Jun. 2, 2008 – Companies losing their ‘personal touch’

By Karin Gelschus
Associate Editor
All businesses want their customers to stay longer and buy more, but long-term patrons are becoming less crucial than in past decades because of greater access to first-time consumers.
Perhaps as a result, customer service is depleting in some industries, especially in the service market according to national studies. In the down economy, however, customer satisfaction is proving more important than ever, especially since consumers are becoming more frustrated with the quality of customer service.
Two major studies, the American Customer Satisfaction Index (ACSI) and Hornstein E-mail Survey, revealed decreases in customer service by reduced availability face-to-face and over the phone in recent years. Declines have partially resulted from changes within customer service departments to keep up with the most efficient business practices of the technology era.
This new age has allowed businesses to access a greater number of product and customers through the Web, e-mail and cell phones, allowing companies to skimp on traditional methods of customer satisfaction.
As a result of more consumer traffic to handle on a daily basis, both long- and short-term customers are frequently denied time with service representatives. Alternative ways of communication like the Internet, for example, have raised some rumblings from consumers who believe they’re frequently receiving a cold shoulder from companies big and small.
Analysts say the problem boils down to the old saying “time is money,” and now that there are more ways to save time through technology, more businesses are viewing customer service as a cost rather than a profit center. The prevailing wisdom, however, is that businesses need to find a happy medium that satisfies both their profit goals and their customers’ need for personal connection, says Scott Hornstein, owner of Hornstein Associates, developer of custom-focused marketing programs.
“What I’m doing is creating a series of drive-by relationships, so I can pick the low hanging fruit,” he said. “Studies have said the No. 1 reason people have switched to a competitor is poor customer service.”
That element can often times be the deciding factor of whether a consumer buys an ATV from one dealer or the other one down the road.

The statistics
Hornstein Associates conducts a one question, annual e-mail survey to companies of various sizes across the country. The e-mail is sent out one by one to companies that are on the Financial Times’ World’s Most Respected Companies list or Fortune’s Most Admired Companies.
The e-mail’s subject line reads “Customer Service,” and the only question it asks is “What is your corporate policy regarding the turnaround time for e-mails addressed to corporate service?”
Hornstein says he’s not actually looking for a response, but an answer.
“All these companies are saying customer service is important and it means something,” Hornstein said. “OK, prove it by simply answering my question (via email).”
Hornstein has been conducting the survey since 2000, but he didn’t see a significant decrease until 2002. Every year after, the number of companies that have responded has decreased, and the amount of time it took the companies to respond increased.
This year’s survey revealed 31 percent of the companies answered within 24 hours. That percent is less than half of 2002’s high of 63 percent. Forty-two percent of companies said they either have a policy of a 24-hour turnaround, or they try their best as quickly as possible. Of those companies, 27 percent took longer than
24 hours to answer.
The number of companies that responded, regardless of time frame, was 51 percent. That number was also down compared to five years ago, which was 86 percent.
Hornstein said the answers to his question consisted of one of the following: They didn’t know; they said the information is proprietary and cannot be shared with the public; or the company asked if the e-mail was prompted by a problem.
Hornstein believes the lack of responses results from companies shifting tactics from customer care and quality after the sale to focus mainly on the number of customers and quantity of sales.
“‘Hello Mr. Customer. I know you’ve been my customer for many years and I know you’ve bought from me in the past, but could you step aside please because there’s someone behind you that wants to buy today.’ (Companies) are less concerned with handling the needs, concerns and questions of their long-term customers,” Hornstein said. “However, at the end of the day if you’re not making a profit, then we have nothing to talk about. Am I looking at it today but am I also looking at it long term?”

ACSI survey reveals results
The national scores produced by the American Customer Satisfaction Index (ACSI) aren’t as negative as the Hornstein survey.
The ACSI scores hundreds of companies on customer service, which it has been doing since 1994. It employs a group of analysts that look at various qualities of customer service to score businesses out of 100. Those factors include drivers of satisfaction (customer expectations, perceived quality and perceived value), satisfaction and outcomes of satisfaction (customer complaints and customer loyalty, including customer retention and price tolerance) for each company. The study is based on a sample of 250 customer interviews for each company. There are hundreds of companies in 43 industries like Honda Motor Corp., eBay Inc. and Universal Studios Inc.
David VanAmburg, managing director of the American Consumer Satisfaction Index, says there are two types of products, durables and non-durables. The durables, which have a service aspect to them like airlines, hotels, cars, etc., will always have lower scores because there is the human element, which is more variable. The powersports industry fits into that durable category.
The ACSI does not report directly on the powersports industry, but some of the durable related fields include automobiles and light vehicles, Internet retail, department and discount stores and airlines, which share many common issues as powersports manufacturers and dealers on a daily basis.
The automobile/light vehicle category is maintaining a satisfactory number from the ACSI at a score 82 out of 100, which is up three points since 1994. The national average for all industries is a score of 75. Internet retail has only been scored since 2000, but it’s also up a few points to 83. It was at 78 in 2000.
While some industries are doing well, others are heading in a downward spiral.
The airline industry’s score is at its all-time low of 62, which is almost 14 points lower than in 1994. The department and discount stores industry is also not doing well. It’s down about five points since ‘94, and this year didn’t relieve the downward trend since it lost another point and a half.

Revenue vs. service gain/loss
The number of variables that affect revenue and customer service makes it difficult to verify how much the two factors intertwine. The amount of time and money needed to track customer retention and word of mouth is considerable for any company and even then, numbers aren’t necessarily concrete.
Since those numbers aren’t as concrete as sales numbers and it all comes down to profit, Hornstein notes companies are measured by day-to-day sales.
“Wall Street measures businesses by what they sold today, which means customer service gets put on the back burner because its instant results are not evident,” he said. “Companies have short-term focuses and don’t see immediate, specific results from providing strong customer service.”
Viewing customer service as a long-term focus, VanAmburg of the American Consumer Satisfaction Index says it’s not a secret as to why some companies do really well in the area.
“They do well with matching what they deliver with buyer preferences. It doesn’t necessarily mean bending over backward all the time; that might not be what’s needed,” said VanAmburg. “The companies that do best understand what their customers want. That means sending out a lot of surveys, direct mail, anything to get the feedback to figure out how you want to deliver service.”
What customers want varies from industry to industry and sometimes company to company. VanAmburg says that might mean more sales personnel or touch points, but conversely, it might mean leaving people alone and offering them other technologies to do what they want. Whatever it entails, every company’s goals need to be unique to its mission.
Sometimes those goals don’t always fall in the line with generating the most sales. VanAmburg says Amazon does extremely well as far as generating revenue, but its investors aren’t always satisfied with what they’re doing.
“(Customer service) is not always rewarded like we would expect it to be in the market,” he said. “Investors don’t always love what Amazon is doing because they are constantly updating what they offer to satisfy their customers, which doesn’t satisfy investors because its top priority isn’t profit.”
It’s the hazy line between profit and customer service that has many companies debating how much time and energy it should spend on something that’s not generating immediate revenue.