pretty much standard in colder climates (excluding the UK for some
reason) for the past 10-15 years. They can open inwards or be securely locked
open in a ventilation position, seal airtight with multiple seals and locking
points when closed, and are triple glazed.

------
tenebrisalietum
I get the feeling the researchers never worked in a call center and don't
understand the realities involved in running one.

The reason why you have a first level, and then levels after that, is so Level
1 can be focused on speed for simple issues, or routing for non-simple issues.
Level 1 call work is not something the more expensive agents who can solve
complex work should be doing.

Another alternative is doing what Sprint did over ten years ago and firing
their worst customers ([https://www.cnet.com/news/sprint-breaks-up-with-high-
mainten...](https://www.cnet.com/news/sprint-breaks-up-with-high-maintenance-
customers/)). It'd probably be better if more companies could do that, though
there are companies where it is not possible (e.g. ISPs).

~~~
badrabbit
That's so horrible. There should be laws to prevent companies from refusing to
do business with "high maintenance" customers without proper documentation and
regulation. What recourse does the customer have to contest their decision?
What if sprint tells other carriers about this customer?

Just like with employees, if you get to fire a customer then how you aquire
customers and how you refuse to do business with customers should be subject
to regulation. I would even say this should be public record so other
customers can see exactly why they blacklist customers.

FYI: I have worked in a call center type environment for a company well
reputed for having bad customer service. I have faced horrible customers day
in and day out until one reallybad customer pushed me off the edge and I quit.
I still stand by my position that consumer rights and fair treatment of the
public by businesses is much more important than a company's right to refuse
to do business with anyone.

~~~
michaelmrose
From what principal do you derive the right to buy cell phone service despite
being a pain in the ass?

Asshole is not a protected class.

As someone who has worked in customer service let me tell you that people
already make ridiculous demands.

People start with their nonsensical demands, proceed to threatening to
explicitly or implicitly cease future business, move on to threatening to get
the employee in trouble, move on to speaking to a manager, to threatening to
go to the company about the manager that told them no.

You want to add another layer after the company also tells them to pound sand
where they can go to a government bureaucrat and make the company litigate the
case for why they don't want to do business or what face a fine?

There is already maximal incentive to make any reasonable accommodations
possible because any amount of hassle that costs less than losing the
customers business is already a net gain.

If the cost of responding to for example a lawsuit because you declined to do
business with someone is thousands of dollars then the equation changes
substantially and not for the better.

This only makes sense from a social standpoint if the service you are denied
is something one can't do without and then THAT becomes the issue rather than
requiring every trivially replaceable company enumerate why they didn't do
business with every asshole.

~~~
badrabbit
> You want to add another layer after the company also tells them to pound
> sand where they can go to a government bureaucrat and make the company
> litigate the case for why they don't want to do business or what face a
> fine?

Sort of,if you ban a customer then you will be forced to provide
documentation. The regulation I spoke of will clearly establish when a company
crosses the line. This actually saves the company lawsuits because the
consumer will not have merit for a suit if the regulatory body cleared the
company. If it didn't clear the company then the customer's service will
simply be restored and the company will be fined a standard well established
fine.

I don't know why you and others are misunderstanding my position. I am not
advocating for companies to put up with abusive customers. I am simply stating
a company that provides services or goods to the general public should not be
allowed to refuse to do business with specific individuals without documenting
their defensible reason where a customer being clearly
rude,abusive,threatening or acting in bad faith would be a good and allowed
reason.

By what right does a company that relies on a business license from a
govetnment of the people gets to unfairly treat the public? The peoplr decide
what allowed reasons to refuse business are,not companies.

A BBB complaint is nieither sufficient nor effective.

Oh and...

> From what principal do you derive the right to buy cell phone service
> despite being a pain in the ass?

The same principal that allows revocation and issuance of a business license.
I don't think a "pain in the ass" customer should be tolerated,but rather
government bodies overseen by publicly elected officials get to set a standard
of what a "pain in the ass" customer constitutes not the company. You can see
how a legitimate complaint can be construed as "pain in the ass" because
fixing the problem or assisting the customer was a cost too high for the
company.

