When companies serve their customers too well, nobody wins. But you can.

By | April 10th, 2017

Is it possible for a company to be too good?

Can a business outperform its competitors, spoil its customers, dominate the competition so much that it harms an entire industry — including, ultimately, their own customers?

Maybe. But there’s a way you can benefit from it.

Take Tesla, for example. “Their service is absolutely incredible,” says Dan Nainan, a comedian from New York. “Everything from their phone support, to their willingness to come pick up the car if there’s a problem, to their service centers, which look more like luxuriously appointed offices with food, flat-panel TV, and Wi-Fi, rather than some grubby waiting room.”

The other car manufacturers are a joke, he says. They don’t stand behind their products, their service centers are rundown and unwelcoming, and the overall service levels are disappointing. Sure, their products often cost half the price of a Tesla, but that doesn’t seem to bother Nainan and the 186,000 other Tesla owners. And with the company now offering a new $35,000 model this year, many more motorists may start to see things Nainan’s way.

A company like Tesla makes many other car manufacturers look incompetent, but it’s not alone. In the airline industry, there’s Southwest Airlines and Singapore Air. The hotel industry has Ritz-Carlton. In computers, it’s Apple, and in fast food, it’s Chick-fil-A.

I know what you’re thinking. Is there a list? Sure. The American Customer Service Index (ACSI) benchmarks all of its indexed companies by score. Here are the top performers for 2016.

1. Lincoln (Ford) (87)
2. Chick-fil-A (87)
3. Dole (86)
4. Dr Pepper Snapple (86)
5. Honda (86)
6. Dial (85)
7. BMW (85)
8 Toyota (85)
9. LG (85)
10. Bosch (85)

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Note: The ACSI doesn’t cover every company, so Tesla isn’t on the list. Ritz-Carlton is part of Marriott. But you get the idea.

Another great source is Fortune’s “most admired” list:

1. Apple
2. Amazon
3. Starbucks
4. Berkshire Hathaway
5. Disney
6. Alphabet (Google)
7. General Electric
8. Southwest Airlines
9. Facebook
10. Microsoft

Quality sells. Some, but not all, of these companies have customers service built into their DNA.

“It’s inseparable from the company itself,” says Benjamin Glaser, an editor for DealNews, a bargain website. “Who could think of Amazon without a speedy credit for a late package, or Apple without helpful Apple Store Geniuses, or Starbucks without consistent baristas no matter what store you walk into? Certainly, a lesson here is that customers stick with dependable, pleasant experiences.”

In other words, go for quality. That’s always helpful advice. What good is a low price if you’re getting a shoddy product or service?

But there’s a more interesting question, which is: Can one really good company make an entire industry look bad, thanks to its awesomeness? Can it over-serve its customers — even spoil them?

Let’s take a reality check for a moment. Companies are like people; they are not perfect. Eventually, even the top performers will disappoint you. Also, remember that you don’t always have a meaningful choice. In some industries (notably subscription TV services, internet search engines and social media) there’s almost no competition, which is to say the businesses are de facto monopolies. There, being great doesn’t really matter because who else are you going to do business with?

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But there are the Teslas, Starbucks and Apples of the world that arguably have competition and still shine. What’s their effect on the rest of their industry?

For rivals, it must be demoralizing to see the same competitor recognized year after year for being a favored business by consumers, if not also by Wall Street. Tesla’s stock price must drive the other car manufacturers mad, for example.

But for consumers, doing business with one of these overachievers also has its downside. Because you can quickly get spoiled. I like my Café Americano done with no room for cream and two cubes of ice to cool it down. And you know those Starbucks baristas get it right, whether they’re in Dallas or Dubai. I like that. But at any other coffee shops, you just can’t be sure. I know people who refuse to try new coffee shops because they love Starbucks’ quality and consistency.

Yes, it’s possible to be too good. That’s a bad thing, because it creates a barrier to entry that’s difficult to break through and frankly, it makes the rest not try as hard to compete. In the airline industry, for example, even JetBlue seems to have stopped trying to compete with Southwest on service; the other legacy carriers quit a long time ago. Only the luxury car manufacturers come close to Tesla in the service department. It’s as if the others don’t care.

