Sep
13

What’s wrong with customer service and why are we financially rewarding it?

Written by Lisa Canning

Customer service is a gateway for good or bad feelings to flow between potential and existing customers of a product or service. Customer service is an experience that reflects directly back to the customer the intention of the business delivering it and what they value.

There was a time when more businesses understood the value of making things truly right with their customers;  until the pendulum swung too far in the customers direction thanks to offers that left them with little skin in the game like; ” Return it for any reason and we will give you a full refund anyway”. Or “Get it now and start paying for it a year later” kind of credit terms. Now, all that seems to be left of customer service is ‘attitude’ accompanied by a lack of respect for what it takes to actually get that customer to walk through the front door the first time and open their wallet and spend money .

Recently I spent almost 20K with Home Depot. The money was spent to build out our maker space, iaeou. When my initial large order arrived with numerous mistakes, I called my local Home Depot store where I made my initial large purchase. Surely they would help me right?  It took 10 days, 4 phone calls, and 3.5 hours of my time waiting on the phone, ( I am not kidding) to get the incorrect items picked up. It then took another 2 weeks to get kitchen tile that was admittedly sitting right on their shopping floor, the right paint- which simply had to be made- and a stove that had to be transferred from another store- along with a few other odds and ends- delivered to me as we worked on our build out.

And if that wasn’t enough, I ordered a 4 zone air conditioning unit- a $5000 ticket item- and it was delivered incorrectly from California.  They shipped a 3 zone air conditioning unit that was only worth about $3000. When we refused it and asked for the right one to be delivered Home Depot told me it would take 10 days to credit it back to my account and that because we were at our 20K limit- BECAUSE we spent all of our money in their store- and even though we had ordered the right unit they failed to properly deliver- I would have to get a credit line increase to order the correct one ( again) from Home Depot. Needless to say, I went elsewhere for my air conditioning needs but it took me another 3 weeks to get them to credit my card back.

While Do It Yourself rules these days- both because of our shift to a “creative economy” and because funds for most of us are tight, all which naturally serves a business like Home Depot, why are we rewarding this kind of non customer focused behavior? My experience with Home Depot, up until this experience, for small purchases always had been good.  It is hard to screw anything up when you are buying garden tools and cleaning products and yet DIY home building products is really what they are known for. I informally surveyed, on my 10+ visits to the Home Depot store, customers waiting in line with me at the service counter. Every single one of them when asked why do you shop here said some form of “I don’t like this store” followed by ” their service is so bad that I just ask them for a discount and usually get it.”

 

Rivals Lowe’s Companies, Inc. (NYSE:LOW) and The Home Depot, Inc. (NYSE:HD) have battled it out in retail of hardware and other household goods for years. As might be expected, the two are frequently compared to each other in the market: Home Depot, the larger market leader, and Lowe’s, the smaller company but arguably a better value- not only in the stock market but a far better customer oriented company too I would argue.

Regardless of what happens in their industry, the two stocks have generally tended to move together which makes absolutely no sense to me.   Both stocks have risen on the expectation of a housing recovery that may fuel demand for home improvement and yet Home Depot retains a leadership advantage.

According to insider monkey, Home Depot saw 12% earnings growth, primarily through margin expansion as revenue only increased 2%. ( imagine that!) Where as in its most recent quarter Lowe’s reported a slight fall in revenue which helped drive a 10% fall in earnings compared to the same period a year earlier . So the larger company (Home Depot currently has about twice as many employees and an $86 billion market capitalization compared to $33 billion at Lowe’s) is doing better so far, but its stock price has also risen and may have outpaced its business’s advantage- partly because of its market leadership position and partly due to its better recent performance, Home Depot trades at higher valuation multiples in the stock market.”

Why is it that size matters? Why do we value large and incompetent over smaller and more able? We all know the stock market has a huge ability to fluctuate based on how we feel about a brand,  and our own well being, so why are we rewarding Home Depot’s behavior?

 

About Lisa Canning

“Vowels are to words what creativity is to the world~ basic and necessary.”

Lisa Canning is the founder of IAEOU, the Institute for Arts Entrepreneurship (IAE) and Entrepreneur the Arts.

Follow me @IAEOU

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