~~~
Ozzie_osman
I agree. Don't know why youre getting downvoted. If ShitCo can get away with
poor customer service because of regulation or licensing protecting them from
competition, then ShitCo shouldn't get to decide the line for "pain in the
ass".

~~~
badrabbit
It's probably because many current and potential enterpreneurs are on HN.
Regulation is unpleasant and costly for any startup. But just because it is
unpleasant does not mean it is not needed. In a utopia,regulations simply
allow you to be transparent with the things you would be doing anyways.

I am sure we all appreciate health code regulations on restaurants for
example. I am sure it is costly and unpleasant to restauranteurs but it is a
neccesity to safeguard the interests of the public.

------
deogeo
> There may be a hidden layer of discrimination at play here as well. Studies
> and surveys have shown that some segments of consumers, such as women,
> African Americans, and Latinos, may experience higher hassle costs when
> dealing with customer service.

Their source for the 'women' part of that claim only says that, given the same
treatment, women get more annoyed than men [1]. Not what I would classify as
'discrimination'.

[1] [https://www.consumerreports.org/cro/news/2011/06/women-
get-m...](https://www.consumerreports.org/cro/news/2011/06/women-get-more-
annoyed-than-men-with-aspects-of-bad-customer-service/index.htm)

~~~
boomboomsubban
>Not what I would classify as 'discrimination'.

No, but it does classify as different hassle costs as they claim.

The summary words it poorly, but the article is just showing that some groups
experience more hassle than others.

~~~
deogeo
No, the sourced article says that some groups get more annoyed than others,
when exposed to the _same_ hassle.

~~~
boomboomsubban
That source doesn't say that they were exposed to the same hassle, the hassle
can't be the same in survey accounts. Not really the point though.

~~~
deogeo
The source presents a survey asking "How annoyed were you by X", with women
answering as more annoyed for the same X. How you interpret that as "hassle
can't be the same in survey accounts", I have no idea.

~~~
boomboomsubban
Imagine we're both answering the second question mentioned, whether we were
"annoyed at not being able to get a human being on the phone."

The previous night one of your loved ones was very sick, and though you called
the hospital you were unable to get a human on the phone. Meanwhile, my food
delivery came without a side dish, and I was unable to get a human on the
phone to get my $3 back.

The survey is now asking both of us the same question, but do you think we're
experiencing the same thing while deciding how to answer it? Or would our past
experiences cause the hassle to have much different weight for both of us.

We would need to be in a controlled experiment for us to have the same hassle.
A survey has us answer from our own experiences of being in similar
situations.

------
twopens
I spent several years in both Tier 1 and Tier 2 support for several companies.

Generally speaking, I found companies that failed to provide a high level of
support did so not because it was particularly profitable, but because they
either A) Wanted to cut costs and off-shore as much of the operations as
possible or B) Were struggling financially and unable to support their product

Working as Tier 2 support for Apple I can tell you that I gave away free
products (From the Apple Online Store) constantly. I required no approval for
products $300 and under in value. The only caveat being that Apple did not
give away ANY of its own products. Some days I would give away more money in
free products than I made working that day. Apple is doing fantastic
financially.

When I worked for Frontier Communications (Who are currently being
investigated on a few fronts for failing to maintain their network and refused
to take questions from investors at their last quarterly earnings call) I was
basically unable to help anyone who called in unless their problem was user
error. Any customer who had an issue with something on our end was basically
given the shaft.

I've had much more middle of the road experiences as well, but those are the
two polar opposites that I've had in my early working experience.

------
noodlesUK
When there’s no market pressure in a sector, why would any company do anything
but the cheapest possible customer service offerings? I recently had to deal
with trying to convince my ISP to cancel a charge for a wifi router that I
don’t even have, and upon them crediting me for the over billing, I received
an email from UPS telling me a router had shipped (which I will have to send
back). This all increases revenue for the company and it’s not like there are
other people who have a fiber line to my house, so what am I to do?

------
Marsymars
Redress payouts aren't everything. I'm currently in the process of changing my
primary email and moving all my accounts over to new addresses. Probably 90%
were easy to change online myself, but there's a tail of businesses that are
trying to tell me it's impossible to either change my email or delete my
account, forcing me to escalate to departments that really shouldn't be having
their time wasted with either problem.

~~~
mattmanser
Well, you don't know that.

It could be that developing proper processes, training and tools to handle it
costs far more than the rare few times they need to pass it up to someone to
manually change it in a DB.

