The high cost of great customer service

The basics of good customer service, like courtesy and attentiveness, may be free. But great service? That’s expensive.

Consider what happened to Virginia Bibliowicz’ father, who rented a car from Budget recently. Shortly after he picked up the vehicle in Knoxville, Tenn., he suffered a heart attack and died.

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“When my sister and her husband returned the car later, Budget refused to let them pay the charges,” she says. “I think Budget and this rep should be commended, and they will certainly always have our business.”

The car rental company didn’t accept a penny of the family’s money because it was the right thing to do, just as airlines offer no-questions-asked refunds when passengers pass away before their flight. These decisions make perfect sense to customers, but not always to a revenue-obsessed travel industry.

Budget’s late rental cost it hundreds of dollars, and my efforts to find the employee who zeroed out the bill were unsuccessful. It isn’t clear if the agent who waived the rental fee was rewarded for his actions or punished. Many airline employees, for example, are strictly forbidden from offering passengers waivers and favors, even as their bosses boast about employee “empowerment.” The sad fact is, most customer service agents probably couldn’t push a button and make your change fee disappear even if they wanted to.

“The distance an employee will go in perfecting a service recovery is directly a result of the management culture at the company,” explains Jim Coyle, who runs the hospitality market research firm Coyle Hospitality Group. “An assistant manager sweating a budget can kill a good service culture by chastising an employee who went a little too far in helping a customer.”

Can’t you offer great service and earn a respectable profit? Maybe if you’re a boutique hotel company such as the Library Collection, which essentially gives its employees carte blanche to address customer concerns.

Henry Kallan, who owns the Library Hotel Collection, cautions that saying “no” only makes short-term sense in the hospitality business. But it’s a long-term recipe for disaster. “With a decision made purely on a financial basis, you may make money today and leave the guest unhappy, but it is far more profitable in the long run to cultivate lifelong customers.”

At other hotels, employees are rewarded for breaking the rules, as long as it results in a better service experience. At boutique luxury chain Kimpton, going above and beyond for a guest is referred to as a “Kimpton moment.”

“The rule is: There isn’t a rule,” says Tom Waithe, Kimpton’s regional director of operations for the Pacific Northwest. “Use your best judgment and try and make the situation better for the guest.”

Maybe it’s a little easier to pull a “no rules” policy in the hotel business than, say, in the airline industry, where junk fees seem to have no limits, and airlines rely on these nuisance surcharges so much that failing to collect even a single $200 change fee is said to have a meaningful impact on a flight’s profitability.

So it was with considerable interest that I read that among American Airlines’ post-merger goals was “empowering people with greater decision-making authority.” Here’s an airline that, combined with US Airways, sucked an eye-popping $815 million in ticket-change fees out of our wallets in 2012, the most of any domestic airline. It’s hard to imagine how flexible employees of the “new” American could be, given their dependence on these fees.

Unfortunately, talk of employee empowerment is often exactly that — talk. Jon Picoult, founder of customer experience advisory firm Watermark Consulting, calls this “slogan leadership,” and says it hurts customers as much as it does employees. “It encourages the employee to feel empowered and make decisions, only to be reprimanded by the same manager when they make what’s viewed as a poor judgment call in the course of delivering service.”

So the next time an employee zeroes out your bill or waives a fee, don’t just say “thank you.” Say “thank you very much,” because that person may find himself in a manager’s office, and in extreme cases, out of work.

Bibliowicz is very grateful to Budget. Her father, Reid Patterson, was a 1956 Olympic swimmer who lived a quiet life as a financial adviser and swimming coach. She says his family will remember him for “always doing the right thing, quietly.”


How do you get better service from a travel company?

• Don’t set the bar too high.

• Sometimes, full refunds don’t make sense to the company, even when they do to you. Consider the cost.

• Ask a supervisor—politely.

• Managers can often waive or even disregard a policy that doesn’t make sense. Ask for a favor, nicely.

• Appeal to staffers’ humanity.

• When front-line employees don’t have the flexibility to bend a rule, you can still argue that offering better service is the right thing to do.

16 thoughts on “The high cost of great customer service

  1. It’s nice to see that even a company with a high score of bad customer service sometimes does a nice thing to a customer.

    1. Believe it or not, I disagree with Chris about refusing to accept fees for the car being “the right thing to do.” The car was rented and picked up by the father. If it was a reservation that was cancelled because the father didn’t pick it up, I’d say then that there was no loss, no foul. But the agency did rent the car out.

      It was a nice gesture on the part of the local budget.

  2. But for some reason, I doubt that most airlines refund tickets for deceased passengers out of the goodness of their hearts. There’s probably some legal requirement to do so. Chris would know for sure.

    1. When my son-in-law’s father died suddenly while visiting our grandson for his H.S. graduation in WA, Delta transported his body in a casket back to KY on his return ticket. I don’t know if they would still do this, but it was very helpful to his widow back in 2007.

  3. What the heck does “perfecting a service recovery” mean? Maybe, “providing excellent customer service.”? Why can’t these folks speak English? I love how businesses – and politicians – have come up with these interesting phrases to describe mundane actions. If it sounds good, it must mean you’re smart. right?

    1. My employer calls it service recovery. It’s recovering the customer, so they’ll give us another chance. If that doesn’t work, I guess that’s when the customer does conscious uncoupling. 🙂

  4. The key factor here is giving frontline employees the authority to make decisions based on circumstances. The main reason customers hate call centers so much is not the funny accents, but knowing that the staff are purely script readers. They have no authority whatever to fix a problem.

  5. Hmmmm, so there is something that is free? Interesting turn. If that’s true then maybe other things are free? Is the world as we know it changing forever? I’m scared.

  6. In my previous business I had only two rules for employees. Treat the customers money as if it were their own and make decisions as if the customer was your mother or brother.

  7. After receiving word of my mother’s death, my wife and purchased round trip tickets from JetBlue and flew to Boston for the funeral. We purchased round trip tickets with the return being the day after the funeral. My sister and other relatives asked us to stay longer. I called JetBlue and explained the situation. The reservations agent said to me “You paid us enough already. I’m going to waive both ticket change fees.” This happened six years ago and since then, I’ve flown JetBlue whenever possible, even if the fare is a little more. I even steered a family member to them who flies on a full fare ticket between JFK and Portland Maine almost every week. Great customer service coupled with compassion sometimes really pays off for the carrier.

  8. Lovely story. Perhaps if we keep lauding the good guys, more of them will appear more often. And management will actually mean “empowerment” when they say it. If you empower employees, you have to accept some mistakes. Punishing the employee for making a mistake means that other employees won’t try to do the right thing and we’re right back where we are today. Praise the good guys!!!

  9. it’s really nice to see that some “customer service” agents actually do have to power to serve the customer.
    my ex worked for a computer warranty help company, and his reviews were based on how long he spent on the phone with a customer… the less time spent, the better! if employees are downgraded for actually spending the time to diagnose and fix problems; if their job depends on handling as many calls in the shortest time possible, that is sad. but unfortunately, many “help desks” work that way.
    i remember him coming home one day and telling me how he’d spent an hour on the phone with a customer, and got her problem solved, only to be called into his supervisor’s office the next day for spending too much time on his calls!
    (note: if you ever call in to a company for computer support and get told to do a system restore – you’re dealing with a company who values shorter call times over actually helping the customer!)

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