The Changing Game of Service Quality

You can excuse but you can’t hide poor service

Published: Tuesday, May 24, 2011 - 06:00

Caveat emptor or “let the buyer beware” is a long-used phrase familiar to consumers. Your ability to get good service is proportional to your knowledge. Certain industries have poor reputations that make customers wary, but they remain reliant on the vendor to be honest with them. The predictable result is anything from rip-offs to dissatisfaction.

The Internet has begun to change all this, and the advent of social media appears to be speeding the process up. Consumers may not rely on all favorable and unfavorable reviews but will use their social networks to find out the reputation, cost, and other relevant criteria to assess service before buying.

Regularly, I speak to consumers about how they decided to use a particular service provider, and the answer is still referral. However, in today’s networked society, they don’t just rely on their next-door neighbor; they are communicating with people and reading about the reputation of the company on the Internet. These days there are just fewer places to hide poor service quality.

W. Edwards Deming talked about those costs that can’t be seen, the ones he described as “unknown and unknowable.” Things like the cost of poor service, demoralized employees, and the like. The adage where a dissatisfied customer tells anywhere two to 20 people about his poor experience has not just been given a mouthpiece but a megaphone.

Contact centers have long provided a place for customers to share their service experience. Customers who place failure demand (i.e., demand caused by a failure to do something, or do something right) on service centers give us some insight into the “unknown, but knowable” measures of customer service.

However, companies that aren’t monitoring social media conversations may be missing feedback from those who don’t complain through contact centers or other avenues. These complainers are the worst kind because they are influencing future buyers, and service organizations may have no idea of the damage being done.

So how do service organizations quell the social media noise—or for that matter any negative customer perceptions?

By designing services based on customer demand.

Customer demand offers us a huge lever to fix what is wrong with our service design. Designing based on customer demand will provide less failure demand and less negative conversations in social media circles. When service is so good that customers have nothing (or very little) to complain about, then costs go down—a lot. Not just the operational costs, but also expenses like marketing, where service organizations spend millions to convince customers that their service is really good. Seems it would make more sense to design service organizations that are good.

Caveat emptor may be the way of yesteryear, but service providers trying to compete in a socially networked world would be wise to provide good service. This thinking provides both added revenue and reduced expenses at the cost of a redesign of work and management thinking.

About The Author

Tripp Babbitt

Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business.  Babbitt can be reached at tripp@the95method.com. Reach him on LinkedIn at www.linkedin.com/in/trippbabbitt

Tripp also has a podcast and YouTube channel called, The Effective Executive.