I beg to differ. I get some of the best customer service from companies that are keeping costs low, because they know that time on the service line is precious and they don't want to be tied up arguing. Customer service isn't about fending off those customers who dare to call you, it's about handling problems that YOU'VE created. If you don't create the problems, you won't get swamped in calls or the calls you get swamped with will be easily dealt with. If you have a system, have good, trained personnel instead of thousands of phone monkeys with "Sorry, sir, I can't do that", etc. then you will end up costing yourself more than you save.
Case in point - I had an argument with "Benson's For Beds" (part of the Harvey's Furniture group, which is now sitting permanently on my blacklist). They sent me two beds, each several hundred pounds, and one with *39* missing pieces (out of 314 if you count ALL the screws, etc.). So I call up. And waste literally 30 minutes because, despite the fact that they were quite happy to confirm all kinds of details and talk to me, because it wasn't MY name on the invoice (but was phoning from the property they delivered to, after signing for the thing they just delivered, and was in the process of building those items), they wouldn't send out a replacement pack of missing parts. They tried to claim it was because of the Data Protection Act (How? I just gave YOU all the details of the buyer, invoice numbers, delivery dockets, address, phone number etc. to let you talk to me in the first place! And how does that stop you sending a FREE packet of missing spare parts to the address - and even name - on the invoice, which I happened to be holding in my hand)?
The time spent dealing with me, the time spent quoting (completely falsely) the Data Protection Act as a reason (I offered to recite it to them, if necessary, but they weren't interested and just stuck to their script - even the "most senior" manager on their Customer Service department), the hassle spent not handling other people's calls, disturbing managers, tying up support lines, etc. WAS NOT WORTH the cost of a pack of screws that you KNEW you would have to send out anyway. In the end, they phoned (at their cost) the person named on the invoice, and then we had YET ANOTHER lengthy conversation (because only I knew what parts were missing so they had to phone ME back - I took a little pleasure, when they asked if that was Mr Dowling, in telling them that I couldn't tell them that because the Data Protection Act required that I didn't give out personal details. Technically incorrect, but funny and the guy on the other end - yet ANOTHER guy who was less senior than the person I had spoken to 30 minutes earlier - took it with good humour and just said "Ah, yes, I have the right person, then."), and then after I started listing off the bed model numbers, parts missing, etc. and wasted ANOTHER 10 minutes, the guy just sent me out a complete kit of parts because it wasn't worth the hassle to identify so many different screws etc.
Just how much money was wasted there compared to just doing what a customer service line is supposed to do? Send a £5 pack of screws and plastic bits on the HUNDREDS of pounds worth of beds that you KNOW I bought from you (so I wasn't exactly "scamming" you out of random plastic connectors and some wooden dowels) that same day with a few quid for delivery (it came back on the same van that delivered the beds a few days later as part of their normal delivery rounds). Send them to the delivery address on the invoice if you get a lot of "fake" callups requesting spares. Do it without arguing and you could have got rid of me in 5 minutes, not nearly 2 hours of multiple phone calls and disturbing just about EVERYONE in the call center. Or just make sure your damn beds have all the parts in them before you send them out!
Customer service is an expense, of course it is, but it's like product quality. You can only skimp so far before it costs more than it would just to do a decent job. Some of the best companies in the world are small, independent companies that have trained people on the end of the phone and can handle anything you throw at them in a handful of minutes. If your customer service department spends half its life fending off angry customers trying to do something in particular, work out a way for those customers to do that, or make it so they NEVER have to do it, and then you don't HAVE to fend them off.
I've had technical support departments for dedicated server hosting REFUSE to tell me what they can actually do. All I needed was a query about installing a Linux update (which said it specifically COULD NOT be installed remotely, yet the server hosting company wanted to make me install it and then refused to install it for me). They actually REFUSED to say if they could reboot my server, or change my password, or anything else. What sort of service or support is that? None, because I cancelled my account (against their minimum days notice period) the same day and let them sort it out by letter at great expense to themselves. Just what exactly did all the costs they poured into support get them for that? Angry customers, a cancelled account and a lot of paperwork and hassle.
Or the phone company that INSISTED it must charge me every month for the next 2 years for a phone that NEVER arrived and a contract I never had the opportunity to sign because it was presumably in the same box as the phone, on an SIM that I had phoned up to BLOCK because it had never arrived. Their customer service was completely, 100% useless but my bank's - on the other hand - was fabulous and forcibly cancelled the Direct Debit within seconds.
"Three" spent nearly a month harassing me by phone and post before they sent a letter deciding that they would graciously "waive" those charges on that account - the account for a phone that never arrived, on a SIM I didn't have and had deliberately phoned up to block because it was suspected stolen, send second-class parcel post with no proof of receipt, on a contract I hadn't yet signed, via a Direct Debit that wasn't correctly authorised but had already taken three payments (which were instantaneously refunded by the bank and the only thing that really kicked their customer service department into action). I even offered to initiate their threatened lawsuit for them. They didn't like that, apparently. And for what? A £10 a month contract with a cheapy non-smart Nokia phone that cost about £50 in the shops. Really worth all that hassle. All I really wanted them to do was send me another SIM / phone. As it was, they'd already lost one because of being cheapskates and not sending it recorded delivery, so what exactly did they expect to gain by trying to fraudulently charge me for the next two years and argue with me about it to the extent that I got 28 phone calls in one day from them (the last 26 of which were "I'm recording this call, because I've informed your colleagues that I consider this harassment and you're unwilling to make any progress. I suggest you hang up and contact your legal department who have a nice letter winging its way to them").
Or the ISP (VNetworks) that supplied the school I work for and when we went over their "limit" (which was about 10Gb a month, I think) REFUSED to provide any better package whatsoever. They knew we were a business - they installed the damn phone lines and broadband themselves. They knew we were a school, but because we "used more data than the average home user" (their words), they cut us off. My boss tried to get on a higher package or a better deal - anything, because the school was cut off without it - and literally said to them at one point "How much do I have to pay you to put it back on?" and they couldn't do anything. They literally DID NOT HAVE any better packages or any way to deal with someone who went over their pathetically low limit except to cut them off. So we severed the contract "early", let them try to chase us for a year, when they then conveniently decided it wasn't worth chasing, and phoned up BT who within the week supplied us with 2 business lines, and T-Mobile supplied us with a couple of 3G dongles to run the network in the meantime.
Customer service is an expense for the same reason that "buying stock" is an expense, or "handling returns" is an expense. You need to do it. If you do it well, it doesn't cost much at all. If you do it BADLY, it can cost you so much that you'll never make profit. Outsourcing to India - costs less, but bad for business. Having only email support - costs less, but bad for business. Untrained staff on phone line - costs less, but bad for business.
The companies I make SURE I do business with again are those that go above-and-beyond. Squaretrade, when I broke my Kindle, offered not only to replace it under the insurance I bought (which cost £26 for 3 years!) but to instead push it through Amazon's returns department for me (and thus save me one "claim" on the insurance). Within a minute, on the same phone call, I had an Amazon rep on the phone arranging the return and the replacement was sent out THAT SECOND (it arrived before I could box up the broken one!). They also offered to replace a previous one that was also broken (i.e. YEARS before I bought one with the Squaretrade insurance!) for just £40 if I wanted to do that at the same time.
It's got nothing to do with the size of the business (small or large), or the money they make, it's to do with whether customers are seen as the enemy, or someone you can get more money from if you're nice to them. You're a fool to annoy your customers. It's like being a rude hotelier, or a lazy waitress. All that will happen is you will end up with no repeat custom and people only spending money with you reluctantly when they ABSOLUTELY have to.