Telecom Customer Service Can Afford To Be Terrible Because Switching Costs Are High

Image courtesy of dmuth

Why is customer service generally terrible from your cable and internet service provider? It’s not so much that the service is terrible, even though it often is. The problem is that it’s inconvenient to switch providers, if you even have a second option at all. When you feel like you don’t have a choice, you resent your current provider more.

Companies know this, and they understand that the reason why we stay put and complain a lot is that we don’t want to go through the switching costs. Say that you’ve been a longtime Android user considering switching to an iPhone: you’ll have to consider the cost of buying all of your apps over again and transferring your information to a new address book.

Broadband and cable have high switching costs, too, explains business columnist Lee Shafer of the Minneapolis Star-Tribune. Depending on what you’re switching to and from, you’ll need new wiring and maybe to change e-mail addresses, you may need to switch out all of your DVRs, and you’ll definitely have to wait around for a service appointment.

If customers are going to complain about their providers’ service anyway, it doesn’t make much sense for them to invest in superb customer service. Instead, they invest in finding ways to lower their costs and maybe even upgrade their service.

Schafer: There’s a reason for bad service from cable companies [Star-Tribune]

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