How CEOs are failing the customer by devaluing service

Posted by Alastair on September 13, 2016

customer service failings

It doesn’t matter what industry you are in, customers are becoming more demanding and products less differentiated. The boundary between efficient customer service and the best products is blurred. If you talk to people about what car to buy the topic is often more focused on aftercare service than the actual car.

In the case of domestic appliances this is certainly the case; although many manufacturers have outsourced their service business, it is still perceived as the service arm of the manufacturers. I know my wife will never purchase a well-known brand again as the service company was in her view ‘a nightmare’ (her post on Facebook attracted many similar ‘likes’ effectively trashing the product), when the problem was a different organisation.

Facilities management companies invest heavily in bid management, but rarely in efficient operations. Yet this has had fairly tough consequences – we can all remember the G4S fall out after the Olympics more than 4 years ago. I am sure, retrospectively, G4S would have invested more in efficient processes and technology had they known the consequences.

Service management is now the shopfront for products, not an afterthought, but it never seems to have the investment it deserves, certainly not compared to areas of the business like product development or marketing.

Why is this? I guess it’s not seen as dynamic or sexy, and operations rarely have a position on the board. Unfortunately, many organisations still view operations as a cost and a target for reduction, rather than investment.

This is where CEOs and CFOs have failed. Not only to understand how influential service management is on their overall business, but also how investment in technology, supporting efficient processes, will really drive down costs and more importantly enhance the customer experience.

There have been many business cases, requiring substantial capex, which have been rejected, often as the argument has been based purely on operational costs and not the impact of poor service on future sales.

I hate the phrase ‘no brainer’ but in today’s world, we are missing a trick in excluding the company’s reputational damage through poor service from a business case. Also in failing to recognise how cheaply cloud-based products can be implemented as the cost becomes a monthly charge rather than a huge opex expenditure. If our industry leaders truly understood this, implementing a solution would surely become a ‘no brainer’ and the costs of running a service business balanced with the repeat sales.