Is bad customer service more profitable than good?

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Is bad customer service more profitable than good?

Post by Furball » Sat Mar 09, 2019 8:02 pm ... profitable

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.

As part of our research, described in a forthcoming article in the journal Marketing Science, we interviewed managers of call centers to understand how their customer service organization is structured, and the way it contains redress payouts. We found that most involve at least two levels of agents.

The Level 1 agents take all incoming calls and hear each customer’s complaint first. These agents are typically limited in the amount of redress they are authorized to offer to the caller. For example, one Indian call center that serves the seller of language learning products forbade Level 1 agents from offering any monetary refunds. These agents could only offer replacement items or provide information on the status of an order. Any caller insisting on a refund was told to call the U.S. headquarters during normal business hours, generating additional tasks for any customer seeking more compensation from the call center manager, or Level 2 agent. This design relies on the fact that some consumers are not willing to incur this hassle. When this happens, the company is off the hook for the additional payout.
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