Why Bad Customer Service Won’t Go Way

Anthony Dukes, Yi Zhu

Some of the most hated companies in the U.S. are also the most profitable.

Much of this consumer resentment may stem from poor customer service. In fact, most Americans have fought with phone menus, desperately seeking a live service agent to seek a refund.

In 2013, Americans spent an average of 13 hours disputing a purchase or resolving a problem with customer service.

As professors of marketing, we have examined why customer service continues to be so unsatisfactory even at many profitable companies.

Is good customer service unattainable?

Our research focuses on the structure and incentives of various customer service centers to explain why consumers perpetually experience hassles when seeking refunds.

What we found is not encouraging.

Many complaint processes are actually designed to help companies retain profits by limiting the number of customers who can successfully resolve their complaints.

The process involves a tiered structure in which all incoming inquiries start at “Level 1.” Level 1 may be a call center operator who listens to a complaint but acknowledges that there is nothing he can do.

Only by insisting to talk to a manager or threatening to leave the company do consumers come closer to obtaining a refund.

Forcing customers to talk to a computer, circulate through phone menus or sit on hold “while serving other customers” serves the same deterring role as that Level 1 call-center agent.

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By design, Level 1 agents are limited in their authority to compensate customers.

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