[shalmanese]

Sure. The airline industry, for example, has been notoriously unfriendly towards most attempts at differentiation based on quality. Margins are razor thin (http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-...) and customers are incredibly price sensitive. While many consumer's stated preferences are for things like more legroom and less delays, their revealed preference is they'd rather save $5 on a $300 ticket and suffer the indignities.

I would argue you're seeing the same narratives play out in the ride sharing space right now. Lyft tried to compete with Uber with their friendlier drivers vs we'll get you there faster and cheaper messaging and we'll see how long that differentiation lasts since Lyft seems to be rapidly backing away from their branding and into competing on purely on price.

Markets which are natural monopolies like Comcast also don't profit from extra CS. When your choice is shitty broadband vs no broadband, there's little CS, good or bad can do to sway your decision.

Markets where the purchaser is not the end user like enterprise sales also benefits from investing more money in sales than support. Every doctor I've ever been to has bitched at length about basic usability issues with the software they're forced to deal with but they have no real power so the software stays uniformly bad.

Markets where purchases happen infrequently. I recently had to buy a spare part for my refrigerator. Amazon didn't carry it, and the sites that did seemed uniformly low rent and amateur. I ordered from 1 site that said it was in stock and chose reasonably fast shipping. After not hearing from them for 2 days, I sent an email and they got back to me saying that due to a clerical error, it was actually out of stock and wouldn't be shipping out for another 4 days. Meanwhile, the website still listed the part as in stock. They didn't care, what's the worst I could punish this retailer for? Denying them all of my future spare fridge part purchases?

Sure, there's always exceptions to be found in all of these areas but by being the exception, you relegate yourself to a niche of the market and it becomes hard to expand outside of that niche.

[geoka9]

> their revealed preference is they'd rather save $5 on a $300 ticket and suffer the indignities.

It's hard to believe this is true. I'd gladly pay $20 extra for a trans-Atlantic seat with more legroom and my experience shows that I'm not alone--all those "improved economy" seats are usually sold out well in advance (and they cost a lot more than $20 on a 1k extra).

[fennecfoxen]

$20 a seat will buy you legroom on a 2-hour flight (and $30 will buy you extra legroom in the front of the plane with better recline). Extra trans-atlantic legroom costs more like $200 a seat, though.

[gnopgnip]

In the Bay Area Megapath competes with Comcast by offering the same exact connection but much better service with value added options like proactive monitoring. The same physical line in the ground will get you internet access. They will almost always cost more than Comcast, but it is worth it to many people to not have to deal with automated phone systems that waste your time and ineffectual support.

[shalmanese]

Right, so what you see is in areas where people have a choice, Comcast rationally decreases prices and increases service levels. That's the entire logic behind Google Fibre. But for most of the country, there's literally no choice of broadband and there's no incentive for Comcast to improve.

[shostack]

I had a feeling you might cite some of these examples :)

Admittedly the Lyft example was unknown to me--I'll have to dig in, sounds interesting.

Specifically to airlines, I'd direct you to some interesting info on Southwest[1]. While TBH the case study doesn't really prove to me the causation of success by being customer-centric, it does show that they can compete in that industry with that approach and be successful.

For the cable industry I'd argue that Sonic.net has carved our a nice business for themselves in part because of their amazing service. That doesn't really disprove your statement that it relegates a business to a niche of the market and makes it hard to expand outside the niche, but I again think back to the question of correlation vs. causation. Comcast, TWC, etc. were all well entrenched before Sonic.net even existed. So it is hard to say how much of a factor that played in their limited ability to compete vs. the fact that they focus on customer service.

Respectfully, what I still remain unconvinced of with your examples is what exactly Comcast and others like them are leaving on the table by not having awesome customer support experiences. You don't necessarily need to break the bank to have one, but you do need strong direction and culture, and that comes from the top down.

I go back to the notion of customer acquisition costing potentially 5x as much vs. retention costs (all hypothetical averages of course). If an industry has razor-thin margins and cost-focused customers, wouldn't you think it would make them a lot of money to maximize the LTV of said customers?

[1] http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case...

[shalmanese]

so everyone loves to talk about Southwest but I'd say the far more representative example is Virgin America. Despite being the mesia darlings and winning all sorts of awards, it's hemorrhaged money for 6 straight years before posting a meagre profit (http://articles.latimes.com/2014/mar/26/business/la-fi-mo-vi...).

As you mentioned, it's always hard to separate out cause and effect but I'd argue Southwest's unique fleet and labor arrangements gave it a temporary structural advantage. Now that those advantages are disappearing, it seems to be reverting towards the mean (http://www.wsj.com/articles/SB100014240527023039497045794596...).

[vidarh]

When there are other big differentiators, and the CS issue in question is not serious, then yes, the non-CS factors are likely to dominate decisions.

But often this is not the case. I find that while good CS can make customers happy in normal circumstances, CS really makes or breaks a customer relationship when something goes wrong. Good CS and you have a brand advocate. Bad CS and you may have a nemesis that will go to irrational lengths to tarnish your brand out of pure spite.

I left my old cable operator for two reasons: 1) they were unable to fix my cable internet for two weeks, 2) their customer service kept giving me the wrong information.

Of those two, the latter was by far the most important factor. The former was just the trigger that put me at the mercy of their abysmal CS processes. Before that, if you'd asked me, I'd have recommended the company, and been totally neutral about their customer service, as I'd not had to deal with them for anything of substance.

Leaving did not get me internet back faster. It did not get me better service - just different. But it gave me the satisfaction of telling them to f-off, very publicly, after I'd suffered through multiple days of regular calls to their customer service team.

The downtime made me annoyed to start with, but their CS team who could have defused the situation just with some basic courtesy - others have - massively escalated things by being unsympathetic, not passing on the right information, not calling back when there were changes to the situation, and the final straw: after I'd decided to cancel, and had waited in line 45 minutes, I was told the computer systems were down and when I asked if they could take my details and arrange it later, they said no - ok, but could they call me back? No. I was expected to call back, wait in the same queue again for who knows how long, without knowing if they'd manage to cancel for me then.

So just by attitude and a few process issues that would not have made a material difference to their cost, first they lost me as a customer, then they pushed me into publishing a scathing complaint on my blog and tweet about it. I "only" have a direct reach of a few hundred people, but apparently that worried them enough that I had a call from someone claiming to be an assistant to the CEO the following (Saturday) morning, asking how he could help.

While that calmed me somewhat, had they just had better processes in place, they'd have had several thousands pounds in additional revenue from me by now, and not wasted a dozen or so CS reps time with all the repeated calls that arose from their poor internal communications.

That's why good CS matters.

It's those cases where long term previously satisfied customers decides to blacklist you for life and starts to badmouth you to every friend, co-worker and relative just because your CS processes made them angry by unnecessarily escalating some minor problem.