5/18/2010 9:00 AM ET|
The Customer Service Hall of Shame
MSN Money's fourth annual survey reveals which companies have scored points during the recession -- and which have made their customers' lives more difficult.
Face it: Getting consumers to open their wallets in a hardy economy is not all that difficult. But when times get tough, companies need to step up their games.
So who's done that? There's a good way to tell: Ask the customers which companies have earned their business.
"Those are the ones," said Kevin Burkhard, an expert in strategic initiatives at Arizona State University's W.P. Carey School of Business, "that coming out of this (recession) are going to be miles ahead of their competitors."
MSN Money's fourth annual customer-service survey, conducted by Zogby International, reveals which companies have been making their customers happy and likely will reap the benefits for years, and which may be sending customers a message -- "We don't care about you" -- they won't soon forget. (Psst: Can you say "big banks"?)
To gauge these sentiments, MSN Money identified 150 of the largest companies in 15 customer-facing industries, as varied as fast-food chains, airlines, grocers and financial-services companies. Zogby then asked people across the country if they'd had experience with each company's customer service and, if so, would they call the service "excellent," "good," "fair" or "poor"?
For the 2010 Hall of Shame, we ranked companies based on the percentage of those who had experience with a company's service who said "poor." The worst 10 make up the Hall of Shame. For MSN Money's Hall of Fame, we ranked companies based on the percentage of those respondents who said "excellent."
To get a sense of how attitudes have changed in the recession, we also compared the percentage of responses that were positive (answers of "excellent" or "good") and negative ("fair" or "poor") in past surveys to those in 2010.
A few of the surprises: Names not prominent in customer-service textbooks -- Wal-Mart Stores (WMT, news) and McDonald's (MCD, news), for instance -- are making strides toward capturing customers' hearts. In a difficult economy, customers may be putting more emphasis on the bottom line.
In 2008, 45.5% of respondents in the MSN Money-Zogby International survey gave Wal-Mart positive marks. In 2009, it was 55.3%. In 2010, that number climbed to 56.9%, giving the retail giant one of the largest two-year gains in the survey.
"They're appealing to new customers who have moved down a bit but who want reasonably upscale stuff, but at lower prices," said Praveen Kopalle, a professor of marketing at Dartmouth College's Tuck School of Business. "They got them in because of the recession, but they want to keep them."
Through what it calls Project Impact, Wal-Mart has created more-appealing visual displays, widened aisles, lowered shelves, put down nicer floors, boosted register staffing, added higher-end products and fair trade, goods, and even tried to make those now-shorter lines more bearable with well-placed TVs. The company switched its pitch from "always low prices" to one that emphasizes value and lifestyle: "Save money, live better."
Patricia Edwards, the chief investment officer for wealth management firm Storehouse Partners, said her husband had walked into a revamped store and quickly sent her a text: "I had to look around and make sure I was still in Wal-Mart."
"They finally figured out that making the experience miserable is not worth it for a few pennies," Edwards said. "The middle-market customer is not willing to experience pain to save money."
Rival Target (TGT, news) scores were higher in the MSN Money-Zogby survey -- 68% gave the discounter positive marks -- but have remained stable over the past three years. In a reversal, experts say, Target is now trying to learn some things from Wal-Mart.
Other discounters making notable gains in the survey included TJX (TJX, news), appealing to "fashionistas" by offering department-store labels at bargain-basement prices (its positive scores rose from 40.5% in 2008 to 53.5% in 2010); Home Depot (HD, news) (60% to 68.8% positive); and Costco (COST, news) (72.5% to 79.4% positive), now on par with [[chart=JWN, Nordstrom]] (also 79.4% this year).
Though Home Depot has never made MSN Money's Hall of Shame, complaints about service at its stores prompted our first survey in 2007. The CEO of the building-supply store apologized to customers, and in recent years the company has added floor staffing and created incentive bonuses for good service. It has helped others and itself in the downturn by hiring unemployed builders to assist customers.
And even though we don't often associate fast food with the concept of customer service, fast-food companies' scores have risen, too, proving that now is the time to up the game for both new and existing customers. McDonald's, which has expanded its healthier fare and dollar menu, saw its positive scores rise from 45.7% two years ago to 57.8%.
By offering a $5 foot-long sandwich and plenty of cucumbers, lettuce and onions, Subway is making a whopping 70.1% of its customers say they are pleased with the company's service.
In fact, one of the few companies that experienced a drop in its customer-service scores, and the only supermarket to do so, was Whole Foods. Surely the upscale grocer didn't benefit from its mock nickname, Whole Paycheck, a reflection of, at the least, a perception about its prices.
"Probably why they dropped is they thought their customers weren't price-sensitive," Kopalle said. "But previously price-insensitive customers become price-sensitive in a recessionary environment."
"Compare that to Publix," he said, referring to the Southeastern grocer that gets high marks for service and ranked high enough to place in the Hall of Fame. "It's saying, 'Hey, you have a prescription for antibiotics? Come here -- you can get it for free.'"
