Quaint notion, Jon. But we all know that such things happen all the time in all kinds of enterprises these days. And nobody knows better than Fornell. A professor at the University of Michigan Business School, he created something caned the American Customer Satisfaction index (ACSI) three years ago. The index which is based on regular interviews with 16,000 customers of 200 companies in 33 industries, has shown declining satisfaction with service in each quarter since it began. It’s Everycustomer’s lament: if this is a service economy, where the heck’s the service?
Don’t get us wrong, Fornell says. We’re not a nation of spoiled gripers with impossibly high expectations. Repeated readings of the manufacturing side of the U.S. economy show we’re just as happy with hard goods now as we were: in 1994, the ACSI’s first year. And we think a few services (parcel delivery and express mail) have even improved. But the rest of the picture looks grim–from banks and hospitals to fast-food chains, from telecommunications giants to the department stores at the mall. On a scale of 1 to 100, the ACSI shows that our overall opinion of the service we get has dropped steadily, from 74.5 in 1994 to 70.7 now. Satisfaction with local phone service has sagged from 79 to 75; with airlines from 72 to 67; with h6spitals from 74 to 67. Fail-grades? Yes indeed, says Texas A&M University’s Leonard S. Berry, an admirer of Fornell’s index. “Perception is reality in marketing. When managers tell me their service has gotten better, I say, ‘Maybe so. But if your customers think otherwise, you’ve got a problem’.”
Nobody has more infamous service woes than the airlines these days. Three weeks ago United stunned its competitors (and some of its own employees) by dropping its 30-year-old “friendly skies” theme for a riskier message–admitting flying’s a hassle. The campaign takes some remarkably contrarian shots at Madison Avenue flim-flam. The punchiest line: “Wouldn’t it be great if we could all fly commercials?” United pledges to spend $400 million enhancing service over the next five years, preaching a new religion called the Customer Satisfaction Philosophy.
How did customer satisfaction become such an exotic notion? The numbers in Fornell’s index look even more like F’s when you remember the lip service that’s been paid to service. We were supposed to be enjoying a fabulous experience with every retail transaction by now–at least according to all those books about super-duper getting-close-to-your-customer excellence. What did we get instead? Downsizing, re-engineering and retrenchment, say Fornell and Berry. rand while manufacturers can often replace workers with machines, that’s not usually an option for services. Some companies–FedEx, UPS, Nordstrom’s–kept customers happy despite the new pressures. Many others just got surlier.
At the airlines, according to David Coltman, the senior vice president behind United’s new ad campaign, there’s no secret about what happened. Deregulation, he says, focused the industry on three words: cost, cost, cost. In the last few years, he says, United has rediscovered that the word counts, too. Its latest research shows that 60 percent of United travelers (providing 91 percent of its revenue) say they care deeply about factors besides cost. Some competitors will believe that when they see it. “They’ve set themselves up for a huge fall,” one airline exec told NEWSWEEK last week. Phooey, says Coltman. Rivals are “wasting huge amounts of money on ads that key customers simply no longer believe.”
Customers are similarly annoyed by the hurly-burly world of telecommunications. Don McManman of Kennewiek, Wash., wanted to talk last month to the Army Corps of Engineers in Walla Walla–a half hour’s drive down the road. “What city, please?” asked the operator. “Walla Walla,” said McManman confidently. Then he was told-by five successive operators-that Walla Walla was nowhere to be found in the database. At least two of the operators, sitting at computers in Arizona, seemed to doubt its existence in the real world, too. Frontier Communications vice president Randal Simonetti, whose subcontractor in Phoenix made the error, says he’s sorry. He’s never been to Walla Walla, he adds. “And now, I’m afraid to go.”
Directory disinformation is just a minor irritant compared with the widespread service chaos created by telecom deregulation. As the Baby Bells slash prices to hold on to their once captive customers, they’re struggling to keep up with service demands –repairing outages, installing phones, even staffing service centers with something more human than voice mail. Many Baby Bells have laid off thousands of workers at the same time that customers are demanding jillions of new lines for home of-flees and fax machines–and fuming while they wait. Last year Denver-based US West managed to respond within 24 hours to only 40 percent of its customers who reported a phone problem. This year it’s up to 80 percent after an emphasis on service ordered at the top. That’s still not good enough, says Bob Knowling, US West’s “Mr. Fixit,” who was hired away from Ameritech. That means there are still 20 percent of our customers whose moment of truth with me isn’t an enjoyable experience," he says.
It’s not just downsizing and deregulation that causes the problems. Ask Christopher Andersen, an author in Litchfield, Conn. His bank repeatedly loses his entire retirement account, and his mortgage company keeps sending his bill to somebody else. Last December, Andersen ordered a $129 breadmaker. from Filene’s Telephone Shopping Line for his wife’s sister’s wedding anniversary. The breadmaker arrived on time, wrapped smartly in silver paper, at two addresses his sister-in-law’s and his own. When Andersen shipped his unit back, ‘Filene’s couldn’t find it for months and kept demanding payment for both. “We regret our error,” says a Filene’s spokeswoman.
Fornell thinks lousy service distorts our picture of the economy. Prices may look the same, but a dollar doesn’t buy the same service it used to. The result: inflation may be higher than we think. For now, Fornell isn’t getting as much of a hearing as he’d like in the United States. So he’s meeting with European Union officials to help start customer-satisfaction indexes in EU countries. He helped launch one in his native Sweden in 1989. Folks seem more receptive to his ideas in Europe, he says-when he can get there.
