The Short-Term Hitmen: A Lesson in Customer Service
by Nick Cernis | 26 June 2008
Nick says: When I invited guest posts on Put Things Off earlier this month, I was delighted to receive several late-at-night submissions that saw my artfully-brewed Earl Grey rushing up through my nostrils and spewing across my overpriced undercrackers, a not entirely unpleasant experience that left my tighty-whities smelling lightly of oranges.
This post, from dazzling Florida life coach and general mischief-maker Tim Brownson, tackles that thorny but important subject often relegated to the “maybe later” pile, known to the initiated as customer disservice.
The Short-Term Hitmen
by Tim Brownson
I doubt you have ever read a post before where somebody starts with an unknown quote by an unknown person at an unknown time, but now you have. Congratulations — life doesn’t get much edgier than this.
There was once a guy that was head or at least very high up of one of the US mobile carriers. I don’t know which one, but to be honest, it doesn’t really matter. He was being interviewed by somebody about something when he was asked a question I forget that invoked an answer a bit like this one:
“When somebody signs up for a 2 year contract with us, we know we will lose that customer at the end of the period and we don’t really mind as long as we don’t hear from them in the meantime.”
I don’t know what I was eating/drinking/playing with at the time, but I’m sure I would have choked/spat out/ceased playing out of sheer surprise. Was he being serious? Was he high? Was that gravy on my crotch?
The part I can clearly remember is that the conversation was about ‘churn’ in the telecoms business. Churn is the process of customers moving from one carrier to another each time their contract expires and sometimes even before that time. Churn is an issue for a lot of industries such as the financial sector with credit cards and mortgages, the airway industry both short and long haul and of course cheese manufacturers.
One of the reasons why US cell companies struggle to hold on to their customers is because every single one of the major carriers has a less than stellar record of customer service. What happens is that after 2 years of being used and abused by their cell phone company, customers go looking for another supplier just hoping and praying they’ll be better. Of course the bargains that are offered to new customers sweeten the deal, but they are nothing that can’t be offered by the present supplier to retain the business.
Everybody that has worked in the corporate world for more than 6 hours knows that it is cheaper to retain a current customer than attract a new one. We’re not talking fractions here either because, depending on which set of stats you want to believe, that figure is between 5 and 9 times cheaper!
So what stops the CEO of CrapCell Corp standing up at the shareholders meeting and making an announcement like this?
“As of 1 January 2009 we are going to bring all our customer service operations back in-house. We’re going to make a point of becoming a company that is known across North America and then Europe as the best for customer service. We’re going to treat our customers with respect and we’re going to start to build life long relationships with both private and corporate clients.
We know that people don’t really want to move carriers and go through the grief of changing or even porting their number, being credit checked and changing payment details with their bank. So we’re going to offer our very best deals to people that re-new their contracts. We want to recognize their loyalty to us, not penalize it. That is how we feel we can grow the business by developing an actual win/win scenario rather than just talking about one.”
At this stage my naïve guess would be that all the shareholders are nodding in agreement and looking excited at the thought of owning stock in a company that is about to rule the world, or at least the telecoms world. Then the statement would continue:
“We understand that to carry through on this ambitious and worthwhile plan there will be some short-term pain. We’ll have to invest in people, infrastructure and marketing like never before.”
Audience: Murmur, murmur.
“That may well mean that there will be no dividends…”
Audience: MURMUR, MURMUR
“…for the next 2 years and we may actually see a drop off in stock value as we go through some difficult restructuring.”
Audience: String him up. Kill him! Who’s got the rope?
At this point the stockholders and investors storm the stage, insert a spike in the ass of the CEO and march triumphantly down the street holding aloft a rather uncomfortable, distressed and red-faced CEO.
So what went wrong? It seemed like everything was going swimmingly until the CEO announced a short-term hit.
And there you have it in a nutshell: A short-term hit.
It seems to me that businesses are driven, or more accurately paralysed by short-termism. They want results now because stockholders and investors want results now. They’re desperate to keep their stockholders and shareholders happy because they have the power to take away the jobs of ambitious, brave and long-sighted CEOs. Consequently, ambitious, brave and long-sighted CEOs are about as widespread as positively tested athletes gracefully admitting they took performance-enhancing drugs to help them win gold medals.
Short-termism is a difficult cycle to break, especially for large publicly-owned companies. It often requires a change of mindset, investment and the willingness to ride out a storm. As we sail merrily into the wind of what could well become a worldwide recession, is there a more sensible long-term option?
