Consolidation, bad customer service, disaster

As consolidation sweeps across an industry, customers suffer. Oligarchies stifle competition, setting prices and releasing products that meet their needs, not the consumers. For a classic example of this, see OPEC during the 1970's, Ma Bell before the 1980's break up, the music industry or, for a more recent example, the U.S. auto industry. The other lesson here is that oligarchies hurt themselves. The lack of competition leads to complacency, a failure to innovation and focus on the bottom line not the end user.

No where is this clearer than in the customer service department of large corporations. Every call to a customer service department starts with a machine and menu of options that generally starts off letting the customer know how to pay the bill. From the outset, the company sets the image that its chief role is to collect payments, not provide service.

Customer service departments in large corporations are similar to human resources. They work for the people providing the service, not the people receiving it. As a result, they stick to corporate policies rather than resolving customer issues.

A case in point: I recently cancelled my FiOS service with Verizon because I moved out of their coverage area. While I liked the FiOS service and the channels, especially now that I am living with a more limited and more expense lineup from Comcast because I am no longer in a competitive market, for the first six months of my relationship with Verizon, I was over billed. Problems that I thought were resolved, snuck back into subsequent bills.

Cable bills are paid in advance. That means, you pay for June service before you actually receive it. They also don't prorate your last bill, but ask you to send in the full amount and promise to send you a refund check 6-8 weeks later, if they remember. During all that time, they collect interest on your money. During a call to Verizon I point out that there was no need for me to pay the full amount of the June bill, they had cut off service and I returned the equipment so I could not siphon off services. Verizon said they hadn't determined the final bill. But why not, I asked I had been without service for a little over a week, why couldn't they simply prorate the bill on the spot? Because that's not the way it's done came the answer.

Verizon is by no means alone in this, when I switched over to ATT to buy the iPhone, each of my first four bills contained $40 of extra services that I never ordered. It took four separate 30 minute phone calls to finally resolve the problem.

I mention this not because I think everyone should check their bills carefully--you should--but these companies can get away with this lack of customer service and over billing for two reasons:

1) They think people will not notice that they are being over billed and they are right.

2) There is no penalty for over billing. In fact, because most of us sign one or two year contracts to get favorable rates, there is a penalty on us if we fight back by taking our business away.

Bad customer service is one symptom of a larger malaise, a lack of focus on the customer. This disregard for the end user is fine as long as the consumer cannot find other choices, but it kills the corporation when sea changes occur. Most often this sea change comes with a shift in technology, such as the oil crisis and the resulting demand for cars with better gas mileage or Napster and music industry reluctance to embrace the Internet.

In both cases, the reigning colossus lost because it tried to dictate end user behavior and failed as outside forces proved to be too strong. To be fair, both the auto and music industry had products that inspired loyalty, but as giants who focused on their bottom lines rather that what was good for the customer, they didn't innovate and are on life support.

Who is next?