~~~
Marsymars
Yes, I get that, but these are large corporations where there doesn't even
exist any way to "pass it up" to someone in IT from the standard CSR channels.
e.g. one of them had $15B in revenue last year and an actual privacy office,
which I guess will be my next step to contact.

------
the_snooze
It's not just companies structuring their customer service to reduce redress
payouts. Companies are also using customer service as a sales channel, where
"customer support" reps are also marketers trying to up-sell you something.
When you have a problem you want to get fixed and you've waited on hold for a
long time after navigating a terrible voice-prompt system, you're a great
captive audience.

~~~
vegetablepotpie
I think that’s a consequence of the profit-center cost-center dichotomy. Cost
centers get budget cuts, downsized and off-shored. Profit centers help grow
the business. If there’s a way to be a profit center, managers are going to
take that route. The consequence is that customers asking for assistance on
their existing services are going to get sales pitches for more expensive
services.

------
hn_throwaway_99
This seems very much like a 'water is wet' type of study. And to clarify, it's
not really a study - the authors just interviewed some call center managers
and came to the (pretty obvious conclusion to anyone who has ever called
customer service) that companies put up barriers to getting refunds.

I agree with other commenters, though, for me the issue is not often about
getting a refund, but more often about getting the information I need to solve
my problem.

------
DoctorOetker
consider a total budget for customer service, why not hire 2 or more customer
service subcontractors on the following contract: customer questions are
randomly assigned, and money flows proportionally toward the company with the
better customer satisfaction scores?

any question a subcontractor has not enough information for will be between
the customer service contractor and the original company, and they don't need
to be afraid of insisting the original company resolve a real fundamental
issue with the product as the other subcontractor faces the same issues, which
has the side effect of the subcontractors summarizing a large number of
complaints for the original companies product engineers etc

consider how for a long time many manufacturers didn't want to spend the time
and effort to fix some linux driver, not because they couldn't but because
they didn't want to plough through 10k complaints or requests, of unknown
similarity or difference, and having the original high wage engineers plough
through them is uneconomical, so have the subcontractor summarize the issue
concisely yet precisely

~~~
mlthoughts2018
What subcontractor would accept this arrangement? I sure wouldn’t. It’s like
an evil genie situation. You’re never going to define customer satisfaction
metrics in a way that won’t end up being gamefied to circumvent the spirit of
what you’re supposed to do to help customers in order to maximize some
metrics.

This issues can also be related to the company itself. What if there’s an
undisclosed bug in your randomization process based on IP or time zone or
something that tilts the satisfaction metrics via an almost impossible to
detect skew in the customer distribution routed to subcontractor A instead of
B? What if you the company introduce a policy or product change that makes
customers unhappy even if the subcontractor is doing exactly what you asked
them to do? Or what if subcontractors realize the only way to make people
happy is to do something really expensive or unapproved by you?

~~~
DoctorOetker
> .. skew in the customer distribution routed to subcontractor A instead of B?

provably rolling a random dice is a solved problem, superstition that
fluctuations in a cryptographically verifiable random coin flip would
correlate with "pathologically dissatisfied customers" is just that:
superstition.

> What if you the company introduce a policy or product change that makes
> customers unhappy even if the subcontractor is doing exactly what you asked
> them to do?

That would make the customers assigned to the other subcontractors equally
unhappy, so the customer satisfaction feedback drop will be the same for the
other competing subcontractor, and so the budget division will be unaffected,
but still tilted proportional to the gross difference in performance between
subcontractor A and B

> Or what if subcontractors realize the only way to make people happy is to do
> something really expensive or unapproved by you?

What do you mean? reverse engineer a driver and rewrite a better one?

~~~
mlthoughts2018
> provably rolling a random dice is a solved problem

You clearly have no experience with setting up randomized trials in reality.
It’s _very_ hard. You think you’re flipping a coin, and totally forget that
there are all kinds of things that can creep in to introduce confounding
factors that correlate with assignment to one group or the other. Time of day,
time of week, operating hours, handling customers waiting in a queue too long
by rerouting them, random outage in subcontractor A’s cloud service account,
geopolitical event causes problems with payment processing to subcontractor B
for a certain time period.

