It’s not really accurate to say the state of Washington just sued Comcast for bad customer service.
Sure, there were stomach-churning descriptions of terrible things the company did to its customers, but the state’s formal complaint didn’t describe long hold times when calling for technical support or failing to show up for service calls.
Instead, the state is seeking about $100 million in restitution and civil penalties for “unfair and deceptive acts and practices.” In fact, it wrote, Comcast allegedly performed at least 1.8 million such unfair and deceptive acts.
This news can’t be any surprise for Comcast customers in the Twin Cities, where it’s the market leader in broadband internet and cable TV. The company finished at No. 277 in the latest Temkin Customer Service ratings of major U.S. companies. That was dead last.
Some Twin Cities consumers may consider themselves lucky not to use Comcast, but Charter Communications came in at 267 for internet service and 273 for TV on that same ranking. CenturyLink wasn’t on the 2016 edition, but Temkin ranked it last year — at No. 268.
This was just one company’s rankings. But it doesn’t matter which publisher produces them, year after year it’s the cable TV and internet providers populating the bottom of the list. So delivering bad service is not just Comcast’s problem, it’s a whole industry’s problem.
It’s a head scratcher just why this happens; these companies are run by accomplished business people who certainly know they get pounded in every customer service ranking. Looking closer, though, it’s clear they understand something about their businesses we don’t, and that’s how little providing good customer service really matters.
The key to understanding why is a concept called switching costs. Like it sounds, these are the costs in time and money it takes to find a new provider. There are some markets where switching really does cost a lot; broadband is one of them.
One classic cost is overcoming a compatibility problem. To pick an absurd example, it might be that only a Ford pickup fits snugly in the garage, and the new Toyota and Chevy models don’t. There are also transaction costs, like the fee the wireless phone service providers charge for ending a contract early.
The other common switching costs are harder to quantify, like putting a dollar value on the fear of the unknown that causes a 20-year user of Windows computers to balk at switching to an Apple MacBook. If the consumer plunges ahead and buys an Apple, there are the costs of learning how to use it.
What are the switching costs in cable TV and internet access? Well, for starters, the existing provider’s name probably appears in the homeowner’s personal e-mail address. It’s also not easy, with bundled services and tiered pricing, to decide if a competitor offers a better deal.
Fear of change comes into play too, including the completely rational fear that a new provider’s service will be even worse. And no one looks forward to the home visit for new equipment to be installed, followed by the period of not quite knowing how to use it.
Books have been written to advise CEOs on the best option for winning in a market with high customer switching costs. What the cable and internet providers have commonly tried is using introductory cheap prices to land a customer and then counting on the switching costs to keep them. Then they can ratchet up the monthly charges.
New channels are added and new services are added that may include tossing residential phone service into a bundle and the perceived switching costs go up, too.
These high switching costs should make us a little suspicious of the industry’s terrible customer service scores, explained George John, marketing professor at the Carlson School of Management at the University of Minnesota. Researchers have found that if consumers feel stuck, they are more likely to be dissatisfied with a service, he said, even if it may not be that bad.
Don’t get the idea that he’s an industry defender. “To any objective person, the quality of cable services have been going down, and the prices have been going up,” he said.
How cable TV and broadband service could be as bad as it is has long puzzled me. My household is now on the second go-round with Comcast after trying CenturyLink, and there’s really been nothing else to compare to the experience of dealing with these two.
There are actually pretty good examples of businesses that have to compete in markets with low switching costs. Often, the way they measure customer service, any score other than a 10 is considered a failure. These businesses’ owners know anything less than perfect just may lead to a lost customer, and a bad experience clearly will.
In my recent experience, the service department at Borton Volvo of Golden Valley deserved its 10 out of a 10 score. Champion Plumbing of Eagan just got a 10, too.
Getting 10s across the board might be ambitious for Comcast. But even at Comcast, getting sued by a major state for $100 million has to be considered a failure. Both Comcast and Charter have solemnly pledged to provide better service.
There’s plenty of reason to remain skeptical, according to Colin Shaw, author and founder of a Florida-based consulting firm called Beyond Philosophy that helps companies improve their customers’ experience. These firms are indeed run by savvy executives, he said, but what they spend most of their time doing is making investments and tweaking operations to cut costs.
“I spent 18 years of my life working for telecoms, and all of those organizations talk about providing a great customer experience,” he said. “But none of them do it. And the honest answer is that none of them care enough for it to happen.”