Customer service. As customers, we say we want it—indeed, demand it. But are we willing to pay for it? Peter Gurney and Lisa Goodman have helped companies like Starbucks, Expedia and Westin Hotels & Resorts sort through customer service strategies for years. They're writing a book titled The End of Service: Rewriting the Relationship Between Your Company and Your Customer, which questions the central tenet of the service literature—that good service is profitable. A better approach, they claim, is to say that profitable service is good. Executive Travel asked Gurney and Goodman to explore the state of customer service in 2005—for customers and companies.

Service isn't what it used to be. But then, it never was. Customers have always complained that service was better in the old days, and a hundred years from now, they'll still be saying the same thing.

Nevertheless, it is certainly true that the service we receive is changing, often in dramatic and fundamental ways. Where once we were helped by humans, we now interact with machines. The live assistance we do receive is often from rented staff located half a world away. Airline meals have shrunk to a bag of peanuts, and even the bags are getting smaller.

Who's responsible? We are, of course. As Pogo used to say, "We have met the enemy, and he is us."

Over the past 20 years, we customers have taken most cherished notions of loyalty and the value of good service and turned them on their heads. Even as businesses built strategies around customer intimacy, loyalty and delight, customers were proving themselves to be fickle, unfaithful and cheap. It isn't that we don't want good service. We love it, so long as it's free. The fact is, customer service could improve overnight. Just get out your wallet.

So, if these changes are simply a matter of market forces at work, it's all for the best, right? Maybe. The problem is that neither customers nor businesses are being honest about the situation. Customers continue to complain about service quality and dream about the good old days, when flight attendants fluffed pillows and no one had to enter a 16-digit account code to reach a recording.

In the meantime, companies continue to tell themselves fairy tales about loyal customers who stick with them through thick and thin, like trusty pets. Worse, they send mixed messages, both to their customers and to themselves. Read just about any corporate Web site, annual report or strategic plan, and you will see pages of flowery language about "exceeding expectations every time" and "creating a superior customer experience." In the meantime, these same companies are busy finding new ways to reduce services and tack on charges every time a customer makes eye contact.

This phenomenon is particularly evident in the world of travel and hospitality. A popular hotel chain proclaims on its Web site, "Our goal is to deliver in every interaction an experience that builds positive, long-term relationships with you, our customer." It does not mention the complaints from guests about undisclosed charges, from jaw-dropping fees for local calls to "resort amenity" surcharges for maintaining the swimming pool.

What we have here is failure to communicate. In the spirit of restoring goodwill to the marketplace, we would like to help customers and companies see eye to eye. To that end, we offer a few honest disclosures from both parties.

A message from customers to companies

1. Forget about loyalty.
We're not talking about the type of loyalty that companies pay for through air mileage and travel award programs. You're welcome to that kind of loyalty, so long as you don't mind our giving it to all your competitors at the same time.

What we're talking about is the kind of feel-good loyalty that is so attractive to service experts and management consultants. In their view, loyalty is an emotional bond that causes customers to stay with the company longer, buy more, pay higher prices and recruit their friends.

Loyal customers are special because they stick with a company through thick and thin. The operative word here is "thin." There is no virtue in sticking with something through thick. It's only in the face of thin—temptation or failure—that we get to prove our loyalty.

For customers, temptation comes when a competitor offers a better value. Failure comes when the company makes a mistake. Therefore, loyal customers are people who stick with a company when they can get a better deal elsewhere or when the company does a bad job.

For a business traveler, or in fact any customer, this makes no sense whatsoever. We may harbor the occasional fond feelings for a company, but in the long run, our relationship is economic, not emotional. Why should a rational customer be willing to sacrifice for the sake of a corporation? It's a fantasy invented by consultants, who, at the end of the day, are no more loyal than anyone else.

Nevertheless, companies consistently overestimate our loyalty while underestimating our ability to make rational business decisions. Sorry to disappoint you, but we're in it for the best deal. If you really want loyalty, invest in the Chicago Cubs.

