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from: http://articles.moneycentral.msn.com/SmartSpending/ConsumerActionGuide/the-customer-service-hall-of-shame-2009.aspx
MSN Money’s 3rd annual survey finds which companies, despite tough times, still put customers first — and which ones seem intent on walking all over them.
By Karen Aho
How a company handles adversity can tell you a lot about its character. Does it stick to its guns, keeping the customer first? Or does it stick it to customers, raising prices and cutting service?
The recent economic turmoil has given companies a chance to prove their mettle. But many, particularly in the hard-hit financial-services industry, have failed to do so.
That’s one message from 2009′s MSN Money Customer Service
Hall of Shame. For the third year in a row, MSN Money partnered with polling firm Zogby International to find out how customers think they are being treated by the nation’s largest retailers and service providers.
The results of the 145-company survey, conducted in late April, capture which businesses are doing a good job of winning over customers in these tough times and which are clearly not.
Those that aren’t may not come as a surprise. For the most part, banks and credit card issuers fared noticeably worse this year when it came to pleasing customers. About 65% of financial-services companies received more negative marks than positive marks this year, compared with 40% that did so last year.
Four financial-services companies made the top-10 Customer Service Hall of Shame, joined by one online-service provider — AOL — two cable companies, two phone companies and one retailer. Nine of the top 10 were repeats from 2008.
AOL, like last year, ranked worst in customer service in the 2009 survey, this time with 44.8% of respondents saying AOL’s service was “poor,” down from 46.6% a year ago. (To see what AOL and other companies had to say about their inclusion on this year’s list, please click here.)
What may be surprising is not that these companies continue to do poorly but that their raw scores remain low at the very time other businesses are improving customer service in response to market uncertainty.
Discount retailers, supermarkets and fast-food restaurants, in particular, made sizable gains in this year’s survey, which was taken in the thick of the economic downturn. Even Wal-Mart Stores (WMT, news, msgs), which tends to receive relatively low marks for service, received better grades this year.
“The effect of the recession has been quite different from what we’ve seen in the past,” said Claes Fornell, a business professor at the University of Michigan’s Ross School of Business and head of the American Customer Satisfaction Index. “They are cutting people, and they are cutting costs, but the remaining people are working harder, and it seems to be of a higher quality.”
One retailer, however, made a repeat appearance in the Hall of Shame: Abercrombie & Fitch (ANF, news, msgs), which continues to irk its customers by catering exclusively to “cool, good-looking people.”
The MSN Money-Zogby International survey listed companies in 15 industries, including airlines, hotels and mail delivery outfits. Respondents were asked whether they had experience with each company’s customer service and, if so, to rate it “excellent,” “good,” “fair” or “poor.”
Companies were ranked based on the percentage of opinion responses that were “poor.”
For the third year in a row, telecommunications and financial-services companies dominated the top of the “poor” rankings. In addition, their raw scores did not improve over last year’s.
So why is it that as other industries strive to improve customer service in the face of economic difficulties, these companies continue, for the most part, to make customers so unhappy?
Each year, we ask the companies in the Hall of Shame to respond to our survey. (You can read their responses here.) In doing so, some have discussed the particular challenges their industries face in trying to keep customers happy for the long term.
On the surface, their arguments make sense. Cable, Internet and cell phone companies say they must provide service 24 hours a day, often by overcoming complex technical problems. (For more, see “Why we hate cell phone companies.”)
Banks, meanwhile, along with insurance companies, must often deal with customers who are already upset by stressful, costly situations.
But outside analysts say even the most difficult situations needn’t leave customers displeased. It’s not the outage that matters; it’s how the company responds to it. It’s not the cost of operations; it’s how the company bills for it. In short, it’s not what you do but how you do it that leaves a lasting mark.
As evidence, the company that had the highest percentage of marks for “excellent” service was, yes, a financial institution: USAA, or the United Services Automobile Association, which offers banking and insurance to military members and their families.
