Is Your Business Customer Centric? Here's An Easy Test

I get a laugh when I say, "The best indicator of whether you have bad customer service is that you need a customer service department." But this is not a joke. For most businesses, the entire is business is built as needed. Products and services are defined. Delivery systems are put in place. Maintenance programs, sales programs, and financial management are all built up.

And then one day, when service failures are large enough, companies quietly admit failure in service delivery by bolting on a department dedicated to address the failures of the organization. This after-thought department is normally called Customer Service. 

For company owners that have drunk too much of their own marketing Kool-Aid, the department might be called Customer Success. The irony is overwhelming.

It's a long, winding path from building a company that works to bolting on a department to deal with your failures. If your company is headed in the wrong direction, there is a simple test to determine whether you have taken your eyes off your customers. Answer one question.

If you deliver less service, will you make less money?

For most people reading this, service IS your business. It's the primary thing you deliver. Service is your product. Service is everything in your business. And, therefore, service is the profit center of your business.

That’s not true for many businesses, or any big businesses. For Apple or Microsoft (and every other large corporation on earth), customer service is a cost center for them. And when they need to cut costs, they might cut customer service from time to time.

Don’t gloss over this point. Large companies often have bad service because service is a cost center. When they cut service, they increase profits (at least in the short-term). 

If you cut service, you cut revenue. In fact, when you increase the level of service you deliver, you can charge more money. Many (many) IT consultants I talk to describe their service with terms such as "white glove." They are proud of the service they deliver. In fact, they use it as a primary selling point for new clients.

Truly service-focused and customer-centric companies will always reduce their revenue (and generally their profit) when they cut service. Conversely, companies that are profit-centric have to view customer service as a cost center. And, therefore, it is as likely to be chopped as any other department when the company needs to increase profit.

Think about your suppliers, partners, and vendors. Many of them brag about service in their marketing. But when the time comes to make cuts, they cut the service (or customer service) department. They make more money when they give less service. 

Service Does Cost Something

It does cost money to deliver services. And it generally costs more to deliver better service. It's never free to hire good people, train them, and provide them with the tools they need to deliver your services. And you might save some money here and there with tools and training. 

But cutting service delivery is always a red flag, because it's always a short-term savings. Cutting service delivery will always result in lower customer satisfaction in the long run, and to lower profit in the long run. Large companies address this by increasing sales without regard to capacity or service delivery.

Perhaps the greatest example of the last fifty years is companies that sell connectivity and internet services. AT&T and Xfinity, for example, are famous for horrible customer service. They "make up" for this by simply hiring enough sales people to provide a never-ending flow of more customers to piss off and disappoint.

And it's a never ending story when these companies have a bad quarter: They start laying off workers. This gives them an immediate increase in profit. And please note: It's not just the customer service department that gets cut. ALL of the people who deliver services are cut, across all departments.

This is also why companies purchased by private equity investors cut services almost immediately. It saves them money - almost immediately. Some of them wait a while to cut services, but this is only so they can make other cuts first.

For example, the immediate reduction of development and investing in the future is an easy place to cut. That long list of new features on the development map? That gets frozen right away. New (especially expensive) initiatives? Gone. Anything that would make clients happy? LOL.

This Is Real - Even in Small Business

Don't think your company is immune because you run a small, customer-centric business today. The shift away from a customer-first attitude is slow and gradual. You grow, and make excuses about being behind. You take on more clients than you can serve with the historic levels of attention. You might train folks faster. You might outsource one too many things.

Gradually, over time, companies morph from customer-first to focusing on saving and squeezing pennies. And then one day, the idea is floated that you need to hire a customer service rep. 

This move FEELS like an attempt to increase customer service. It is not. It is an attempt to increase customer satisfaction. Those are not the same thing! 

Increasing customer service will always increase customer happiness with your company and the service you deliver. By definition, you have increased the service they can expect.

Customer satisfaction is a reaction, an after-the-fact attempt to make someone happy after you have failed to deliver the service they expected. This is one reason that customer satisfaction scores are generally useless and lead down an entire path of focusing on the wrong things. 

In manufacturing, you cannot fix the design after the product comes off the assembly line. You have to redesign it and build a new product the right way from the start. When you do this, there is no need for bolting on a fix after the manufacture is complete.

Service is the same way. Building service in from the start - and maintaining it at a high level - will always produce better service than bolting on a department at the end and calling is "customer service."

Action Step: Take time every quarter to example the service you deliver by design. Is it where it should be? Is it what you imagined when you designed your service? If not, fix the service. Don't gather CSAT scores, admit defeat, and bolt on a customer service department.

:-)