Customer service conundrum

When we ask companies on our Smart 50 awards list what it is that they do better than their competitors, customer service invariably rises to the top.

“We pride ourselves on going above and beyond for our clients,” they say.

“We focus on putting the customer first,” is another common statement.

“Our service levels drive repeat business,” is another one.

In most cases, it appears to be true. Smaller companies focus very closely on delivering superior customer service because it really is one area where they can compete with bigger, less personable businesses.

But while businesses experts might hammer customer service as one of the keys to growth, the plain fact is that high customer service levels cost money.

Great customer service requires systems and processes in many cases (such as CRM systems) and it requires marketing money (if you use freebies or discounts to drive repeat business).

But most of all, it requires lots of money to be spent on employing people – to answer complaints, respond to feedback, assist people through the buying process.

And in an environment where prices are being forced down and margins are under pressure, the cost of keeping up great customer service is one that some businesses will struggle to bear.

Jetstar appear to have come up with a unique response to this. To encourage customers to use its self-service system SMS check-in system, it wants to charge customers a “small fee” (somewhere between $5 and $10) to talk with staff at the check-in desk.

As Jetstar points out, the system will allow passengers to dodge queues, the bane of every traveller.

But the idea of being specifically charged for a higher level of customer service is one that might irritate some customers.

We pay for customer service all the time, except that the cost is generally built into the total price.

But charging a specific amount for customer service – and separating this from the price of the product itself – is quite different and raises an interesting question: Customers like good customer service (and whinge if they don’t get it) but are they really prepared to pay for it?

I think Jetstar will get away with this. It’s a low-cost airline that makes it very clear up front that everything – food, blankets, entertainment – is user-pays. Why shouldn’t customer service be any different?

But the airlines’ model should be viewed as a bit of a test case by entrepreneurs. Do customers expect high levels of customer service to be effectively free (or more realistically, included in the total price) or are they prepared to pay for it separately?

Not every business would realistically be in a position to charge specifically for customer service, but it will be very interesting to get a read on how customers are thinking in a period where everything is about the bargain.