How will you isolate the effect on customer satisfaction of each
subcontractor, controlling for all effects that could drive the observed
satisfaction metric for a given subcontractor that are not in that
subcontractor’s control? How will you make certain you’ve done this, as
opposed to just making the deeply invalid assumption that some seemingly
random assignment mechanism has automatically taken care of it? How will you
actually verify the populations of customers sent to each subcontractor are
actually probabilistically equivalent across every potential confounding
factor?

Acting like it’s just going to be a simple coin flip is a woeful lack of
imagination.

~~~
DoctorOetker
there is no random trial to set up? it's just plain simple provably random
assignment

~~~
mlthoughts2018
Huh? The entire A/B test you are proposing _is_ a randomized trial. You are
proposing a random assignment mechanism (what you seem to misunderstand as
“provably” random assignment) but you’re not explaining how you will verify
your assignment mechanism didn’t result in a lack of probabilistic equivalence
(and thus invalidate a simple comparison between the two groups).

The key part you’re missing is that it doesn’t matter if you _believe_ you are
choosing uniformly between each subcontractor. You might have a perfect random
number generator, doesn’t matter. The ability to pick “50/50” between them has
pretty much nothing to do with the causes for confounding factors to
invalidate the comparison.

You might happily go on calling your perfect random number generator and
checking if it’s less than 0.5 as your decision rule, and yet still be biasing
the population directed to one subcontractor vs the other, due to factors
you’re not accounting for.

~~~
DoctorOetker
Unlike organizing a randomized trial -where each extra datapoint to gather
would cost money and one tries to get the most unbiased result for the low
total number of datapoints- in this economical setting of an endless and
continuously growing number of processed customers one is not interested in
how fast the relative error decreases, but that it converges on a fair value.

This is just the law of large numbers: the expectation value of the
correlation of pesky clients with the output from a provably fair coin is by
definition zero. So yes if 1 out of 10 customers is a pesky (say unhelpable by
attitude) customer, and we look at the first ~10 customers, then yes, probably
it will result in the unfair assignment where one of the subcontractors got a
pesky customer and the other didnt. But this is not a randomized trial with a
finite low number of customer tickets.

Treat the problem like a poisson process: after a short amount of time the
accuracy on gamma is low, but after the millionth ticket the accuracy on gamma
is high, and we are effectively discussing fractions of a cent.

I assume you know how to throw a provably random dice: for example both
subcontractors generate a secret randon number, hash it, publish the hash,
then reveal the nonce, sum the nonces: even -> A, odd -> B

This is not a medical experiment with a limited budget to study most
efficiently with the low number of costly datapoints, this is not about the
design of experiments.

You seem to believe a lock-in amplifier could never work? That you can't raise
a signal from below the noise floor? or is it really just the transient
fluctuation that average each other out by the law of large numbers?

------
perl4ever
I've found that email support varies wildly, and you don't get the quality you
might expect.

I've asked simple questions of a financial institution that I trust with most
of my savings, and gotten responses that totally ignored everything I wrote
except for a keyword or two, as if they were an Eliza-style AI.

On the other hand, I emailed a question to my health insurer, and I got a
completely sensible, intelligent, and helpful response.

Even in person, I frequently ask a simple question and people act like I've
got two heads. Sometimes the businesses they work for are objectively honest
and competent, but somehow they can't answer a really basic question. Like the
other day, I was replacing some fire extinguishers and I realized I had just
signed off on new ones without understanding the UL rating. Granted, it wasn't
that hard to find an explanation online after a few minutes, but someone who
works for a business that sells them to everybody in the area should be able
and willing to explain.

I don't think this can all be economically rational optimization.

~~~
lotsofpulp
A lender miscalculated my monthly loan payment, so I wrote up a nice email to
them, attached an amortization spreadsheet, linked to a public google sheets
in case they can’t download attachments, and attached a pdf showing them the
calculations.

It took 6 weeks and over 10 emails for them to fix it to the correct
amortization. This is literally this company’s entire purpose, to calculate
payment amounts, and they couldn’t take 20 seconds to use the PMT() function
in a spreadsheet to see they had made a mistake.

I forwarded the account of my experience to as many bosses at the company I
could find and never heard back.

~~~
zaroth
I’ve tried to reproduce monthly payment amounts and found it’s incredibly
difficult to match the bank’s calculation.

They could be compounding interest at a different rate. They could calculating
the daily rate one of 3 different ways. I believe there can also be
differences based on the grace period for making payments.

PMT() doesn’t account for any of this - it’s just simple interest.

It’s worse for commercial real estate loans than residential. In my case I
gave up trying to reproduce their calculations.

