The Heartbreak of Customer Service
by Don Libey
This article appeared in the January 23 and 30 editions of DMNews. We believe it is sufficiently provocative to reprint here for the concentrated CEO universe of the business-to-business catalog and online worlds.
As an observer of the direct marketing industry for over thirty years, I have been afforded some perspective with which to comment on significant trends, positive and negative. Over the past twelve years, I have been carefully watching and collecting the evidence of a major shift in the concept and execution of customer service. In my 1993 book, Libey On Customers, I described the historic practice of customer service and its deep foundation for near-permanent customer loyalty. Superb customer service was, in my estimation at the time, the hidden secret causing the growing dominance of direct marketing over retail. Now, as we embark on the second half of the first decade of the somewhat tarnished New Millennium, America’s practice of customer service—with a few bright exceptions—has plunged to what can only be called appalling new lows.
Three Influences
1. Expectations. Nothing really works any longer. The hub system of airline transportation is a horrendously flawed and utterly failed experiment that has produced no customer service, satisfaction, loyalty, utility or profitability. One could not create such a colossal failure even in great fiction. Cable television, cell phone and telephone companies are faceless, service-starved behemoths dedicated to their own local oligarchies. Corporate restaurant chains produce cookie-cutter formulas that spew out mediocre food along with obsequious wait staff whose only skill is writing their name upside down in crayon on the cheap paper covering the table. The commercial experience nearly everywhere has become dreary and gray, and we have become anesthetized and tolerant of dreary, gray experiences.
The past twenty years have brought an erosion of customer expectations. It is no longer expected that retail personnel will be knowledgeable, helpful, courteous, or caring about your purchasing experience. As customers, we have learned to expect almost nothing, and we are seldom disappointed as a result. The shopping experience in the retail setting of 2006 is vastly inferior to that of 1976, 1986, or even 1996. The customer has either ‘dumbed down’ personally or has been ‘dumbed down’ by the industry—or both.
To compete, merchants much fight price at every turn. To compete, merchants must battle selection, facility cost, wage cost, cheap imports and a host of overhead, inventory and other costs, the control of which has been elevated to a finely-tuned art by big-box merchants with near-socialistic global appetites, specifically Wal-Mart and its spawn. As a result, staffing costs have been reduced in quantity, quality, training and benefits. The result: retail customer service staffing has migrated from a meaningful career to a minimum wage, part-time, temporary, high turn-over, zombie-like, dead-end job.
And so, after more than a decade—indeed, almost two decades—of customer service erosion, the 2006 customer has almost zero expectations as a learned and conditioned response. Wal-Mart—the present-day Skinner Box—has trained the rats to expect nothing and be happy when we get nothing. It only takes one generation to establish a new norm. If the only thing you have ever known is zero customer service, then zero customer service appears normal.
2. Internet. In its second incarnation, Internet commerce has elevated customer service to algorithms. A classic example of the dichotomy of the appearance of good customer service and the reality of appalling customer service is found with Amazon.com. If you wish to purchase a book, or a smoked turkey, or a toy, or a tool, the algorithms are essentially flawless and instantly satisfying. The appearance of customer service is matchless. But, if you are a supplier attempting to correct errors in product descriptions, release dates for newly published books, prices, carton quantities, or thousands of supply-chain details involved in fulfillment and product listing, or if you are a customer hoping to actually return something, Amazon.com is an unparalleled failure. The company cannot be telephoned. Human problem-solvers do not exist. Vendor service has been reduced to faceless emails sent in endless loops of frustrating, non-functional, problem non-resolution. There is no chink in the outer skin through which one might gain entry to the real company behind the façade. Amazon.com has wonderful algorithms, but no viscera, no blood, no soul.
The Internet experience has capitalized on the dumbing down of customer service expectations by reducing expectations further to canned processes that fit seventy percent of the demands. This ‘seventy percent solution’ goes by the pseudonym, Customer Relationship Marketing, which is a term that simply means, “No Service Here.” The ubiquitous CRM systems have brought you the Festival of Miracles of attempting to correct a telephone billing problem, retrieving the service history for your automobile warranty, finding your lost blouse at the dry cleaner, flying anywhere on schedule, registering your Microsoft Office software at some location in Bangladesh, and unsuccessfully downloading any driver for any computer peripheral without even the vestige of human intervention. Increasingly, little works and the only way to fix the customer service problems that crop up at every turn is to pay someone who knows how to go around the problem to the solution. The computer on which this is being written has a Hewlett-Packard wireless printer that has required no less than five house calls by the Geek Squad at $89.00 an hour each to re-install the software due to glitches for which there are no solutions. Try to get someone at HP to actually talk to you about the problem. Try to use your printer at five in the morning by resorting to CRM. Nobody’s home and never will be!
3. Price. Sorry. I will stand my ground. Price is becoming the primary driver of commerce and, as a consequence, customer service has eroded and will erode further. The customer without expectations, classically conditioned to expect nothing, Skinner-Box-trained to seek out a Smiley Face representing an impoverished mentality of Low Prices—Always, will ultimately use price as the mindless determinant for consumption. And the mega-retailers want that to occur. This disturbing trend is very real and growing, not only in the U.S. but globally. To obtain the lowest possible price, most people will forego customer service, convenience, quality, even cleanliness. And, at the end of the evolution, we are left with low price and virtually nothing else inside the maze. Combine price with the Internet and zero expectation for customer service, and you arrive at a place that the retail world had to go to in order to compete globally: lowest price-driven, comparative, product integrators that have reduced costs to the lowest possible level through ‘greatest-majority’ algorithms and the least number of employees. This is called Profit Maximization. It’s what the shareholders have been classically conditioned to get when they peck at the investment lever.
