The Candid Voice in Retail Technology: Objective Insights, Pragmatic Advice

Will Consumers Finally Pay For Service?

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Consumers have been motivated almost exclusively by price since the Great Recession. They’ll tell you so, and from our research, they have firmly convinced retailers this is all they want. In fact, even luxury retailers are getting infected by the need to use promotions and discounts to drive consumer behavior.

So I’m going to say something controversial now: Consumers get the service they pay for.

I know what you’re thinking, given the now-infamous United incident. And I agree. No one deserves to be beaten up for a seat – by the company selling that seat, no less. No one deserves to be mistreated by any service provider, ever. Even if they’re getting the service for free.

And yet… If consumers are going to be so price-driven, to the point where retailers are closing stores left and right, where the most successful retailer (yeah, Amazon) doesn’t have to be profitable at all, then what kind of service should they expect for those rock-bottom prices?

Of course, consumers want it all. They say they want the lowest price no matter what. They say customer service doesn’t really matter – that they’ll take care of that for themselves. But really what appears to be happening is that consumers do actually care about customer service. When they say they want the lowest price, implied in that is at least some base expectation from retailers and brands around service. And, to be fair, retailers have fed those expectations, training consumers to expect promotions, to wait for discounts, all the while implying that consumer will be getting the “full price ” value for those discounts.

But the industry appears to be headed toward the ground floor of minimum consumer expectations for service when they also insist they want the lowest price possible. In the airline industry, that minimum now firmly includes the idea that once you’ve taken your seat on the plane, you’re not going to be asked to get off. There is still a lot of angst over whether access to overhead bin space is part of the minimum consideration set for the price of a plane ticket.

I personally found myself contemplating that question while spending over thirty minutes on hold trying to reach DirecTV: at what point would I be willing to pay more to actually be able to talk to someone? Conversely, for what I pay every month in cable TV bills, shouldn’t I have an expectation that if I have a problem, I can talk to someone in less time than 30 minutes? Even during prime calling times?

Retailers and brands seem to continue cut services in order to cut costs so they can meet low-price expectations, or charge more to access services that used to be included (like overhead bin space). We’ve talked about it in terms of a race to the bottom, where the finish isn’t some ribbon to be broken through, but rather a cliff. Only one retailer can win a race to the bottom on price. The rest end up insolvent.

But until the blowup in response to United’s uncaring policies and behavior, I never thought about the damage that might happen along the way. This damage is real. No matter what consumers say about low prices, they have some kind of base expectation for how they’re treated, again, even if what they’re getting is free. Retailers might think they’ll know when they reach the point where consumers say “Enough! I will pay for better service! “, but I think the reality is, there’s a lag between when consumers have had enough, and when retailers figure that out. And we may very well be in that lag space right now.

Take, for example, all of the punitive posts on social media every time there is a customer service failure. There were at least three different camera angles from other passengers on the United flight. Facebook and Twitter are chock-full of consumers posting either companies behaving badly, or rants against companies for perceived injustices. When I was on minute 29 on hold with DirecTV, believe me, I was just a couple clicks on a screen away from becoming a Twitter ranter myself.

Just last week I got into an exchange with someone commenting on one of Paula’s posts about customer service – the comment made the point that it’s not really fair for consumers to take to social media at every perceived customer service slight, when consumers really ought to be taking their complaints directly to the company first, to at least give the company a chance to make it right.

But I have to ask – why are consumers so upset to begin with? If I’ve given DirecTV 30 minutes of my time and all I have to show for it is some horrible hold music and no indicator of how much longer I must endure to reach someone who can help solve my problem, at what point have they ceded their chance to make it right?

Consumers seem to be getting angrier and angrier about how they’re treated, and when brands aren’t providing good customer service (because they believe that consumers don’t want to pay for that service) then we end up in a vicious cycle. Consumers won’t pay for service, retailers won’t provide it, consumers get mad, and then retailers don’t have the capabilities in place any longer to handle consumers’ ire, so consumers get even angrier.

I just hope the industry can figure out how to break out of this cycle before, literally, someone else gets hurt. For industries that are about helping customers – whether retail or travel or anything else consumer-facing – the fact that someone CAN get physically harmed over customer service should be a warning to all. The value equation for retail is out of whack, it needs to be fixed, and it’s not just retailers who need to do the fixing – consumers have a role to play too, in having realistic expectations for value vs. price.


Newsletter Articles April 24, 2017
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