It’s easy to say ’twas ever thus and it will remain so and maybe that is the reality. Perhaps I’m just a naïve fool, but I think there are signs that subtle changes are occurring. People seem to be less tolerant of large corporations making huge profits without actually offering a credible product/service. I don’t want to go all woo-woo and start talking about collective consciousness because I’ll probably be asked to leave the blog, but maybe that’s where the shift needs to happen?
I’d really like to hear about your experiences both good or bad or any examples you have where companies have started on a long-term plan knowing that they would take the dreaded short term hit.
Tim Brownson is a lovable life coach who writes at A Daring Adventure. Visit his site, grab his free ebook, and don’t drink tea whilst reading.
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26 Jun 08
16:06
Nick Cernis
Thanks for a great post, Tim! I’d suggest that most people who start a small business take a short-term hit (money & security) in the hope for greater good (wealth & independence) in the long run.
It’s what makes small business thoroughly frightening but wonderfully exciting at the same time! Of course, we don’t have to contend with shareholders…
26 Jun 08
16:06
Ali
I work for a small company which has a fantastic customer support team (cos I’m one of them *ahems*) … but I do see this “short-termism” in other aspects of the business.
We often end up looking for the most “cost-effective” way to do something short-term, even knowing it’s causing many time/money-consuming problems down the line. For example, there’s one task we do manually every couple of months, involving at least a day or two of someone’s time (usually mine) for a fiddly, tedious procedure that could be automated to run almost all by itself … IF the company were willing to invest in 10 days or so of programmer-time to sort it out.
Of course, 10 days RIGHT NOW is never going to win out over 50 or 60 days over the course of two years…
26 Jun 08
19:06
Morten
“a not entirely unpleasant experience that left my tighty-whities smelling lightly of oranges”
Really? You actually smelled them?
Okay, enough kiddin’, because the actual post is quite important.
I think this is a lot of what Seth Godin have been ranting like crazy about, especially for the last year or so. Of course it’s not just in terms of customer service many businesses go for the short term profits rather than the long haul - it also happens to product development, etc.
Perhaps what is changing the gears - and I believe they are changing - is the rise in consumer power and drop in funds needed to start a new company (meaning if someone with entrepreneurial genes is unhappy with the markets current service level(s), he/she might just start his/her own company)..
26 Jun 08
19:06
ZHereford
Alas, having worked for Canada’s largest communications company for over 10 years, I knowest of what you speak!
Short term gain over long term customer service and satisfaction . Very unfortunate. I hope what’ happening now in the world will start to drive a different message home.
Great article Tim!
26 Jun 08
19:06
Aaron - Today is that Day
Great post, Tim! You really brought together what a lot of people seemed to have conveniently missed - that customer service should always be job #1. Marketing and sales are rapidly becoming more about relationship-building than anything else.
I have been with the same cell phone provider for 6 years straight, and it isn’t because their service has been flawless that entire time. However, they HAVE taken care of me each time I needed help, and that is why I stay.
{name of cell company withheld to protect the innocent!}
27 Jun 08
12:06
Tim Brownson
Aaron, you gotta tell man. 6 years!!! I’m desperate to get away from T-Mobile so don’t tell me it’s T-Mobile.
27 Jun 08
12:06
Aaron - Today is that Day
HAHAHA! Alright, Tim - since you asked nice, it’s Cingular! Or should I say AT&T?
Whatever you call them these days, they’ve got every service option you could ask for, and they take care of you when you call them every other month wanting to change your plan, add (or subtract) bells & whistles, or get a new handset because you are already sick of your old one. ;)
1 Jul 08
17:07
Marc in Chgo
I don’t know how they managed it – maybe because they’re closely held by the Carlson family, but U.S. Cellular is a public company with great customer satisfaction.
I’m one of their customers, and I’m very happy with their service. They spend the short-term money to make the long-term gains. Plus, they’re even a little bit cheaper with innovative plans like free incoming calls or free incoming text messages.
I fear the day when U.S. Cellular is bought by a national cellphone operator.
Everytime the big guys boast about the most reliable network, etc., they always have to qualify it as among national operators because U.S. Cellular kicks a$$.
1 Jul 08
18:07
Marc in Chgo
P.S. I’m such a U.S. Cellular lover that I’m forgoing the iPhone just to stay with them (though I may get one for the office). That says a lot considering what a gadget geek I am.