Does the Comcast Cancellation Call Prove Customer Service Has a $100 Billion Problem?

Comcast is in the news for a bad interaction with a subscriber, but the problem goes deeper than that.

Jul 17, 2014 at 10:25AM

Comcast (NASDAQ:CMCSA) was all over the news earlier this week when a well-known technology journalist published a recording of his attempt to cancel his account with the cable and Internet giant. The amazingly poor level of customer service provided by the so-called "customer retention" specialist certainly shocked anyone who heard it, but Comcast's lousy treatment of people is fairly typical, according to a new study from Click Software (NASDAQ: CKSW).

The report says that customer service issues are causing more than just frustration for consumers and businesses. The problems could be costing Americans $108 billion annually with an individual loss of more than $750 per person. Businesses stand to suffer a yearly productivity loss of approximately $900 per employee due to work time spent contending with customer service inefficiencies. Overall, that's a $130 billion annual expense to companies nationwide. 

That's likely a huge overstatement of the actual problem -- it's more than the gross domestic product of 134 countries. But even if the survey's math is exaggerated, poor customer service is a huge time-waster for Americans. If one business treats customers poorly, it only affects those customers, many of whom will likely switch. But when poor customer service becomes institutionalized, it affects us all.

What happened with Comcast

Anyone who has dealt with customer service at a cable company, Internet service provider, phone company, bank, or utility company knows the frustration. It's unfair to pretend that what happened with Comcast was somehow unique, but the eight-minute obstruction-fest was so over-the-top, and it happened to former Engadget Editor Ryan Block, who posted it on SoundCloud, so it is being held up as an example.

Few companies make canceling an easy process and most -- Comcast included -- try to talk you out of it, often by offering enticements to stay. Once Block asked to cancel he was transferred to a customer retention specialist, whose job is to get people to reconsider leaving. Block's recording showed the Comcast rep was a tad overzealous. 

The representative aggressively stalled and belittled Block's decision, saying things including:  

  • You don't want something that works?
  • So you're not interested in the fastest Internet in the country?
  • I'm really ashamed to see you go to something that can't give you what we can. 

At the end of the call Block was successful. In response to the media coverage, Comcast issued the following statement.

We are very embarrassed by the way our employee spoke with Mr. Block and Ms. Belmont and are contacting them to personally apologize. The way in which our representative communicated with them is unacceptable and not consistent with how we train our customer service representatives. We are investigating this situation and will take quick action. While the overwhelming majority of our employees work very hard to do the right thing every day, we are using this very unfortunate experience to reinforce how important it is to always treat our customers with the utmost respect.
The problem is that while this may be an extreme example, it's consistent with how customer service is handled by many companies. Everyone has a horror story. Nobody understands why we have to enter a phone number or account number before we're connected yet somehow the rep never has it. This is not a Comcast problem it's a general breakdown in standards and often a "penny wise pound foolish" approach to keeping subscribers. 

What the study shows

The online survey of 2,051 U.S. adults, 1,197 of them employed, was conducted by Harris Poll on behalf of Click Software in May. Collectively, employed Americans reported burning 30.8 potential work hours per year waiting for service industry responses. Based on the average national hourly wage of $24.45, that's an average $753.06 that people lose waiting instead of working. Multiply that by 144 million employed Americans and the cost of frustrated wait time experienced by the U.S. population is $108 billion.

This wasted time during work hours causes a massive loss in productivity. On average human capital costs a company 20% more than an employee's base salary, according to the report. This 20% added to the individual American's $753.06 loss reveals an unaccounted expense of $903.67 to companies per employee -- multiplied by 144 million U.S. wage earners that means a total annual cost to businesses of more than $130 billion in lost productivity. While that number would seem to represent a worst-case scenario, the underlying logic remains true.

"The findings show people want first-rate service, they won't pay extra for it and more than a third will sever ties if they don't get it. Businesses need to realize the actual toll poor service quality takes and put a specific focus on optimizing their existing resources in order to more effectively serve their customers and improve their bottom line," said Steve Timms, president, North America for Click Software. 

The survey also showed:

  • At least two in five employed adults who find an industry frustrating have spent at least one hour dealing with an issue when they could have been working. The banking industry is the most time consuming with those frustrated spending six hours dealing with them, followed by the repair and home services industry, where they could have spent, on average, more than five hours working.
  • Over one-third (35%) of Americans have canceled their service or stopped using that brand altogether due to a frustrating experience. 
  • Seven in 10 Americans (72%) say their frustrations have caused them to take action of some sort. Half (51%) have demanded to talk to a supervisor, while 14% have yelled at the service representative and 13% voiced their complaints on social media. 

But the report also showed that people believe change is possible. Around half of U.S. adults said companies can provide customers more frequent and exact estimate arrival times via their preferred method of contact. Around two in five Americans said companies can proactively update them on the progress of their problem.

It has to change

But we've seen it's possible for companies to provide positive experiences -- some companies have used to technology to narrow those dreaded six-hour appointment windows.

And that can be a business win. Saving money by offering lousy customer service can hurt companies. More importantly companies that break the cycle and offer a positive experience can profit. Just look at the airline business -- an industry that has notoriously lousy customer service -- and two of its success stories, Southwest (NYSE:LUV) and JetBlue (NASDAQ:JBLU) are the top two most highly rated companies on the 2014 American Customer Satisfaction Index. 

On a personal level, my bank, People's United Financial (NASDAQ:PBCT), quickly got me to a human being last week when I realized moments before boarding a plane that I had left my credit card in a restaurant in a state I was about to leave. The friendly rep dealt with my horrendous mood, canceled my card, and arranged for a new one to be sent.

It was a small thing -- doing right by a customer with minimal hassle -- but it has become exceedingly rare. Instead of most companies having a tacit agreement to keep offering poor service, we need to see more businesses buck the trend. If Comcast learns from this and becomes the friendly, people-first cable and Internet provider, that will likely help it earn more money than badgering a few departing customers could.

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Daniel Kline has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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