Bad Customer Service as a Profit Center

There was a December article in Fast Company that spelled out what I’ve long suspected – that many big companies have lousy customer service on purpose – they want to make it hard for customers to get refunds or to drop service. The article was written by Anthony Dukes of USC and Yi Zhu of the University of Minnesota. The article is worth reading if you have the time to click through all of the links, which elaborate numerous ways that big companies abuse their customers.

This certainly rings true for the big ISPs. I harken back to the days of AOL, which was famous for making it a challenge to drop their service. Comcast has always had a reputation of making it hard for customers to break a bundle or leave the company for another ISP.

The article cites some interesting statistics. They claim that in 2013 that a study showed that the average home spent 13 hours per year disputing charges with customer service. That’s nearly two workdays of time, and it’s little wonder that people hate to call customer service.

Customer service at the big telcos and cable companies was never great, but in my time in the industry it’s gotten worse – the big ISPs are now rated at the bottom for customer satisfaction among all corporations. I think the big change in the industry came in the last few decades when the big ISPs got enamored with win-back programs – offering customers incentives to stop them from dropping service. Unfortunately, the ISPs tied employee compensation to the percentage of win-backs and there have been numerous articles published of ISP employees who would not let somebody drop service and who would keep a customer on the phone for an hour to convince them not to leave.

ISP customer service also took a downward spin when every call with a customer turned into a sales call trying to sell more services. Unfortunately, these sales efforts seem to result in new revenues, but it’s irksome to customers to have to listen to several sales pitches to accomplish some simple customer service task.

Dukes and Zhu claim that a lot of customer service centers are structured to dissuade customers from dropping service. They say that long hold times are on purpose to get customers to give up. They cite some customer service centers where the people answering the first call from customers have no authority to change a customer’s billing – only customers willing to fight through to talk to a supervisor have a chance at fixing a billing problem. They claim that chatbots are often set up in the same way – they can sound helpful, but they often can’t make any changes.

They also believe that companies are getting sophisticated and use different tactics for different customers. Studies have shown that women get annoyed faster than men in dealing with poor customer service. Research has shown that some demographics, like the elderly, are easier to dissuade from getting a refund.

Smaller ISPs understand the poor customer service from the big ISPs and most of them strive to do better. However, I know of smaller ISPs with aggressive win-back programs or who use every call as a marketing opportunity, and such ISPs have to be careful to not fall into the same bad habits as the big ISPs.

I find it amusing that one of the many reasons cited for breaking up the Bell System was to improve customer service. Regulators thought that smaller regional companies would be nimbler and do a better job of interacting with customers. This turned out not to be true. In fact, I consider my interactions with monopolies to be the easiest. I can’t recall a call I’ve ever had with an electric or water utility that wasn’t completed quickly and efficiently. Perhaps ISPs ought to strive to be more like them.