Does it pay for itself?

Executive Summary

When most people think of customer service, they picture an impersonal call center near Mumbai, or a computerized system that struggles to understand the caller’s question and leaves the consumer screaming to speak with a human. Such unhappy images still exist. But—driven by the internet, mobile devices, social media, company apps and a growing army of Millennial consumers—customer service is changing dramatically. At its best, it is a 24/7 interaction with customers that can take place in a store, on a mobile app, in a tweet, or in an online chat. This engagement is producing reams of data that help companies serve customers better. It is also empowering consumers, who now have considerably more information and choice when it comes to making a purchase. But questions remain: Does good customer service translate into good financial results? Is it important to improve the quality of service employees to achieve a good customer experience? Does social media improve customer service?

Key Takeaways

  • Businesses with poor customer service risk damaging their brand and bottom line.

  • Consumers are increasingly willing—and able—to call out companies that fail to meet expectations.

  • The customer is always right—but some are more equal (valuable) than others.

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Dixon, Matthew, Nick Toman and Rick DeLisi, “The Effortless Experience: Conquering the New Battleground for Customer Loyalty,” Portfolio/Penguin, 2013. Three management consultants at the Corporate Executive Board, a best-practices and technology company, take on the challenge of defining what really matters in company relationships with customers, and that’s loyalty.

Fader, Peter, “Customer Centricity: Focus on the Right Customers for Strategic Advantage,” Wharton Digital Press, 2012. A professor of marketing at the University of Pennsylvania’s Wharton School, who is co-director of the Wharton Customer Analytics Initiative, deconstructs the concept of customer centricity and describes it as a key growth strategy in a competitive and disruptive economy.

Notter, Jamie, and Maddie Grant, “When Millennials Take Over: Preparing for the Ridiculously Optimistic Future of Business,” IdeaPress Publishing, 2015. Two consultants present strategies on how businesses can use the characteristics of the Millennial Generation to generate business.

Reichheld, Frederick F., “The Ultimate Question 2.0 (Revised and Expanded Edition): How Net Promoter Companies Thrive in a Customer-Driven World,” Harvard Business Review Press, 2011. A partner at Boston-based management consulting firm Bain & Co. discusses how asking the right question—“Would you recommend this company?”—can help businesses assess customer loyalty and lifetime value.


“The difference between customer experience and customer service,” Disney Institute, Business Insider, April 5, 2016, The Walt Disney Co.’s professional development arm describes its approach to customer service.

“Will a Robot Take Your Job One Day?” BBC News, Sept. 11, 2015, The British news site reports on an Oxford University study citing the likelihood of certain jobs, including customer service, becoming fully automated.

Borowski, Craig, “Survey: What Customers Really Think About Your Call Center Script,” Hello Operator, May 5, 2014, A market researcher analyzes why scripts for call-center operators can do more harm than good.

Chemi, Eric, “Proof That It Pays to Be America’s Most-Hated Companies,” Bloomberg BusinessWeek, Dec. 18, 2013, A business reporter cites data showing companies with poor customer service records do better financially than those with good records.

Fry, Richard, “Millennials overtake Baby Boomers as America’s largest generation,” Pew Research Center, April 25, 2016, A think tank researcher shows how immigration has helped the Millennial Generation surpass the Baby Boom Generation in size.

Griswold, Alison, “The Most Hated Merger in America,” Slate, April 24, 2015, A business writer analyzes how poor customer service forced Comcast Corp. and Time Warner Corp. to abandon plans to merge.

Ripley, Amanda, “Starbucks the Benevolent?” The Atlantic, Feb. 3, 2016, A journalist shows how the coffee chain won more loyalty from customers by treating its employees better.

VanAmburg, David, “Customer Satisfaction and the 2013 Stock Market Anomaly,” ASCI Matters, Dec. 20, 2013, A managing director at the American Customer Service Index refutes a Bloomberg article detailing how companies with poor customer-service records perform better financially, saying the news service examined only one year of data.

Reports and Studies

“2013 Social Media Benchmark Study,” J.D. Power and Associates, Feb. 14, 2013, The market research giant finds a link between business metrics and the effectiveness of a company’s social media strategy.

“2014 Global Customer Service Barometer,” American Express, October 2014, The credit card company quantifies consumer attitudes toward customer service and the impact they can have on the top and bottom lines.

“Customer Service and Business Results: A Survey of Customer Service from Mid-Size Companies,” Dimensional Research, April 2013, A market research company seeks to quantify the impact of good and bad customer service on businesses.

“How the IoT Is Shaping the Future of Customer Experience and Product Development,” Cito Research, March 2015, A company that publishes reports for chief information officers and chief technology officers analyzes the potential impacts of the Internet of Things.

Alvarez, Jose B., and Aldo Sesia, “Customer Loyalty Schemes in the Retail Sector,” Harvard Business Review, March 7, 2011, A lecturer at Harvard Business School (Alvarez), and a research associate at the school (Sesia) discuss the evolution of loyalty schemes, how they operate today, and how retailers can improve the way they use them to attract business.

