Good Analysis, Bad Method

I nearly wrote a blogpost last week about customer service, or the decline thereof, based on a nice piece by James Suroweicki in The New Yorker (click here for full story), He accurately analyzes a problem I've been railing against for a lot of years:

The real problem may be that companies have a roving eye: they’re always more interested in the customers they don’t have. So they pour money into sales and marketing to lure new customers while giving their existing ones short shrift, in an effort to minimize costs and maximize revenue. The consultant Lior Arussy calls this the “efficient relationship paradox”: it’s only once you’ve actually become a customer that companies put efficiency ahead of attention, with the result that a company’s current customers are often the ones who experience its worst service. Economically, this makes little sense; it’s more expensive to acquire a new customer than to hold on to an old one, and, these days, annoyed customers are quick to take their business elsewhere. But, because most companies are set up to focus on the first sale rather than on all the ones that might follow, they end up devoting all their energies to courting us, promising wonderful products and excellent service. Then, once they’ve got us, their attention wanders...

This attitude has never made any sense to me. It is, as Suroweicki writes, always more expensive to get a new customer than to keep an old one, so, in a tight-money environment, why wouldn't you spend less to keep rather than more to acquire?

My guess has been -- I don't have any research to prove it -- that it's the sex appeal. It's simply sexier, a bigger rush, to land a new customer than to keep an old one happy. (I wonder if this is why so many people seem to be better at courtships than at marriages?)

In response to the article, one reader responded as follows (I haven't found the "letters to the editor" section on the magazine's website, so I'm providing the text rather than a link):

Many years ago, I owned a small business. Two members of my staff handled customer-service calls. They were told that they didn't have to listen to customers screaming at them but that, instead of hanging up, I preferred they give the really tough calls to me. I would begin every conversation the same way: "Mr. Jones, I understand there's a problem, and I'm here to solve it. But, before we get to that, there are a few things I'd like you to know. On the way to work today, I got two flat tires. When I finally got to my desk, I found a letter from the I.R.S. telling me that I'm being audited for the past three years. And, as if that weren't enough, I just got a call from my son's school. I was told that he has been suspended indefinitely. But enough about me, Mr. Jones. How can I help you?" At that point, I could hear the wind go out of Mr. Jones's sails, and a calm discussion would ensue. If you can get people to take a deep breath, and put things in perspective, customer service can work more effectively for those on both sides of the divide."

The analysis is correct: If you can get people to put things in perspective, customer service can work more effectively.

But the method? Lying to your customers as a way to do customer service?!?!

I don't think so.

Most customers don't call customer service screaming for blood immediately. Something else has gone wrong along the way. Usually, it's a sequence of indifference that makes them madder and madder, so that by the time they have gotten to the business owner or the vice president or whomever, they're steaming. Or it's the call-center-from-hell automation system (press "1" for a different problem than yours, press "2" for something else entirely, press "Mom" on your speed dial if you want someone who cares).

The way to deal with infuriated customers isn't to lie to them at this point -- by the way: just imagine, Mr. Ex-Small Business Owner, how your former customers will feel when they read your letter -- but to deal with their problem immediately before they get so angry they can't "put things in perspective."

In other words, your customer-service representatives should have had not just the responsibility of dealing with customers' problem, but the authority to see to it that the customers were satisfied.

Whatever it took.

Oh, that open-ended offer is going to get me into trouble.

Not really.

Most customers aren't out for blood. They have a problem, and they want it fixed. And they want to be treated respectfully and honestly.

The first thing to do is to listen. Really listen. Let them tell the whole story without interruption, even if it's the 238th variation on the theme that you've heard. It's not the 238th for them (at least, we hope not! And if it's the 238th for you ... well, you have a set of problems all your own that need fixing, don't you?).

Acknowledge that the customers' issues are real problems, whether you think they are or not. It's real to them. (Note that your lawyers may not like this suggestion: "You're laying yourself open in the event of a lawsuit," they will warn. Ignore them. If you deal with the problem promptly, and fix it, there won't be a lawsuit. Suits come about because you've screwed up.)

Ask your customers what it would take to make it right. Unlikely as it may seem to you, most of them are quite reasonable: "The toaster broke the day after the warranty expired." Do they want your store, your savings, or your first-born child in recompense for this disaster? No. "Gee, all I really want is to get it fixed or replaced."

Then fix it, or replace it. Done.

And you, Mr. Ex-Small Business Owner, haven't had to get involved. You haven't had to waste your more-valuable (or at least more expensive) time. And best of all, you haven't had to lie to your customers.