“Unfortunately for you and me as customers, businesses tend to look at and copy others in their industry, so there’s a lot of what I call ‘me-tooism,’” said Stephen Brown, a marketing professor and the executive director of the Center for Services Leadership at Arizona State University’s W.P. Carey School of Business.
So when one provider grabs new customers by offering a free phone or zero interest, making up the costs later through surprise fees, others will do the same.
“If those industries had some bold leadership, which I think those industries don’t, they could see there’s a huge competitive advantage to having good customer service,” Brown said.
Banks may be most in need of some of that bold leadership today. Of the 11 financial-services institutions ranked in the survey, nine landed in the top 20% of the rankings this year. Last year, only half did.
“Banks are there to manage our money and do that reasonably well, and many of them haven’t,” the University of Michigan’s Fornell said. “So they haven’t even done the basics. They have provided something negative.”
Furthermore, when the market crashed, banks ramped up the very revenue-generating tactics that have been upsetting customers for years. In an effort to recoup losses from high default rates, every one of the eight largest credit card issuers arbitrarily increased interest rates, even for good customers, according to research from the Center for Responsible Lending.
Many companies also increased punitive fees, shortened grace periods and broadened the reach of certain fees. (Many of these practices will be prohibited when the new credit card reform law goes into effect in early 2010.)
“Their primary focus is on getting new customers or on getting more balances or more income from existing customers, rather than making existing customers happy in the long term,” said Josh Frank, the senior researcher who conducted the study.
Now contrast those “gotcha” fees with the methods that discount retailers, supermarkets and fast-food restaurants have used to generate income in this recession. All of these industries managed to keep customers just as happy, if not more so, than they were a year earlier.
McDonald’s (MCD, news, msgs), for example, received “good” or “excellent” marks from 58% of respondents this year, compared with 41% last year. Warehouse retail chain Costco Wholesale (COST, news, msgs) received “excellent” marks from 38% of respondents, compared with 29% last year. And Trader Joe’s, a privately held grocer that strives to make food shopping an adventure, got “excellent” marks from 51% of customers this year, compared with 45% the year before.
So how did companies such as these improve their customer-satisfaction scores in the face of the same economic difficulties?
They did it in two ways: First, they appealed to the customer’s current needs by creating value options through, for example, a dollar menu or a bundle pack.
Such tactics don’t just draw customers through the door; they allow customers to walk out feeling good for spending prudently. The trip to a store then becomes an emotional experience that leaves a lasting positive impression.
“That memory is the currency of your brand,” said Jeanne Bliss, the author of “Chief Customer Officer.” These businesses “are still creating and tendering an experience for families to get out and escape the humdrum of life, in a way that they can afford.”
Second, these stores and restaurants cut costs in ways that customers don’t notice or don’t mind, a far cry from a bank’s surprise $39 fee.
Restaurants reduce portion sizes. Stores cut back on inventory, stocking fewer sizes and colors and more low-price items. They might also raise prices on nonessential goods, for which customers are less price-sensitive. Mostly, retailers provide fewer choices.
“So some customers see it, (and) some don’t,” said Michael Shames, the executive director of the Utility Consumers’ Action Network, a California nonprofit that monitors business practices. “You say: ‘They don’t have that mustard? Oh, well, I’ll try this one — and look, it’s cheaper.’”
And the customer can leave feeling good about himself.
1. AOL’s response. Post your experiences here
.
2. Comcast’s response. Post your experiences here.
3. Sprint Nextel’s response. Post your experiences here.
4. Capital One’s response. Post your experiences here
5. Time Warner Cable’s response. Post your experiences here.
6. HSBC’s response. Post your experiences here.
7. Qwest’s response. Post your experiences here.
8. Abercrombie & Fitch’s response. Post your experiences here.
9. Bank of America’s response. Post your experiences here.
10. Citigroup’s response. Post your experiences here.