Published: 17 February 2017
It may be argued that if there is only one difference between companies at the top and bottom of almost any sector, it is less and less the product, and more and more the level of customer service.
One of the better examples comes from the airline sector, where the flight from A to B may thankfully be just as safe, but where it is all about the customer service. While the flag carriers may no longer offer the VIP approach of the golden age of Hollywood, there is a clear line between the “lay back and relax” long haul flights approach, and the “treat em’ mean, keep ‘em keen,” treatment served up by the so called “no frills” brigade.
Ironically, if one looks at the relative values of British Airways owner International Consolidated Airlines and Ryanair, it is currently the case that the “upmarket” player is nearly 50% cheaper than Michael O’Leary’s company in terms of stock market value.
This implies investors regard the company which offers less customer service as having better margins and hence merits a greater valuation. However, there has been a twist in the relationship between customer service and brand value given the way Ryanair has at least in theory officially adopted a new customer friendly culture in the past couple of years.
Things may be more straightforward if you bring in what is almost universally regarded as being one of the world’s most valuable brands, with the best customer service. In many ways it can be said that Apple is merely an iconic brand with an incredible level of customer service attached. It is almost just incidental that the company sells tech gadgets such as mobile phones. What stands out is the in store and online customer experience, both at the point of sale and after sales service.
This brings us onto the latest report from Ombudsman Services which rather suggests that the only way is down for companies who offer less than adequate customer service.
Alas, the evidence suggests that there is a “one strike and you are out” policy in force. It means that good customer service will ensure loyalty, but that any slip up can lead to over a quarter heading for an alternative.
To make matters worse, it would appear that people are becoming progressively more fussy, with over 5% more complaints last year than in 2015. Of course, it does not help that a significant proportion of complaints on service go unreported or that many (well over half) are simply resigned to suffering poor treatment as a way of life. Of course, such a statistic plays into the hands of those who wish to scrimp on investing in good customer care.
In fact, to be somewhat cynical, if the above revelations were as far as the effects of customer service shortcomings, it might have been that many corporates would be happy to sweep the matter under the carpet. But the worse aspect of all is when things go wrong and a complaint is badly handled. This leads to nearly 80% of those affected leaving and not returning. It also means that UK corporates are losing £37bn a year due to not adhering to the maxim that the “customer is always right.”
Chief amongst the offending sectors are retailers, then telecoms and energy. Given the way that the former are generally accepted to be suffering a horrific time from online competition, renewed inflation and the forthcoming business rates hike, the message from Ombudsman Services is that the name of the game is almost all about customer service.
One of the ways of addressing and improving this issue is to acknowledge the increasing role of Social Media and the way it can not only be used to portray a positive customer service culture which is above all user friendly.
It can also directly mollify and reassure in the wake of things going wrong. Indeed, direct communication via these channels can make the difference between a situation escalating or being nipped in the bud.
As the statistics would lead us to believe, preventing a car crash situation is infinitely better than attempting to re-vamp the wreckage. But given the way that Social Media is still a relatively young concept, and £37bn is a rather tall sum, it remains to be seen how much can realistically be done via this area to help corporates reduce their customer service deficit.
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