Why We Won't Pay More For Good Customer Service

Australians hate it when we get poor customer service, whether that's over the telephone or online. But do we really want to pay more for the privilege?

Picture by London Looks

I've been musing on this topic because of a recent survey conducted by CRM software company RightNow into local attitudes to customer service. The survey (which covered 700 Australians spread across all states) came to two interesting if controversial conclusions: most of us say we'd pay for products if there was better customer service on offer, and we'd be willing to pay almost 10% more to do so.

The study provides some concrete data to back up a pretty obvious conclusion: we're not that impressed with the customer service on offer from many major organisations. Telecommunications scored particularly poorly, with 59% of those surveyed saying they'd had a bad customer service experience (closely followed by ISPs on 44%). A similar percentage across all industries (58%) said that they had changed providers as a result of bad experiences.

With those bad experiences in mind, it's not surprising that 86% of those surveyed said that they would actually be willing to pay more for products that came with decent customer service. The average amount extra which people were prepared to pay was 8.5%.

While not doubting the sentiment, I'm more than a little sceptical about those numbers, especially those about what people intend to do. It's very easy to claim that you'd be willing to spend more money on a decent product backed with real customer service, but it's quite another thing to do it. After all, Telstra remains Australia's biggest telco and ISP, despite admitting this year that it needs to spend millions of dollars to fix up its lamentable customer service record. And yet we haven't made the switch in massive numbers, despite a huge number of alternatives.

Last week's Choice study on our banking habits is also instructive. While whining about banks is a national habit, and finance didn't come off much better than telcos in the RightNow survey, just 8% of us actually bothered to make the switch.

As well as the hassles involved in switching, Aussie cynicism may well be a factor here. "It'll be just as bad with the competition" is a common sentiment (and not always an unfounded one — if you have an ADSL service that's Telstra-based but onsold by someone else, you'll end up facing the Telstra wall of hopeless at some point). There's also a sense of righteous indignation: why should I pay extra just so something actually works?

The reality is also that we often don't have much choice, or think we don't. I always found Vodafone's telephone support for its 3G broadband service lamentable and best and incomprehensible at worst, but the combination of a 24-month contract and its apparent dominance in overseas roaming stopped me from switching for ages. It was only when the contract expired and I realised its overseas roaming mostly didn't work that I finally got rid of it. I should have manned up earlier — I'd have saved countless hours trying to get its buggy software to behave — but I can't blame Vodafone for my failure to do so. That part was my fault. Of course, if it had offered decent service, it might not have lost me as a customer, so there's not a lot of win happening here.

Do you pay extra money for a product because you're confident the back-up service is better? Tell us about it in the comments.

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


    I just recently upgraded my oven and decided to go with Miele - because of their exemplary customer service. They're long established and do all their own service and support. Yes, you pay more for the product (compared to competing brands at the high-end) but you can have 100% confidence in their ability to provide good customer service.

    There was in fact only a minor fault with the old oven (a high-end German brand once very well regarded in Australia) but as that brand's Australian operations are now run by the same company that also services cheap low-end Australian brands, they were simply clueless when it came to this German brand. So rather than repair it now and find it breaks down in 2 years and I can't get parts, I decided to replace it now rather than experience poor support when I really need it (i.e. if the oven died completely).

    I work in the IT industry and poor after-sales service is affecting more and more products - no longer just mainstream PCs, but more and more enterprise-class equipment. Why? Companies (not individuals) are demanding lower and lower prices, and vendors respond by reducing their ongoing costs in order to be competitive. That's why a 4-hour response time on a warranty call is now meaningless.

      Yes well there is the line. I wouldnt pay triple the price for something that heats up and cooks food on the offchance that it may or may not break prior to one which was significantly less costly and to replace the entire apparatus would still leave me with spare cash, than to go Miele and get the "service".

    I definitely frequent places where I know I can get reliable advice and quicker, easier service, and I'm willing to pay a little more for it. Depending on the product, I could easily see 10% being not unreasonable. Banking and ISP's are not those products.

    Yes; Internode. Enough said, IMHO...

      Internode for the win! I've been with them almost a year now and in that time, I had exactly one outage which lasted not more than 3 hours. ONE! I had dodo before and 3 mobile broadband and with both it was just problem after problem. Internode's billing is a bit retarded, (my bill for december's already come even though it's the barely the second week of november)but the quality and reliability is definitely worth it!

    The worst problem with customer service is that is impossible to gauge everybodies perception of it. An experience I have will be perceived differently by some one else.

    We had our 2 year old sofa repaired, in our house, within 48 hours of my first enquirer, free. Customer for live!!

    I had my PC repaired under warranty, but it was like pulling teeth to get it done. The tech guy who came onto sight was super, he was really helpful and supportive, but getting him there...more time and effort then it should have taken (and this BETTER then the last time I had to deal with them nearly 3 years ago!!).

    Customer service isn't a big deal, under promise and over deliver, simple. Build an expectation in the customers mind and then do everything you reasonably can to exceed it (it's not always going to work), but it's the unexpected extra that people like.

    When do you know that you are paying for customer service (that you might not need for a couple of years)???

    It's why I buy Apple. When I've had a problem, they've been outstanding.

    I use Telstra, and yes their support is s**t, absolutely the worst support I've ever experienced, but I live in the country and have absolutely no options with either mobile or home broadband ( I can only use wireless), so the support issue doesn't even come into the picture.

