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Is Bad Service Good Business?

October 9, 2012  
Every small business makes compromises on a daily basis. Adding something here means subtracting something there. But does it ever make sense to cut back on the customer experience? Can bad service be good business?

Bill Taylor, writing at the HBR Blog Network, asked this question after reading a New York Times article in which securities analyst Richard Bove trashed Wells Fargo for its lousy service and upgraded the bank's stock to a buy.

It sounds counterintuitive, but Taylor says bad service can be good business for two reasons:

  • Customers understand they're not paying for service. Consider Irish airline Ryanair, renowned for cheap fares and a service so parsimonious the carrier once considered changing passengers to use the lavatory. "The company, by definition, is not for everybody," notes Taylor. "Customers who value pillows and blankets, cheerful flight attendants, and apologies for late arrivals will take their business elsewhere—and pay more for the privilege. That's the deal."
  • Investment in customer service cannot be justified. Social media juggernauts like LinkedIn and Twitter do their best to be unreachable by phone. It frustrates users, but these companies offer a compelling service, have a vast reach, and don't suffer for their lack of an 800 number.

And this is why Taylor doubts the wisdom of Wells Fargo's approach—Bove very easily moved his business to another bank, and so could anyone else.


The Po!nt: Unless you offer a product or service unlike any other, your long-term strategy can't afford bad service—no matter how profitable it seems in the short term.

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  • by Kathryn Tue Oct 9, 2012 via web

    The headline "Is Bad Service Good Business?" is misleading about the content of this article, and I think it could be more explicative. It obviously poses a lot of interesting business dynamic questions. I feel like there is a misinterpretation here between BAD service and a LACK of service.

    I see nothing wrong with a lack of service, if that is built into the niche of your business, i.e. Ryanair, LinkedIn, Twitter. Downright bad service ought to be saved for the business who's model relies on bad press or degradation for people who like that sort of thing.

    Otherwise, I don't see a reason not to be kind to the people who are paying your bills--no matter if you're offering them extra services, or informing them of the lack of service you have to offer.

  • by Michelle Tue Oct 9, 2012 via web

    I too think the title and thrust of the article does not properly represent the actual content or even the assertions of the article referenced. I wish there was a link to the article mentioned. It seems things may be taken out of context.

    This was eye-catching, yes, but in the end, also frustrating. Investment in customer service can't be justified? To make a statement like that, it must be well supported. It would have been better to say Customer service isn't always what you think. Or something like that.

    I believe this article has potential, but needs to be fleshed out. There's not enough meat to give the concluding sentence the credibility it should have.

  • by Uday Phadnis Wed Oct 10, 2012 via web

    Frankly this article should get space in Marketing Prof.
    Anology offered by the author is also misleading. As rightly stated by Kathryn
    one should differentiate between 'bad service and lack of service' as in case of lack of service customer has accepted proposition with a clear understanding that offer is without any service and still accepts a proposition forsake of economy. , where as lack of service results in disappointment as customer is expecting a service which he is denied. Will it result in Good Business?

  • by Shilpa Tue Oct 16, 2012 via web

    The title catches attention but is misleading.The point made here is about short term profitability at the cost of service.Needless to say,this strategy goes against any business and disturbs the Brand image.However if 'Lack of service' is plugged into the business model and still making it a good business then it forces you to think; is that 800 number a big need, can we really call it a BAD service??

  • by Michelle Tue Oct 16, 2012 via web

    Shilpa,

    I would say they really aren't talking about "bad service" so much as they are talking about limited service. A point Kathryn pointed out.

    Bad service is an active process, such as when two cashiers ignore you when they see you're ready to check out. They let their poor coworker do all the work while they hide in the break room or in the aisles. There's capability, but not the will to do better.

    Lack of service is when there is one cashier working alone on the register and stocking the shelves with loads of people waiting. Provisions to do better were not made.

  • by Kathryn Tue Oct 16, 2012 via web

    Shilpa, I think I see what you're saying... "Bad Service" as a service that does not serve the company? Still, I think we all agree this article was given a misleading headline, and there is a lack of detail moving through the article about what is really being considered:

    Bad Service - Service that is given in such a way that it injures the company's reputation, and therefore success.

    Lack of Service - A niche that, if well-played, can work in the favor of the company

    and

    Superfluous, or Extraneous Service - Service that is not needed and can, therefore, be transformed into a Lack of Service.

    THIS BEING SAID: I want to mention that I am extremely fond of MarketingProfs and find the resource invaluable. It's possible I wouldn't have felt comfortable commenting on this in the first place if I didn't feel that this is a community that truly serves (pun intended) my development. So thank you, and thanks for taking a so-called beating on this one, MarketingProfs.

  • by Michelle Tue Oct 16, 2012 via web

    Wow, excellent clarification...or should I say enlightenment? You hit the nail on the head, Kathryn.

    I also have to give "props" to Marketing Profs. Great resource. I have learned so much here and frequently suggest the site to others to improve their marketing knowledge. I too appreciate the people here and the caliber of the content. I think that's a big reason I gave my two cents.

    While we're being gracious, I have to say whoever wrote this article probably has been published way more than I have. Now that I think of it, I'd like to see something else by them. Can't judge a writer by one article. :-)

  • by Kathryn Tue Oct 16, 2012 via web

    Thank you, Michelle! I've certainly enjoyed our discussion.
    I also just noticed they listed the source of this article as
    http://blogs.hbr.org/taylor/2012/08/when_bad_service_is_good_busin.html

    I didn't read the article, but skimmed the comments. Based on what I glimpsed, it seems to have a similar-ish feel despite being a longer article...

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