Is Customer Support Incentivized to be Bad?

Have you ever experienced poor customer service or support? Something isn’t right with the product or service you bought. You sigh, steel yourself, and dial up the customer service phone number. Maybe you get lost in a convoluted voice menu. Maybe you get tired of waiting on hold after 10 or 15 minutes (or more). Maybe you become frustrated and give up when it’s clear the person you eventually speak to can’t or won’t really do anything to help resolve your situation. Maybe you’ll try again tomorrow. And the next day. And the next day after that. What’s really going here?

Customer Support Sucks

Is it just you or does customer service suck for everyone? As it turns out, bad customer support is a surprisingly universal experience. Here’s how it pans out statistically:

• 13 hours:The average amount of time American consumers spend per year (around 15 minutes per week) being on hold waiting for customer service (source).
• 40%:Percentage of consumers who reported being dissatisfied with the way their customer service complaint was handled (source).
• 34%:The percentage of consumers who think the most frustrating thing about customer service is having to go through an automated telephone system or the inability to speak to a live person (source).
• 26%:The percentage of consumers who feel the most frustrating thing about customer service is a representative lacking the knowledge or ability to resolve their issue (source).
• 59%:The percentage of consumers who have stopped doing business with a brand because of a poor customer service experience (source).

There are so many paradoxes amidst all this crappy customer service. One of the most frustrating is how every company says it offers great customer service, right? What could be more enraging than watching the clock tick off the minutes as you hold for customer service while an automated voice comes on periodically to say things like your call is important to us– but obviously not important enough to actually answer the call in a timely fashion! And then your issue not being resolved just adds insult to injury.

As customer support continues to be horrible, and according to some studies gets even worse over time, consumer expectations about it have continued to rise. In fact, 57% of US consumers have higher expectations for customer service now than they had a year ago – a figure that rises to 66% for consumers aged 18-34 (source). And even 62% have somehow deluded themselves into thinking it’s getting better. Trust me, it isn’t. But the big question is…WHY?

Why Don’t Companies Live Up to Their Customer Service Claims?

One interesting take on this was recently presented in a Harvard Business Review article, which revealed how the way some companies handle customer service complaints actually incentivizes bad services in order to minimize refunds:

“Since 2015, we examined the incentives structures within customer service departments at over a dozen companies in finance, technology, and travel services to understand why customers perpetually experience hassles. We found that these companies screen complaining callers by using a hierarchical organizational structure. This structure, we argue, keeps a lid on the amount of redress customers are willing to seek. In other words, by forcing customers to jump through hoops, the organization helps curb its redress payouts.”

In other words, some companies have decided that bad customer support is more profitable! Is it any wonder that customer service rage now feels more common than road rage? Companies that take this approach consider the customer service function one big fat drag on profitability. Make sure that the initial level of customer service agents consumers come into contact with are prohibited from offering any kind of monetary refund. A customer demanding a refund would have to jump through more and different hoops to make an attempt at getting a payout. Most will give up rather than go through additional hassles to escalate the claim, thereby saving the company from paying a refund.

But what about the statistic I presented above that says 59% of people have stopped doing business with a brand because of bad customer service? Aren’t companies losing out big-time in terms of customer retention? Maybe, and maybe not. Companies who control a large share of the market for any given product or service honestly don’t need to care much about it. When few competitors are available, customers don’t have much of a choice but to shut up and put up with it. This dirty secret abut customer support helps explain why some of the most hated companies (cable companies, airlines, internet service providers, telephone companies, etc.) remain among the most profitable.

Another take on bad customer service blames companies for relegating their customer service agents to a place of second-class corporate citizenship. The reality of being a customer service agent at some companies includes the following:

• Strictly-timed breaks (including bathroom breaks)
• Rigid phone scripts from which they must not stray (lack of autonomy, creativity)
• Fake Anglo names if their real names sound “foreign”
• Limited interaction with (or respect from) the rest of the company
• Few opportunities for career advancement
• Little or no decision-making authority

Sounds fun – said no one ever! Most customer service reps start out at minimum wage or slightly above it. If they stick with it for a while, they might make a decent salary. But is it enough to endure being yelled at by customers all day long? It’s not like that everywhere, to be sure, but you can bet that some amount of bad customer service is because the people providing it are treated poorly by both their employers and the customers they are supposed to help. It’s a shame, really, since better customer service would make both the customers and the agents feel much better.

And a lot of companies really are missing out in terms of customer retention and upselling opportunities if they would just give better customer service. This is especially true when you realize that acquiring a new customer is far more expensive than retaining an existing customer. And providing decent customer service goes a long way towards keeping customers happy enough to stay loyal to a brand. And it’s just a more positive way to approach the customer relationship!

Okay, corporate America – we see through your bad customer service and respectfully request you actually begin living up to your customer support claims and pledges. It will make life better for everyone, including you.