For decades, companies have fought hard to retain customers, pushing the ‘customer is always right’ mantra to its limits. Staff shortages and the need to cut costs during the pandemic have challenged this approach.
The 1980s and The New Era of the Customer King
With major industries maturing in the 1980s, and the cost of advertising climbing steadily, acquiring new customers became costlier. Instead of fighting to acquire new customers, companies naturally shifted their focus on keeping existing ones. This resulted in a race to satisfy customer needs to perfection, and a subsequent four-decade-long customer service golden era. If you were not happy about the food, you just had to say it and send it back to the kitchen. Your bed was not comfortable in your hotel room? You could complain to the hotel manager and get upgraded to a suite…
The emergence of social media in the mid-2000s pushed the customer service obsession to new highs. By giving customers a megaphone to voice complaints of all sorts, social media platforms forced companies to pay even more attention to what was being said about them. Companies began dreading that a customer service failure could go viral. This, in turn, put even more pressure on service staff to constantly monitor customers, and anticipate what could go wrong before potential escalation.
Companies were saying yes to even the most extravagant requests and unwarranted complaints. The thought of making mistakes became paralyzing. The Great Financial Crisis of 2008 however marked a first turning point, forcing companies in industries where cost cuts were needed to outsource their customer service.
Why did it matter so much to excel at customer service? Academic research on customer service suggests that companies that have a customer orientation tend to do better – than those who do not have such orientation – in terms of customer perception. In addition, research also suggests that customer satisfaction is positively related to loyalty and positive word-of-mouth.
The Great Customer Service Reset: Whose Side are You On?
When the Covid-19 crisis hit, three forces helped companies reshape and rethink businesses’ approach to customer service.
First, rules and regulations around Covid enabled companies to test the boundaries of what consumers were prepared to pay for, and accept, to regain access to their ‘old normal’ life. Companies were thus able to test previously unthinkable aspects of customer service – or lack thereof . For example, a luxury hotel without a full-service spa or a concierge, or with limited access to the fitness center.
Second, companies had to cut costs to survive multiple lockdowns. Most of these costs and spendings were slow to be reinitiated once restrictions eased – and some are still uncertain to fully recover, for instance business travel, or spacious offices. In addition, some services that seemed taken for granted (e.g., daily hotel room cleaning) became optional, with major players in the industry hinting that this could be part of the ‘new normal’.
Third, companies, especially in the hospitality industry and the service industry (from consulting to airlines…), experienced difficulties hiring, combined with waves of resigning employees, or new ones not willing to work full time. Those who remained on the payroll could finally demand being treated fairly by customers and being able to push back on excessive customer requests. With such power shift from employers to employees, the former had to decide whose side they were on: their staff or their customers. With Covid restrictions and frustration making consumers at times more aggressive, this was another opportunity for companies to reset their approach to customer service.
How To Do Customer Service Right in A Post Covid World
Customer service, in a post Covid world, is not disappearing – rather it is evolving. If anything, the pandemic appears to have given companies an opportunity to reset their approach to customer service.
Research suggests that three aspects are important for consumers when it comes to satisfaction and feeling that they receive fair service following a complaint. First, distributive justice, which refers to consumers being satisfied with the outcome from the service experience or complaint handling. That is, if your flight was delayed by more than 2 hours, are you happy with the compensation received? Second, procedural justice, which refers to the way a complaint is handled – was it done in a fair, objective manner? If you complained about your meal, were you listened to? Did you get a chance to explain what was wrong about it? Third, interactional justice, which refers to the way consumers are treated throughout the complaint process.
Does it mean companies can get away with anything? Certainly not. Bad customer service remains damaging for a company’s reputation. Companies who adopted controversial refund practices during the height of the pandemic and beyond still face customer backlash. The cornerstone of good customer service remains to consider consumers in the fairest possible way. This implies apologizing when one is wrong, not blaming customers for service failures, taking responsibility where appropriate, delivering on promises, and keeping a constant healthy flow of communication.
New technologies and progress in artificial intelligence may give companies a way to properly service customers in a more efficient manner. Yet, research on customer interactions with chatbots suggests that customers can feel devalued when being helped by artificial-intelligence-powered solutions.
A Wider Range of Customer Service Experiences
With companies looking to adopt a healthier balance in terms of customer service, an open question remains – what will it mean for customer loyalty? Providing companies ‘reset’ their approach at the same time, not much should change. But eventually, it is likely that customers will experience more variation in customer service, with companies providing little to none – even what was seemingly taken for granted before, while others may offer supportive, proactive customer service. In other words, customer service may eventually become, yet again, a differentiating factor.