2. Delight us in moderation.
Some years ago, the word went out that customer satisfaction is passé. Satisfied customers, it seems, are apt to slip off to the competition at any moment. The only to way to be sure of keeping our business is to delight us.

Many companies took this to mean that they should exceed customer expectations every time. Like the town of Lake Wobegon, where all the children are above average, these companies never simply meet expectations. Instead, they have to create a memorable event in the mind of every customer who walks through the door. Sounds nice. Unfortunately, it's preposterous. If you always exceed expectations, then expectations will simply rise. Eventually, the employees will be dancing in the aisles to get our attention.

Despite the silliness of the idea, an untold number of companies have jumped on the customer delight bandwagon. The results have ranged from comical to horrifying: persistently perky restaurant staff, perpetually grinning grocery clerks, car rental employees who beg us to give them perfect marks on customer surveys. Legions of service workers are determined to become every customer's close, personal friend.

The fact is, we don't want to be delighted all the time. It's exhausting—not just for customers, but for employees as well. Every consumer receives service dozens of times a week from a wide range of companies, and most of those service interactions are, and should be, routine. We want service workers to be efficient, helpful and pleasant—but please, back off.

The key to achieving customer delight is not excess, but opportunity. While most service is routine, every once in a while a situation arises that is out of the ordinary: a complaint, a question, a special request or a chance for an employee to go the extra mile. If employees are trained to look for these opportunities and empowered to act on them when they appear, we will be delighted at the right time. These experiences will furnish us with stories about the company's exemplary service, and eventually, the word will get out. But when it comes to delight, a little goes a long way.

3. Focus on our bottom line
OK, so we customers are unfaithful and maybe a little grumpy. Just what do we want? We want the same thing companies want: profit (or call it "value" if you wish; it comes to the same thing). That means reducing our perception of cost or increasing our perception of revenue.

Companies can do this with service. First, lower our cost of doing business with you by saving us money, time, effort or risk. Find us a cheaper option. Solve our problem on the first call. Educate us, so we know how to take advantage of your services. Make a recommendation and back it up with facts. All of these things improve our bottom line and make it more likely that we'll come back.

You can also increase our perception of revenue. Give us an instant upgrade into first-class or a suite once in a while. Give us a free glass of wine or extra points. It doesn't have to be much. Like yours, our margins are razor-thin nowadays. Watch out for our bottom line, and we'll start looking very much like loyal customers. But don't be fooled. For us, it's just business.

A message from companies to customers

1. Expect more automation.
We have all watched enough episodes of The Twilight Zone to know that replacing humans with machines is evil. But automation and self-service are not going away, so long as you keep pushing us on price. And let's be honest—machines really aren't that bad. They're never rude, they're pretty predictable and they're often more convenient than dealing with people.

Customers typically resist automation at first, then come to accept it and eventually to demand it. Who doesn't like Web check-in for flights? Or express check-out at hotels? Or ATMs?

We admit that phone trees and voice response units are annoying. But consider the alternative. Years ago, you could only call during office hours, and even then you got busy signals and unanswered lines. Was that really more pleasant or convenient than navigating through a phone tree? As much as customers complain about the quality of service nowadays, the fact is that the quantity of service has been increasing for years. Customers have far more opportunities to be served than they had in the past, which may be a fair trade-off for a little less human contact.

2. No more free rides.
Service is going to cost you. It always has, of course, but now you're going to see the line items on every bill. Travelers are already getting hit by service charges at every step of their trip. Book your flight with a live agent, and you'll pay extra. Order room service, and you'll be charged a delivery fee, a service fee and a premium for the food (and you'll still feel obligated to leave a tip). You're charged a stocking fee if you use the mini-bar and a surcharge for the workout room.

This practice will continue to grow, although we will fine-tune the specifics based on how loudly you complain. It may be painful now, but as customers get used to service à la carte, they will realize that it gives them more control over what they pay for. And it will also allow us to stay in business, which is better for everybody.

3. Learn to be profitable.
You will be happy to know that all the personal information you've been giving us over the years hasn't gone to waste. We're finally getting the hang of these Customer Relationship Management systems we were sold, and we're putting them to good use. Through data mining, statistical modeling and fairy dust, we can now predict your Lifetime Customer Value, which tells us how you ought to be treated.