~~~
lotsofpulp
This calculation was way off, not a few dollars or cents. Clearly there was an
error with one of the parameters being used to calculate it.

~~~
zaroth
My point is less about your specific situation, and more that — in general —
it’s possible someone doesn’t even realize they’re one of those “trouble”
customers costing the company money and justifying the building of a support
moat.

------
foobar_
Depends on the class of the customer. Poor and middle-class customers are
usually screwed.

~~~
jdnenej
Get what you pay for. I work on some enterprise software with customers paying
$1m/year. I assure you they don't get bad customer service.

~~~
Ididntdothis
Really? My company pays a lot of money for some support contracts. We get a
lot of attention, E-mails and meetings from sales people and evangelists but
not too much in terms of actual solutions for problems. Basically a lot of hot
air.

~~~
teddyh
This indicates that the people using the product are _not_ the same people who
are deciding whether to purchase said product. In that case, there are no
incentives to give solutions to problems, because it doesn’t affect sales.

~~~
PeterisP
"the people using the product are not the same people who are deciding whether
to purchase said product" \- of course, that's pretty much the definition of
enterprise product sales.

"That case" is not a rare exception but the default situation.

------
natmaka
Your customer who struggled in order to have your product work tolerably will
think twice before trying to switch to a competitor, as he doesn't want to
once more live through hassles. You spare money on service/support, and the
customer is less prone to abandon you. Yay.

A competitor offering a better service may seem dangerous because his
customers will recommend him. However he as to sell for a higher price,
therefore most customers will not consider his product. Moreover most of his
customers will be picky (easily by the shitty support provided by you and your
pairs) or dumb/lazy (totally unable/unwilling to think/act usefully by
themselves), and their demands will only grow, leading him tto somewhat reduce
his margins (and you will buy him, because he as less customers and less
profit per customer) or raise his prices (and enter some high-end/luxury (<=>
small) niche).

------
DayDollar
What i do not get, is why there is not a "Lawyer"-Layer between customers and
companys shirking customers-service. Basically you dont get to worry and put
up with what is essentially a denial on service attack on a person, and these
people get you whatever you want if they can and fight for your rights, if
necessary with legal actions.

If they want a war of attrition, a war of attrition they could get.

Also likeable, social customers, who get shafted, become basically anti-
evanglists of a brand and product. Im pretty sure, if marketing would do some
research, these "Warning"-network effects would show up. I had several family
dinners, where one or another would tell horror stories about a product they
tryied and these are shunned afterwards.

Only companys who can get away with it are entrenched network effect companys
like google.

------
nmstoker
I hear anecdotally about these "levels" and it's an obvious strategy, but in
my experience, I usually get paid back without escalation (that's not to say
they aren't escalating the matter discretely on their side w/o passing me up a
level).

The only obvious way they might be masking it is if I have to call back
another day but that doesn't seem like I get through to anyone differently
than if I'd just called up (thus I suspect it would be level 1)

------
b_tterc_p
I feel like in the past few years customer service has gotten much better for
most companies. I have had reasonably concise and helpful calls with my bank,
telecom provider, utilities, phone company, and one product company within the
past year and they all went pretty well despite negative reputations for a
few.

Online chat windows seem to be the most effective for me.

Curious if this resonates

~~~
toast0
The online chat windows work pretty well for me, the written record usually
means at least I don't need to repeat myself to every new person, and often
the chat windows are tied to my account so I don't need to identify myself.
And, it's much easier for me to multitask while waiting for a response, but we
can have a quick back and forth when it gets to that part of the call.

However, what has really helped the most is lowering my expectations. If the
other person seems to understand what I'm asking, I'm satisfied, if not happy
when they say it can't be done.

------
pjc50
See also [http://www.harrowell.org.uk/blog/2012/01/21/the-politics-
of-...](http://www.harrowell.org.uk/blog/2012/01/21/the-politics-of-call-
centres-part-one/)

------
zebraflask
Well, of course, this all makes perfect sense. If a company pushes out a bad
product or service or other generally subpar what have you, the first line of
defense is to make it as difficult as possible for customers to have any good
resolution to their complaints.

------
aksss
Ask Adobe

------
supercanuck
Capitalism only works when there is competition.

