Home > Columns > CRM Columns
Why Bad Customer Service Won’t Improve Anytime Soon
By: Yi Zhu Associate
Professor of Marketing, University of Minnesota and Anthony Dukes
Professor of Marketing, University of Southern California
Some of the most hated companies in the U.S. are also the most
profitable.
Much of this consumer resentment may
stem from poor customer service. In fact, most Americans have fought with
phone menus, desperately seeking a live service agent to seek a refund.
In 2013, Americans spent
an average of 13 hours disputing a purchase or resolving a problem with
customer service.
As professors of marketing, we have
examined why customer service continues to be so unsatisfactory even at many
profitable companies.

Comcast customer Carmel Booth
claimed to have received such bad service that she forced city officials to
hold a public meeting about it. AP
Images/John Amis
Is good customer service unattainable?
Our
research focuses on the structure and incentives of various customer
service centers to explain why consumers perpetually experience hassles when
seeking refunds.
What we found is not encouraging.
Many complaint processes are actually designed to help
companies retain profits by limiting
the number of customers who can successfully resolve their complaints.
The process involves a tiered structure in which all
incoming inquiries start at “Level 1.” Level 1 may be a call center operator
who listens to a complaint but acknowledges that there is nothing he can do.
Only by insisting to talk to a manager or threatening to
leave the company do consumers come closer to obtaining a refund.
Forcing customers to talk to a computer, circulate through
phone menus or sit on hold “while serving other customers” serves the same
deterring role as that Level 1 call-center agent.
Saving money with smart tech
By design, Level 1 agents are limited
in their authority to compensate customers.
For example, one Indian call center that we visited forbade
Level 1 agents from offering any monetary refunds.
Consumers may have noticed that companies’ call centers
increasingly use automated chatbots to serve as Level 1 “agents.” The caller
can talk with a human agent – at Level 2 or even higher – only after the
chatbot’s AI technology recognizes that a customer is sufficiently unhappy with
the process.
These smart technologies determine the caller’s level of
anger by remotely
monitoring the tone and pace of voice. If the level of anger reflects a
chance the customer may leave the company, then the call is transferred to a
more experience operator to handle the complaint.
This allows companies to exploit customers’ individual differences
in age, race and gender so that only the “squeakiest
wheels” are compensated.
Who struggles with bad customer service?
Not surprisingly, surveys
show that chatbots are not improving customer service. This is especially
true for certain segments of consumers above others.
Consumers experience hassles in different ways. For
instance, navigating an online complaint process is generally harder for older
people.
Additionally, African
American and Latino customers are less inclined to complain than
college-educated whites.
In addition, women
get more annoyed than men when dealing with bad customer service.
This all suggests that the tiered process may hit vulnerable
groups in our society harder. Therefore, elderly customers and some minority
groups will be less inclined to obtain a refund.
Bad customer service doesn’t harm profits
It seems puzzling, therefore, to see companies repeatedly
pledge that they are committed to great customer service.
For example, Comcast states that “Our
customers deserve the best experience every time they interact with us,”
but consumers are increasingly
unsatisfied with their service.
Even United Airlines, whose poor customer service inspired a
song and video with
nearly 20 million views, claims to offer a “level of service to our customers
that makes [United] a leader in the airline industry.”
United Airlines customer service inspired this video on
YouTube.
But our research suggests that in markets without much
competition, companies are more likely to implement a tiered complaint process
and profit from the reduced payouts to customers.
This explains why internet
service providers, airlines
and cable
companies consistently receive the
ire of survey respondents.
Reprint with permission The Conversation: https://theconversation.com/us