The high cost of saving

Don't whine. Poor service is price you pay for discounts

November 21, 2007|By JAY HANCOCK

Unless you own a Gulfstream jet and employ personal shoppers, you will in the next few weeks almost certainly undergo what the shopping consultants call a sub-optimal customer service experience.

Your flight will be late. The checkout line will stretch to the meat counter. The sales staff will be absent or clueless. The advertised item will be gone. The call center will cut you off.

You will want to throttle somebody.

But please don't take it out on the nearest flight attendant, salesperson or assistant manager. They're only obeying bosses who have deployed them in an economically rational manner.

Instead, look in the mirror.

When measured by their behavior, American consumers have voted overwhelmingly against quality service. Everybody complains about customer service nightmares, but few do anything about them by shopping somewhere else.

Seventy percent of people keep patronizing a brand or store even after they have had a bad experience, says Richard Feinberg, director of Purdue University's Center for Customer-Driven Quality. Worse, 1 in 5 shoppers will defect even if they get good service, so "creating a good customer service experience will not necessarily get you loyalty," he says.

No chief executive in America will publicly admit this, but it's simply not economical to deliver great service. Short-staffed stores and canceled flights are built into the system like so many defective bridge girders. Sales and profits from cost-cutting outweigh the expenses of the occasional collapse.

What shoppers really want is a low price, and they're prepared to put up with huge amounts of grief to get it. In the language of economics, the marginal utility of more, cheap stuff is greater for the average American than gracious service in obtaining it. Yet we reserve the right to whine.

Poll after poll warns of the high importance shoppers place on service and the vengeance they deliver on companies that don't make the grade. A recent study on consumer electronics "finds that Americans will go where they can get the best help: stores with knowledgeable and courteous employees," reports Gallup.

But that's not how consumers act.

"There's a reason why Wal-Mart is a $400 billion business," says Feinberg. "It's not that they coddle you. People will say Wal-Mart has good customer service, but Wal-Mart is basically self-service." For most customers, Feinberg says, Wal-Mart's low prices create a perception of good service even in the absence of, say, Nordstrom's employee-to-customer ratio.

Fifty years ago, prices of goods and services were generally higher relative to the overall cost of living, but those prices paid for the kind of attention and care rarely seen these days.

Now the mania for deep, deep discounts has squeezed service out of the equation. What customers save at the cash register, they repay in high blood pressure and time wasted finding what they want. These are the unmeasured, "external" costs of discount shopping.

Consultants make very good money promising to upgrade customer service in every way except the one that will actually do so: hiring more salespeople and giving them raises.

"Doing More with What You've Got," is the title of one research paper from Purdue's customer research center. Another addresses what to do when stress causes high turnover among call-center employees. The conclusion: "It is possible to shrink agent attrition not by eliminating stressors that are inherent to the agent's job, but by hiring agents that are able to work and succeed under such inherent stressors."

Which is a good reminder. No matter how bad your shopping/travel experiences, the employees you meet are likely to be under even greater pressure. So be nice. The flight attendant didn't cause the late arrival. The cashier has no say about how many checkout lines to operate. If sales associates had their way they would double the floor help, but they don't.

If you really want to improve service, start paying for it. Avoid stores where a low price came at the cost of headache. Seek out places with ample, educated help. Fly business class for a change. If enough people do, companies will respond and start delivering more of what shoppers claim they want.

Their history, however, says they'll stick with the long lines and the low prices.

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