By Tycho Ferrigni · June 19, 2025 · 3 min read
This article came across our feed the other day. While it’s a little dated, it highlights a point worth revisiting. It is really important to listen to your customers.
Why Is Customer Service So Bad? Because It’s Profitable.
The article suggests that some companies intentionally design their “Complaints Department” to make it difficult for customers to share their feedback. This friction causes some customers to give up and accept poor service. As a result, companies reduce the amount they must refund or compensate unhappy customers. Lower payouts lead to higher profitability.
The article points to airlines, internet, cable, and telephone providers as some of the worst offenders. Despite poor service, these companies often see no real loss in market share. Many of these providers operate in markets with limited competition and high switching costs.
Airlines, for example, rely on hub models and loyalty programs. Changing airlines can be difficult, costly in loyalty points, and may not guarantee better service. Internet, cable, and telephone customers often have few alternatives in their geographic area. Even when options exist, switching takes time and effort.
Limited customer choice combined with switching costs keeps retention rates high. These rates are often higher than what the actual customer experience would justify. However, as new competitors and innovations emerge, retention rates in these industries may drop sharply.
Bottom line: customer feedback is a gift.
Embrace it. Use it to drive operational improvements that create a better customer experience. Improved experiences lead to long-term retention and acquisition. While short term profits may increase by making life harder for customers to voice their concerns, in the long run this wont work.
Understanding the customer experience and making improvements is the best way to compete in the market place.
