The Customer Service Survey

Customer Experience Isn't the Only Thing

by Peter Leppik on Fri, 2014-05-23 15:58

Customer experience is an important part of how companies differentiate themselves competitively. But it's not the only thing. There are some circumstances where it makes sense for a company to not care about how its customers are treated. For example:

  • In some customers' minds, poor customer experience means low prices. Our favorite example these days is Spirit Airlines, a company which seems to delight in inflicting fees and inconvenience on its customers (though recently Spirit seems to be having a change of heart, possibly because of bad publicity). So if you are trying to stake out the market position of low-price leader, it may actually help you to make your customer experience worse.
  • If customers don't have a choice, then customer experience doesn't matter. Some of the lowest customer satisfaction scores are for cable TV companies, and it's not hard to see why: in most places you have only one real choice if you want cable (and increasingly, if you want high-speed Internet service), since the competitors don't have access to the physical infrastructure. So the cable incumbent doesn't need to invest in improving the customer experience to maintain its customer base.
  • When it's hard to switch to a competitor, it's possible to under-invest in the customer experience without losing too much business. Banks and mobile phone carriers are both industries where customers will often put up with terrible service because it's just too hard to change (or too expensive).

In all these cases, the company which provides a poor experience is relying on something else to keep customers coming: price, an effective monopoly, contractual commitments, etc.

But this can be a risky strategy. Subjecting customers to poor service builds up a reservoir of customer ill-will over time. If the market changes--or the company develops a bad enough reputation--it can be very expensive to repair the damage.

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