The Retail Experience
The convergence of these three influences has produced a retail experience of customer self-service that has all but replaced customer service. If you want something, get it yourself, do it yourself, research it yourself, sell yourself. By and large, the only retail customer service function that has not been converted to self-service by the dominant retailers is the receipt of cash and credit card charges, and even that function is endangered. Within ten to fifteen years, I predict that the entire check-out/payment function will be automated in retail stores as it has been so successfully done through algorithms on the Internet. In fact, it may well be that retail stores will only be staffed with a few stocking personnel and a few guards to open and close the doors and to monitor theft. It is even possible that there will be no employees and no assistant managers, just a few part-time stockers, guards and an overall store manager supervising automated systems of self-service processes. If you think about it, the bar code is responsible for huge advances in the evolution of customer self-service. No one is required to price products; no one is required to know prices at the check-out; and bar code readers are faster and infinitely less costly than cashiers over time. People—and their inherent service humanity—have been removed from the equation.
The 2005 holiday season produced repetitive headlines extolling the double-digit gains in online shopping versus the flat bricks and mortar retail store sales. For the first time, we saw clear evidence of the future online dominance over the malls and traditional stores. I have referred to the fifty-year-old mall experiment as ‘Cities of the Dead’ in other articles. The bleached bones of the Mall of America will be unearthed one day by paleo-consumptionologists who will attempt to uncover the meanings behind mystical gathering places called Food Courts and long-forgotten cults known as The Gap. Any serious blip in the U.S. consumption-driven economy will turn these overbuilt palaces of excess to vacant, weed-filled museums owned by rapidly disappearing pension funds and insurance companies with too many claims from hurricane disasters. The retail complex is tenuous at best, and building strong, expensive customer service capability and capacity is not on their horizon.
The Multi-Channel Direct Experience
The direct marketing world has had excellent customer service for decades. It is—as I stated earlier—the reason that direct marketing has shifted huge amounts of market share from retail and is now making double-digit, online gains during the holidays, year-on-year. These customers come from somewhere, and that somewhere is shopping malls. Run out the computer simulation. The gains in online satisfaction relative to the defections from bricks and mortar would indicate that shopping malls will be in real trouble in about five years, maybe sooner.
A great part of this shift is coming from a growing consumer backlash against non-existent customer service. And here is the interesting thing: there may not actually be any more customer service online, but the algorithms make it seem like there is more service, provided you don’t need anything out of the ordinary. A large part of my anecdotal collection of evidence is hundreds of conversations where people comment on how much easier and less frustrating it is to shop online compared to putting up with the rudeness and hassles of the retail stores. And this shift is palpable as a very real trend. You see the evidence in less gift wrap and ribbons being bought as more and more packages are sent to recipients via UPS, FedEx and USPS. You see few cars piled high with presents in the back seat as they drive to Grandma’s house. The presents were already delivered to Grandma’s door, and Uncle Justin’s, and Aunt Kim’s.
If the algorithms don’t meet the consumer’s needs for customer service, there is usually a proficient inbound staff or live chat staff to handle the customer’s wishes. Unlike retailers, direct marketers have perfected the entire fulfillment process, going well beyond the cashier function. Lands’ End, in its pre-Sears, innovative, halcyon days, pioneered live chat and personal shoppers. The result: dominant market share and incredible customer loyalty and retention. Compare that to the customer record of Sears or K-Mart retail stores which is bleak and seemingly getting bleaker. Direct marketers value customer service. We view it as being much more than just a cost-center.
But, there are cracks appearing. So many multi-channel direct marketers today come without the fifty years or more of catalog and extraordinary customer service heritage. Many of these new online, multiple channel merchants come from retail, and they have as little regard for the customer as they did for those irritating people who disturbed them by walking into their stores and asking to purchase something. Many ‘New Merchants’ want to impose the same customer non-service learned psychology of the Skinner-Box response on the online marketplace just like they learned in the retail marketplace. And they will destroy direct marketing. We are at a bifurcation in commercial history. One direction is near-total direct commerce. The other is overbuilt and risk-laden bricks and mortar retail. And I would state that there is little success in a third direction: peaceful co-existence. The market abhors compromise. The market wants a winner.
We multi-channel direct marketers are poised to deliver the coup de grace to big-box retail. If ever there was a time for a total, all-out commitment to arming ourselves with the most powerful of all weapons—extraordinary customer service—it’s right now while we are making incredible gains in online and catalog market share. Why?
- We know how to deliver world-class customer service.
- We have the systems to obtain the necessary information to deliver world-class customer service.
- We have the cost-structure to opt for world-class customer service over bricks and mortar.
- We have the fulfillment processes and systems in place to deliver world-class customer service.
- We have the overall margins allowing us to deliver world-class customer service.
- We have market share scalability because we recognize the inevitable intellectual consumer backlash demanding world class customer service that is coming.
- We have a long heritage of caring for and about our customers.
Provocative? Yes. Divisive? Absolutely. Radical? You bet. We are, however, engaged in a never-ending, global war of economic dominance. That war, and the individual battles fought on the website plains, in the foothills of the Internet and across the rivers of catalogs, will determine what form of marketing dominates and continues and who owns the future. Were I asked to ride a powerful war horse into battle, I would choose as my mount Customer Service.
Copyright © 2006 by Donald R. Libey. All rights reserved. May not be reproduced by any means without permission of the author. Contact Libey Incorporated; www.libey.com or call 877-903-9448.