Perhaps our standards need to be more flexible. For example, I might find a better Americano at a no-name corner cafe. Why not give them a chance? There may also be better computer than my old Apple MacBook, a more reliable car than my Honda Pilot. If I remain blindly brand-loyal, am I just making things worse?

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Customers should not have to play these games, of course. All companies should deliver acceptable service. But until they do, you’ll have to shop more strategically, and set your expectations more realistically.

  • Jeff W.

    “Only the luxury car manufacturers come close to Tesla in the service department.”

    That is because Tesla is in that category. If you are selling $75K cars and higher (some are six figures), you better have superior service.

    It will be interesting to see how Telsa can adapt as they start the roll out of their Model 3, which is the car with a starting price of $35K.

    Also interesting of note is the number one company in the ACSI list is Ford. Honda and Toyota are pretty close as well. So someone cares.

  • AJPeabody

    I don’t consider Toyota to be luxury, but my dealer has a very nice large open waiting area with large screen TV, work station desks to use their free wifi, coffee, vending machines, and very comfortable seating. And they start working on my car as soon as I arrive and they get me out fast.

  • sirwired

    A few points:
    – Heaps of attention paid to customer service, and the prestige of the product can make up for issues that they would not tolerate in, say, a Ford. Tesla consistently does NOT do well on measures of actual product quality (incidentally, other automakers at vaguely similar price-points like Porsche, Land Rover, the Italian exotics, etc. have the same problem.)

    – If you remove the money Tesla makes selling clean-car “credits” to other automakers, they lose money on every single car. If Tesla actually had to make money on selling their cars, it’s not certain they’d be able to afford this level of service.

    – Not that this makes that much difference to the consumer, but the franchised dealer model is likely to be the source of many of the woes by the other automakers. Their ability to enforce customer service standards is limited, and protectionist state laws prevent them, in many cases, from opening their own dealerships. even if they wanted to. Tesla does some maneuvering to get around these laws, but the model is not totally scalable.

    – Tesla has the advantage of being able to sell a niche product and charge a premium for it. At $35k, there are likely to be problems with both scaling and affordability. (Unless, of course, investors continue to allow Tesla to flush money down the toilet.) With quality problems already an issue at their current volume, there’s a lot of doubt in Tesla’s ability to keep them from getting worse as they massively crank up volume.

    It should be noted that Amazon’s retail business was not at all profitable for many years, as investors showed remarkable patience in waiting for that business to actually work. (Even now, the retail business is not especially profitable; they make far more off of the fulfillment business and the cloud services.)

    This is not to detract from Tesla’s achievement in making some remarkable cars and coming pretty close to breaking even in selling them. The other automakers have contented themselves with losing their shirts shipping pathetic “compliance-mobiles”.

  • Rebecca

    All I can ever think of when I see anything about a Tesla is that episode of South Park where Cartman yells that you don’t hit the gas, you press the p”%$& pedal. All I can think of. That and that Elon Musk strikes me as the kind of guy that has missing women in cages in his basement, with the ones already dead from the torture hung like trophies. That guy seriously sets off my creep radar – it doesn’t happen often, but I’ve been correct almost every time my creep radar goes off.

  • LeeAnneClark

    OMG! I’m literally laughing out loud. My dog thinks I’ve gone nuts. BAHAHAHAHA!!!!

  • redragtopstl

    I admit, I’m brand-loyal in certain categories, perhaps to a fault:

    – I’ve driven the same make and style of car for the last 30+ years (Chrysler convertibles). I’m on my 4th one; I drove the 3rd for 15 years before I sold it in 2013 and bought this one used (dealership loaner with very low miles.)
    – Hubby & I have Apple phones (old, refurbished models – his is an iPhone 4, which I passed to him when I got a 4s). I also have a 1st generation iPad. On the rare occasion we have a problem with one of them, we have a tech 5 minutes from home who diagnoses and fixes them, most of the time for $0! (We were just talking today about buying him a gift card for Xmas this year because he’s been so nice to us.)
    – I will only buy certain brands of some foods (Jif creamy peanut butter is one example). Then again, I only buy bagged salad mix at Aldi because it seems to be fresher and last longer than the name-brand stuff in the locally-owned chain supermarkets.

