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Humans are basically powerless when it comes to undercutting corporations

When you have a bad customer service experience, normally you think “Well, that sucked.” Some people also think, “If I complain to the company, or maybe talk about it on Facebook, or maybe tell my friends, then that will hit the company where it hurts and maybe next time around it will be better.” (The latter is a bit more proactive of an approach.) It turns out that none of it matters at all. Here’s the American Customer Satisfaction Index. Here are the 190 brands they ranked in terms of, well, customer satisfaction. And now, here’s a chart of customer satisfaction vs. stock returns, with a regression line thrown in for good measure:

Regression

In case you forgot about mid-level statistics, basically the trend here is downward. In other words, the most-hated companies make the most money. It gets more depressing. This is from the author, who’s the head of research for Business Week and Bloomberg TV:

More specifically, notice the R-squared is basically zero—there’s no statistical relationship between customer-service scores and stock-market returns. Your contempt really, truly doesn’t matter to these companies, with no influence on the bottom line. If anything, it might hurt company profits to spend money making customers happy. For cable-TV providers, an industry whose customers famously have few options, happy users could be a waste of money and bad for shareholders. And so many of us angry subscribers are also the shareholders through, say, our retirement accounts.

Big names like Salesforce have been telling people that customer service does impact the bottom line — and this is a generalized, fairly logical idea that being nice to your customers will ultimately help revenue (companies like Amazon and Zappos are essentially based on this idea) — but apparently, at least in this context (and granted, this was done off 190 brands), it’s not true. It can work the other way, but here it appears that there’s no real tie between customer service and stock-market returns. So that tweet you’re about to send flaming your cable company? Save it take a picture of your lunch instead. It might have broader resonance.

Ted Bauer

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