Several years ago, I walked into my local bank branch at 5:55. Knowing that they closed at 6:00, I thought I had some time but they said I was too late. I said I had 5 minutes, they said no and by the time we had concluded our exchange, it was 6:00. They said they were closed and asked me to leave.
Fast forward to 2012. In a news article, bank analyst Richard Bove told how his mismanaged mortgage application, discourteous tellers, and fee problems made him decide to switch banks from Wells Fargo to Chase.
But…
Recommending Wells Fargo, in a research report, he said, “I’m struck by the fact that the service is so bad, and yet the company is so good.” Rather than customer courtesy, the bottom line grows from “pushing products and managing risk.”
His bottom line resounded. Recalling a recent post on Pepco’s lack of reliability during a week long Washington D.C. power outage, I again pondered what happens when better service has no impact on profits.
I also wondered in which market structure customer service might be most important. (Moving from more to less competition and from smaller to larger businesses) Perfect competition? Monopolistic competition? Oligopoly? Monopoly?
Any similar experiences? Please comment.
Dick Bove’s experience is described in this NY Times article, and here is an abstract for a Harvard Business Review report that concludes delighting customers won’t create loyalty but solving their problems will leave them satisfied.
