Your customer service is awful! Why so many companies struggle to meet consumers' needs

If you’re managing your company’s customer service, you most likely believe you’re providing customers with good service. In fact, statistics show that 80% of businesses think they provide superior customer service.

However, when customers were asked about their experiences with various companies and organizations, only 8% said they think the businesses they interact with offer superior customer service.

That’s a big discrepancy, but I’ve seen it firsthand.

Several months ago, I booked a hotel via a well-known travel website for a trip in January 2022. A few weeks ago, I needed to add one more person to the room, going from two to three people.

When I tried to do it online, I kept getting redirected and prompted to cancel my reservation and start over, which I didn’t want to do. After several attempts and mounting frustration, I realized that I couldn’t make the change online and would need to call.

Two attempts later, I made it through to the live agent and was again told I would need to cancel my reservation and start over – and was informed that once I canceled it, the room would no longer be available. I tried to understand how that was possible. I explained to the agent that I still have the room reservation so it must be available.

But my arguments were to no avail. As the agent said, “There is a process,” and the system showed that the room was no longer available.

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To save you the misery of having to go through every detail, I finally managed to make new reservations, adding the third guest, but I had to settle for a new room. Not a great outcome, plus I had to lose more than an hour to find a solution, including waiting and call time.

What do you do after a poor service experience? I usually vent on social media, so I tweeted about the incident. More than hoping someone from the travel company noticed and responds to me (they haven’t), I was trying to see whether my experience is unique.

Indeed, the responses I received showed that my experience was not an outlier. In looking at review websites like Trustpilot, it was evident that my experience is quite common.

“Do NOT use this website!” was an oft-repeated phrase and the site had an overall grade of 1.1 out of 5.

Now, I know people do not go to review websites to praise firms, but you can find several with extremely high scores if you look.

If you’re thinking this is confirmation bias, an effort to validate my own experience, you’re not wrong. And I did check out the competition is doing – slightly better, but only by a bit.

Bad service doesn't hurt bottom line

Realizing that my experience is common and somewhat indicative of an industry-wide phenomenon, I wondered whether their poor customer service was impacting their financial performance. My research showed this was not the case.

While in early 2020 this company’s stock reached its lowest levels since 2013 as widespread travel restrictions due to COVID hurt the travel sector, the stock has since recovered. In fact, it has tripled to an all-time high, fueled by businesses reopening and people traveling again.

Change in a process is an improvement only if it results in improvements regarding financial performance. The fact that this company is doing well financially means that its poor customer service is probably fully aligned with its strategy and appreciated by the financial market as such.

Even so, why does poor customer service persist, especially in a competitive environment? In this case, customer service is not a source of competition in this industry.

When it comes to hotel reservations, you’re either using Expedia or Booking.com, both of which also own nearly all the competition. VRBO, Hotels.com, Hotwire.com, Orbitz, Travelocity and Trivago are all owned by Expedia. Booking Holdings owns Priceline, Agoda and Kayak.

Although you may feel like you have plenty of choices when booking a hotel, you don’t. These platforms are volume players – they offer low prices and high variety, but poor customer service.

Yes, you can receive better customer service when you book through a hotel directly, but it does come at a cost of less options in variety and usually higher prices. So, while we like to complain about poor service – and some of us will spend precious time online writing negative reviews – most of us are unwilling to pay for better service. But companies should still strive to do better.

Today’s customers continuously compare products and services – they’re divinely discontented; they’re searching for a seamless experience. And while they do expect privacy when it comes to their data, when they interact with a service over the phone, they want to be easily identified so they receive efficient service.

Human interaction still matters

Finally, we have all become more sensitive to non-value-added work. The ideal process is one where you call the company, a person answers almost immediately, they know why you’ve called, they have the information to address your concerns, you go on your way, and you don’t have to call again. As we all know, that rarely happens. 

Yes, companies, your product is the best customer service, but there are likely going to be issues for someone at some point along the way. Thus, human interaction is required where the product or technology is amiss. No, it’s not all that scalable. But you can’t build a good, long-lasting product or service if you don’t understand your customer and if you don’t treat them well.

In this age of technology, customer service can and should be improved across the board.

Gad Allon is faculty director of the Jerome Fisher Program of Management and Technology at the University of Pennsylvania.