Customer Service in a Shrinking Economy
How companies are struggling to maintain customer service amid sinking sales and declining employee morale
By Jena McGregor, Aili McConnon and David Kiley
Hertz (HTZ) couldn't ask for a better customer than Richard M. Garber. The Cleveland-based business development manager typically rents cars from the chain 20 to 40 times a year when traveling on business for materials manufacturer FLEXcon. But now Garber is rethinking that loyalty. In the past month he has returned Hertz cars to the Boston and Minneapolis airports only to find nobody waiting with a handheld check-in device. In Minneapolis, Garber had to drag his bags to the counter to return his car; in Boston, he finally tracked down an employee who came out and explained that some colleagues had just been laid off. "When you're rushing for an airplane, every minute counts," says Garber. "The less convenient they are, the more likely I am to try someone else."
As the economy plunges deeper into recession, many companies are confronting the same brutal choices Hertz faced when it announced layoffs of some 4,000 people on Jan. 16. While businesses may feel forced to trim costs, cutting too deeply can drive away customers. Hertz spokesman Richard Broome says the company has reduced "instant return" hours at some smaller airports but is making adjustments to restore that service in locations where it "might have gone too far." Says Broome: "You try to create the right balance."
Across the business world, managers are trying to pull off the same perilous high-wire act. Just as companies are dealing with plummeting sales and sinking employee morale, skittish customers want more attention, better quality, and greater value for their money. Those same customers are also acutely aware that their patronage is of growing importance to companies as others decrease their spending. BMW Vice-President Alan Harris argues that in the current environment, consumers expect "that anyone who is in the market with money to spend is going to get treated like a king."
KEEP THE FRONT LINES STRONG
The reality, of course, is that the opposite is often true. From retailers such as Talbots (TLB), which have stiffened their rules on returns, to airlines that now charge for checked bags, companies are stretching budgets in ways that can make things tougher for customers.
But the best performers are actually doing more to safeguard service in this recession. Bruce D. Temkin, principal analyst for customer experience at Forrester Research (FORR), says about half of the 90 large companies he recently surveyed are trying to avoid cuts to their customer service budgets. "There's some real resilience in spending," says Temkin.
That's especially true for many of the winners of our third annual ranking of Customer Service Champs. Top performers are treating their best customers better than ever, even if that means doing less to wow new ones. While cutting back-office expenses, they're trying to preserve front-line jobs and investing in cheap technology to improve service.
If anything, the tough economy has made starker the difference between companies that put customers first and those that sacrifice loyalty for short-term gain. In this year's ranking, based on data from J.D. Power & Associates, which, like BusinessWeek, is owned by The McGraw-Hill Companies (MHP), more than half of the top 25 brands showed improved customer service scores over last year. Among the bottom 25 of the more than 200 brands surveyed, scores mostly fell.
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