By Tom Ryan
James Surowiecki, the author of Wisdom of Creeds, believes a fixation on new customers is ultimately the root cause of poor customer service levels across corporate America. But he also said it's a natural tendency for management to do so.
In his column for The New Yorker, Mr. Surowiecki tackled the topic of customer service as Jet Blue flight attendant Steven Slater's temper-tantrum a few weeks ago drew widespread attention to stressed-out service workers. At the same time, the shabby treatment of customers was underscored last year by Dave Carroll, whose guitar was broken by United Airlines luggage handlers. A song by Mr. Carroll about the incident has generated more than nine million views on YouTube.
Mr. Surowiecki said most companies have a "split personality" around treating customers. Many execs describe customer service as "essential to success." They are also aware of how the internet can cause widespread damage to a firm's reputation. Ultimately, however, the return on investment around customer service is often lagging.
"Customer service is a classic example of what businessmen call a 'cost center' -- a division that piles up expenses without bringing in revenue," wrote Mr. Surowiecki. "Most companies see it as tangential to their core business, something they have to do rather than something they want to do. Although some unhappy customers complain, most don't -- one study suggests that only six percent of dissatisfied customers file a complaint -- and it's tricky to quantify the impact of good service."
Part of the problem is the challenge of measuring and quantifying customer service improvement. And with an overall push for greater efficiencies and savings, managers often trim front-line staffs and take other steps to minimize costs in serving existing customers. At the same time, more marketing dollars are allotted to reach new customers to drive top-line growth.
"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," wrote Mr. Surowiecki.
Economically, Mr. Surowiecki said focusing on the new makes little sense since it's more expensive to acquire a new customer than to retain an existing one, especially as customers are showing less loyalty to sticking with businesses.
Discussion Questions: Why do you think so many companies fall short in the customer service area despite a stated commitment to it? How does a company keep a healthy balance between addressing new and existing customers?