'Free' wins hearts and minds
Pricing is always a balancing act. In the current recession, companies that have earned high marks for customer service in the past haven't rested on their laurels. They've found a new pricing sweet spot with a name that couldn't be more attractive to today's customer: free
Take a look at a few from this year's Hall of Fame:
- Amazon.com (AMZN, news) (87.8% positive) offers free shipping on orders over $25 and on all orders for prime customers. The online retailer spent $849 million on shipping in 2009, according to its annual report.
- Southwest Airlines (LUV, news) (79.5% positive) is the only large U.S. airline that's not charging a baggage fee. It flew 86 million passengers last year, meaning it would have collected about $1 billion in fees if only half of those fliers had paid $25 for a bag.
- Publix (81.8% positive marks) offers free 14-day supplies of seven generic antibiotics in its pharmacy, as well as unlimited supplies of a diabetes medicine.
- Apple (AAPL, news) (75.9% positive) offers free tech support for 90 days and free computer and software courses for buyers, and it sets up stores to encourage free use of the devices by shoppers.
To the customer, such promotions feel like a big hug -- empathy in action. Companies are saying, "We know times are tough; we won't charge you," said Richard Honack, a professor of marketing at Northwestern University's Kellogg School of Management. "And people like that."
There's one place that people clearly aren't feeling the love: at the big banks. Of the 20 companies at the bottom of our customer-service ranking, nine sell financial services. Of the bottom 10 -- those making the MSN Money Hall of Shame -- half are banks, credit card servicers or both.
By now the gripes about the big banks are well-known: taxpayers lent them money to stimulate the economy and they grasped their fingers tight around it, restricting lending and even reducing existing credit card lines.
Bank of America (BAC, news), which serves more U.S. consumers than any other bank, got the worst marks, landing in the No. 2 spot in our Hall of Shame with a greater percentage of people calling its service "poor" (34.6%) than "fair" (24.8%), "good" (30%) or "excellent" (10.7%).
Even American Express, typically a standout for customer service, saw the percentage of respondents with positive feelings about the credit card company slide from 69.9 to 60.2 over the past two years.
Telecommunications companies continued to round out the Hall of Shame, as in previous years, but they've shown some improvement, with Sprint Nextel (S, news) and Comcast (CMCSA, news) making gains of 8 and 10 percentage points, respectively.
Nonetheless, the cable companies are still failing to empathize with their customers, experts say. Attractive pricing bundles end after one year, luring new customers for the company but penalizing existing customers later on, all at a time when people are struggling to pay their bills.
"They seem to take the customer for granted," Dartmouth's Kopalle said.
The risks of doing that too long are perhaps best illustrated by AOL (AOL, news), which once again ranked worst in the Hall of Shame. The company has changed dramatically from its days as the pre-eminent Internet service provider, but reader posts on MSN Money's message board after past surveys show that customers still remember service problems dating back 10 or even 20 years.
Don't surprise me
In a time of economic uncertainty, the last thing people want is a surprise bill.
Even worse than a high price, for the customer, is an unexpected charge. A mere $3 fee can send the blood pressure skyrocketing. Dish Network (DISH, news), which makes its first appearance in the Hall of Shame, got into trouble for apparently confusing language regarding its cancellation fees and other costs, a move that cost it $6 million in a legal settlement and probably more than a few customers.
The companies that will fare well after the recession: those reducing customers' stress now, experts say.
"You have to deliver on what you advertise," said Honack, of Northwestern. "People have an expectation when they walk through the door. If what they get is different, that's when they get upset."
Take a look at the high scorers in the MSN Money survey. Costco says it's a warehouse, and it delivers consistently low prices. At FedEx (FDX, news) and United Parcel Service (UPS, news), the package arrives.
People know that if an item from Nordstrom doesn't work out, they can return it without a hassle. And at Netflix (NFLX, news), simply let the company know which movie you want to watch, and a DVD magically arrives, along with an easy-to-use return envelope. If a rental gets lost in the mail, Netflix understands and takes care of it.
"The bottom line for the good versus the bad, is, is it all about the consumer or is it about the company," said Edwards, the investment analyst. "If you're trying to make it about the consumer, you're going to win. If you're trying to make it about you, the company, you're going to lose."
VIDEO ON MSN MONEY
if you want really bad customer service call the msn helpline at 1-800-494-2962 any time 24/7
first you get a computer voice that asks questions but can never understand the answer...then a "human" comes on the phone and asks the same questions the computer voice asked...then they ask you to hold so they can go find some one that might be able to "help" you. it is a great way to wreak your day! if you don't believe me call 1-800-494-2962 and ask for help.
gmail is looking better and better or ymail or aol.com or just about anything.....
call 1-800-494-2962 for a really good example of really bad customer service
Microsoft is the worst company I have had the misfortune to deal with. Microsoft is guilty of all the no nos this article states. Its ironic how this was written by a Microsoft employee.
the list is very accurate, but from my experience I think Nissan acceptance corporation and Nissan's customer service are the worst ever, their customer service is in India and those people have no clues about Nissan's products, and if you try to explain something to them that's not on their computer screen they would hang up on you.
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