Groopman, Jessica, “Customer Experience in the Internet of Things,” Altimeter Group, March 2015, A digital consulting firm researches how the Internet of Things will affect the customer experience.

The Next Step

Digital Presence

Brewster, Signe, “Customer Service Bots Are Getting Better at Detecting Your Agitation,” MIT Technology Review, Sept. 14, 2016, SRI International, a Silicon Valley research lab, is improving customer service technology to identify users’ emotions.

Kirkpatrick, David, “Twitter’s new customer service tools enable brands to offer support,” Marketing Dive, Sept. 16, 2016, Twitter is offering brands access to a customer support page, which allows them to display details about what services they provide; it also lets Twitter users direct messages to companies.

Morrison, Kimberlee, “80% of Consumers Use Digital Devices to Contact Customer Service (Report),” AdWeek, Aug. 17, 2016, About 80 percent of consumers use social media, email or online chat services to contact companies, according to a business process outsourcing company.

Omnichannel Experience

“Here’s Target’s strategy heading into the holiday season,” Business Insider, Sept. 19, 2016, Target is looking to use its in-store presence to drive more digital sales during the holiday season.

“Kohl’s Associates to Deliver an Easy, Omnichannel Shopping Experience This Holiday Season,” Yahoo Finance, Sept. 19, 2016, Kohl’s department store plans to use its seasonal associates to beef up customer service and ensure a seamless omnichannel experience.

Milnes, Hilary, “How tech in Rebecca Minkoff’s fitting rooms tripled expected clothing sales,” Digiday, Sept. 23, 2015, Designer Rebecca Minkoff’s New York “connected store” combines a luxurious physical shopping experience with data-gathering technology.

Service Problems

Buck, Claudia, “California fines Anthem $415,000 for not addressing consumer complaints,” Sacramento Bee, May 4, 2016, California state health officials fined Anthem Blue Cross $415,000 for failing to address consumer complaints within the 30-day limit.

Burns, Matthew, “State fines Blue Cross $3.6M for customer service problems,” WRAL, Sept. 15, 2016, North Carolina’s Department of Insurance fined Blue Cross Blue Shield of North Carolina $3.6 million following hundreds of complaints regarding customer enrollment and billing.

Taylor, Kate, “A study reveals a disturbing trend about Walmart locations across the US,” Business Insider, Aug. 30, 2016, Walmart stores in low-income, minority communities often have worse customer service than the chain’s stores in higher socioeconomic regions, according to a study.

Telecommunications and Cable Companies

Fernandez, Bob, “Senate bares frustration with customer service of cable industry, including Comcast,”, June 23, 2016, U.S. senators expressed frustration with Comcast, AT&T, Dish Network and others over customer-service practices that cost consumers millions of dollars.

Finley, Klint, “Comcast Is Facing a $100 Million Lawsuit Over Its Service Plan,” Wired, Aug. 2, 2016, Washington state filed a $100 million suit against Comcast, alleging 1.8 million violations of the state’s Consumer Protection Act and misleading claims and practices.

Jarvey, Natalie, “Startup Takes Aim at Comcast, Time Warner With ‘Concierge Cable’ Service,” The Hollywood Reporter, Sept. 14, 2016, Marketing itself as more customer-friendly than pay-TV rivals such as Comcast, a cable startup is providing more than 200 channels of “concierge cable” to consumers.


American Customer Satisfaction Index
625 Avis Drive, Ann Arbor, MI 48108
A private company that conducts the only national cross-industry measure of customer satisfaction, factoring in data from 10 economic sectors and 43 industries.

Customer Service Institute of America
500 N. Michigan Ave., Suite 600, Chicago, IL 60611
An institute that certifies organizations using the International Customer Service Standard, which is based on an internal self-assessment backed by an external assessment and certification program.

Institute of Customer Service
Bridge House, 4 Borough High St., London, SE1 9QQ, UK
+44 (0) 207-260-2620
A group that seeks to help U.K. organizations improve business through better customer service.

International Council of Customer Service Organisations
Suite 2.03, 6a Glen St, Milsons Point, NSW 2061, Australia
A global trade group of member organizations that promotes international customer service standards, certification, awards and professional development programs.

International Customer Service Association
401 N. Michigan Ave., Chicago, IL 50611
An institute that provides programs and resources to help organizations advance, strengthen and promote customer service.

National Customer Service Association
1714 Pfitzer Road, Normal, IL 61761
866-315-NCSA (6272)
An association that provides customer service education, development and support services.

Net Promoter Network/Net Promoter System
c/o Fred Reichheld, Bain & Company Inc., 131 Dartmouth St., Boston, MA 02116
A member community of organizations using the net promoter score to determine how well they are serving customers, and the umbrella group that monitors its use and collects data.

Professional Association for Customer Engagement
8445 Keystone Crossing, Suite 106, Indianapolis, IN 46240
A trade organization representing companies that use an omnichannel approach to engage customers.

SOCAP International: Society of Consumer Affairs Professionals in Business
625 N. Washington St., Suite 304, Alexandria, VA 22314
A membership organization promoting customer care and engagement for business.

DOI: 10.1177/237455680219.n1