Just watched the boys and girls at the #custserv chat pretend they know what CEO’s should do about customer service. Each week it gets more entertaining as these folks, none of whom are senior corporate officers demonstrate both their arrogance and judging abilities by “advising” imaginary CEO’s, or more to the point, blaming them. More on that at a later time.
Clearly these folks assume that poor customer service means loss of customers and then slow slides into corporate oblivion, and while that’s an assumption that’s shared by a lot of people, it’s more hope than reality. In fact many of the companies ranked lowest on customer service are and continue to be immensely profitable. I know that’s something members of The Church of the Infinite Customer want to ignore, and perhaps if one has no business sense, it’s easier. But reality is reality, and no amount of hope from Church/Chat members changes the fact.
So, we’ll highlight some of the companies “crippled” by poor customer service. First up. Comcast.
Comcast is a telecommunication firm that has been consistently rated at the bottom in terms of customer service quality. Although they haven’t managed to secure the worst position, over the last four years they come in just about second worst.
How terribly have they done?
Well, here are some financials related to this company suffering immensely as customers leave in droves and drive them out of business. (Numbers from Wikipedia from 2009)
Over the past ten years (to 2009), Comcast has achieved a financial record that is, according to one analyst, “not unimpressive”. The book value of the company nearly doubled from $8.19 a share in 1999 to $15 a share in 2009. Revenues grew sixfold from 1999’s $6 billion to almost $36 billion in 2009. Net profit margin rose from 4.2% in 1999 to 8.4% in 2009, with operating margins improving 31 percent and return on equity doubling to 6.7 percent in the same time span. Between 1999 and 2009, return on capital nearly tripled to 7 percent
Hmmm. Just squeaking by. Now certainly, it’s possible Comcast has lost billions as a result of being seen as offering terrible customer service. Since we don’t know that and can’t claim something for which we have no direct evidence, it certainly looks like despite the perceived poor service, Comcast is alive and well, financially, putting the lie to the assumption that poor customer service perceptions and poor financial results are linked together inextricably.
How can that be? Well, first of all, they have lots of company. Stay tuned for more instances of this effect. Second, it’s an unproved assumption that there is a direct link between service quality and business success. In fact, the causes of business success are so varied and complex we couldn’t demonstrate causal relationships even if we wanted.
Third, this just shouldn’t be that surprising to people who live in reality, not some imaginary world. No Frills establishments have flourished by offering really poor customer service and giving the impression of cost savings. Warehouse type places have lousy customer environments, long lines often, and one of the GranDaddies, Costco, even charges to allow you the privelege of shopping in a warehouse setting. Most of us shop at places that offer poor service because it’s more convenient or we think we get deals, or for other reasons.
For that reason it’s not terribly surprising that many companies ranked badly in service, do very very will financially. Stay tuned for more, and some excerpts form the fanatics from the Church of The Saintly Customer.