    What I’m getting at is, I know what works and performs consistently well and that’s what I buy/use. If/when those products are no longer made or can’t be updated, then I’ll consider replacing them with something else.

  • PsyGuy

    WHy should someone take a risk somewhere else. No one makes a computer like apple, mainly because the software experience is what it is, and was designed to work with a limited number of components. The same is true of Starbucks, you know you’re going to get a Frappuccino or whatever sickeningly sweet shake you get, because real coffee and tea consumers don’t go to Starbucks. I was recently watching the “Founder”, and I’d never brag about a McD’s cheeseburger but I understand how the product was developed and how the process made the SAME dining experience wherever, nd that remains true today. A Cheeseburger in Tokyo tastes the same as one in Dallas.

    I like the info about Tesla, at $35,000 that’s something i can consider.

  • PsyGuy

    So what if he’s a creep (I agree), buy there is a difference between you buying a car and get in his car with him.

  • PsyGuy

    Our cat barely tolerates us living in our apartment.

  • michael anthony

    Good point about Tesla. As they grow with their 35k model, will their outstanding customer care plummet? Wouldn’t be the first time.

  • michael anthony

    I bristle when I see or hear how good Chick-fil-A is. Their anti-gay stunt a few years ago deserves them a placement in the hall of shame.

  • DChamp56

    Most Admired, Facebook and Microsoft?
    Has anyone EVER tried to get in touch with someone live there?

  • PsyGuy

    They have live people there? I thought everyone telecommuted.

  • PsyGuy

    Their Chicken is really good though. One of the few places you can get a real chicken breast that although it comes from some unrealistic domesticated chicken, was actually cut from a chicken breast and not some processed and pressed chicken formed thingy.

  • PsyGuy

    The clean car credits though are real money, why remove them?
    Is Amazon profitable now (outside cloud services)?
    So how scalable can it get?

  • PsyGuy

    I agree at a prior entry point of $75,000 they were in the luxury car sector.

  • sirwired

    The clean car credits don’t scale; as Tesla produces more cars, the price they can get for those credits drop.

  • Bob Davis

    Does the car need much service other than regular maintenance?

  • Fishplate

    I don’t think that Chick-fil-A took any stance on sexuality whatsoever. One of their owners made some public comments, but it was not unanimous, nor was it corporate policy. I would welcome any correction.

    Like the comments above about the owner of Acme, you need to separate the person from the corporation.

    And, the line at Chick-fil-A goes around the building, for whatever that’s worth. They can’t all be homophobes.

  • PsyGuy

    Really, I thought (at least in CA) that the credits were fixed?

  • sirwired

    I’m not referring to Federal and State cash credits towards the purchase of a vehicle, I’m referring to compliance credits for fuel economy and alternative-fuel vehicle legal mandates.

  • PsyGuy

    Oh, uhm, sure.

  • Lee

    Apple, hands down for me, best service. Always blows my mind how much attention and expertise I have gotten from customer service reps there.

    JetBlue doesn’t bother anymore probably because they have built their brand and feel that they don’t need to compete as they will still manage to sell seats; I just flew them twice in 7 days, both planes full to the brim – worst part is, I began flying with them the first week they started and back then, until just a few years ago, it was always my go-to domestic airline, if possible, given their incredibly comfortable seats.

    Now? They are like every other airline – uncomfortable seats (really uncomfortable, can’t believe it’s the same airline and even the pilot agreed with me) – so, now instead of always booking them automatically, I will go with the best price/schedule.

    Maybe some other companies like JB will ride on past good service/products as long as they can get away with it. I like the companies that continue to strive to be the best regardless of their stock prices, etc. Customer loyalty is, I suspect, still worth it to many companies – depending on type of product.

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