    But I guess, like everthing, there will be people with opposite expericences.

      Thats why i use Windows 7 and dont have issues (so dont need the support), and i am also with Telstra but i have found that their service is good (well, it has improved ALOT, but it now is good); i get everything fixed with only 1 or 2 phone calls :)

        Yep, there's nothing wrong with Windows 7, I use that too as I develop for Windows. But I've never needed support for software. I was actually thinking hardware when I said I buy Apple.

        I bought a Dell laptop about 10 years ago and had the 3 year warranty, which had steller service. I don't know what they're like now. Later on, I bought a Toshiba Laptop with the 3 year on site service, it was very ordinary.

        I had an issue with my first iPhone (3G) which was with Optus. The service was brilliant, and I asked the rep about it. He stated that Apple forced Optus to have a specialist iPhone service department that was trained by Apple, interesting.

        I would concede that Telstra are good at fixing their errors when you ring them up after the fact. However that does seem to be down to the fact that they make so many errors that customer support is incredibly practiced at sorting out the other departments screw ups. I have to use them for mobile due to coverage reasons but I use Westnet for land line and internet as their support is even better and they make less mistakes to start in the first place.

        A reply to Bernard actually; it won't let me reply directly to him.

        Thankfully Dell now have much better service than 10 years ago, and at my organisation, are the only supplier of PC we use. 70/30 Mac/PC, but that 30 is exclusively Dell. We've had a few things go kaput (blown PSU, monitor, and I think mainboard), and in most cases of easy fixes, they send a new part out to us and we send the old one back within 2 weeks or so. If it's a mainboard, the tech will be onsite the next day. (We're under Small Business/Govt though, so YMMV)

      I had an issue with my apple product and the customer service was extremely poor. I was on the phone with some Emo kid, I could picture him all cool with floppy hair being bored and ignoring me. Uh.

      Most bricks and mortar stores I know have piss poor CS so I go into their store expecting nothing and sometimes on a rare occasion am pleasantly surprised.

      With online stores the least I expect is fast delivery and a good price anything else is a bonus. So far I have had very few issues.

      Telstra and TPG are two companies I dread having to call as their CS is ridiculous. In saying that the last Telstra call I had was efficient and helpful.

      Indeed, exactly the opposite experience with me. I've walked into the Sydney flagship Apple store and had the "geniuses" simply shrug. I've sent in a number of support questions to Apple online over the last year and have yet to get an answer.

    If customer service was the only deciding factor, people might well leave Telstra. But CS is hardly the defining reason for choosing a Telco.

      I disagree, I recommended my old man go with Adam for his web-hosting chiefly because of their customer service.

    i actu actually stayed with iinet for long after their plans became less expensive because support calls were usually answered in a reasonable time frame. But 2 40 minute hold experiences and I decide I might as well go with the cheaper Tpg.. Sure the service sucks but at least you expect it.

      I too have been with iiNet way after their plans have been surpassed by competitors like TPG... yes, I have had the occasional CS fail from them but across the board I have had probably some of the best CS from them than from any other provider AND if their plans change, they upgrade their customer's existing plans (unlike say, Telstra).
      I moved to Telstra when I bought my iPhone 4 for two reasons: coverage and the Next G network. Telstra have absolutely horrendous customer service, as I discovered when my number was not ported across from Crazy Johns recently. However, their social media group (Twitter @Telstra) have been outstanding and if it wasn't for them, I suspect that my issue would never have been resolved by the correct people. If anyone has an issue that they are struggling to get resolved by Telstra, talk to @Telstra (via Twitter) as they appear to be the only reliable CS in that organisation.

        Initially I went with a decent-price-terrible-service ISP (arachnet, bought by amnet) when I first got DSL. When something went wrong, I'd be on the phone for 45 minutes...but they had far cheaper plans, and knowing how the basics of dsl works meant you could get most stuff fixed fast. I stayed with them until I moved and wanted to get on naked DSL. Amnet had naked dsl plans, but the sign-up method was long, involved, and involved filling out physical forms. with iinet, I had a quick webform/phone call, and incredibly helpful customer service. The customer service convinced me to switch, even though iinet plans were a little pricier at the time.

        I keep the company I work for on telstra purely because of the coverage. As long as nobody else provides range as good as next G, we pretty much have to stay with them. about 15% of the time, when I call the corporate support number I get put through to the home-user line, which leads to some hilarious misunderstandings and terrible advice from them...but they have the infrastructure we need, so customer service doesn't get into the equation.

        In short: I get far better service from iinet paying them $70 a month than from telstra paying $15k a month. I'd change if I could.

    Don't deal with anyone on the internet that does not have either a live chat, email or a phone number in their support set up. Recently my Voipbuser broke not allowing me log in, well guess what, no email address no phone number, nothing. Thankfully I only had a couple of euros in the account so no big deal,but for the fact it was a really really good voip service,cheap and clear as a bell.

    In retail service doesn't count for crap.

    I've worked at a few places in retail for years now, one that offers very good customer service and one that offers reasonable customer service but better prices.

    I feel as if whenever I hear people in these surveys saying they would pay for better service I call bull. They come in waste an hour of your time then just go buy it somewhere else that is cheaper where the service blows. OR they come in waste an hour of your time then go around find the cheapest price that ends up losing you money and demand you price match it, even though the store that gave them that price couldnt tell them where the power button is.

    People are wankers and I don't believe these surveys even for a second.

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