It's as if we took a sample of your blood, ran a DNA test, and figured out what you will be when you grow up. The drawback is that you don't get to see the lab results.

You may be the one who always gets the upgrades. On the other hand, your life may be a series of middle seats. When you call us, you may be instantly connected to someone with a Ph.D. in customer service. Or you may be sent to phone-tree Siberia, where hold times are measured in decades. It all depends on your statistical potential.

If you want to change your classification, you'll need to learn how to be a good customer. The better you understand our profit model, the more success you'll have upgrading your profile. Eventually, we companies may figure out that it's not to our benefit to keep you in the dark. In the meantime, you've got your work cut out for you.

There you have it: Some honesty to help us get along better. With a little more understanding, we can all profit in the end.

Peter Gurney and Lisa Goodman are customer service consultants in Seattle, Washington.

Service by the numbers.
The statistics of satisfaction.

Some of the most widely quoted research on customer service was conducted by a company called TARP in the 1970s. Since then, much of the research has been updated, with the original numbers often confirmed—but sometimes modified. These key findings and updates shed light on the fickle consumer:

TARP's original study found it was five times as expensive to win a new customer as to keep a current customer. Since then, TARP has found the real ratio of cost to win a new customer vs. retain a current customer varies from 2 to 1 to 20 to 1.

One set of data often attributed to TARP is the reasons why customers leave. This so-called study reports that 2% of customers die, 5% have personal reasons, and the rest are lost due to poor employee attitude. However, the research shows only 20% of dissatisfaction is caused by employee actions, 40% by corporate products and processes which have an inherent unpleasant surprise for the customer, and up to 40% are caused by customer mistakes or incorrect expectations.

On average, across all industries, 50% of consumers will complain about a problem to a front line person. Only 1-5% of customers will escalate their complaint to a local manager or corporate headquarters.

An 800 number at corporate headquarters will, on average, double the number of complaints getting to corporate. However, only one out of 100 to 500 will actually be addressed to a senior executive.

On average, twice as many people are told about a bad experience with a company than they are about a good experience.

Residents of the New York City region complain 3.4 times as often, on a per-problem basis, as the national average, while those in Washington State complain half as much as the national average.
—Nancy Branka

How unhappy are you?

Our first reader service survey counts the ways.

Think customer service has declined, and you're peeved about it? Join the club. Executive Travel readers were asked to complete a survey about customer service that was mailed with our last issue. Here are some key findings from readers:

Compared to ten years ago, the majority of Executive Travel readers* believe that customer service has become worse (62%). Only 2 in 10 readers feel customer service has actually improved.

Readers blame budget airlines for decreased levels of customer service in that industry. There are fewer amenities (e.g., meals) and attention to detail and service. They feel the airline industry is driven solely by low price and profit today, rather than service.

The effects of 9/11 are also to blame. The plethora of airline budget cutbacks and employee layoffs has resulted in fewer staff doing more work—and these employees are underpaid, over-stressed and grumpy. Heightened security measures, although necessary, also lend to readers' ill perception of customer service today. Business travelers spend much more of their time standing in lines at the airport compared to 10 years ago. Many also mention that TSA employees are rude and poorly trained.

Although technology has made business travelers' lives easier in many respects (online check-in, boarding passes, flight status check, online travel booking, etc.)—given the advent of "Internet everything" and automated phone reception, it's nearly impossible to speak to a live person who can actually help you solve a problem.

The top brands that come to mind as offering exemplary customer service are:

Marriott Hotels: mentioned by 18%
American Express: 17%
Southwest Airlines: 17%
Ritz Carlton Hotels: 13%

Two-thirds of readers would be willing to some extent to pay more in order to receive better customer service (27% "strongly agree," 49% "somewhat agree").

Readers would be willing to pay a 13% premium in order to receive superior customer service in the airline, hotel and restaurant industries. They're willing to pay less than half that much more for great service from a car rental company or train. Many readers do not use train service.

Executive Travel readers typically tip waiters 18%. They'll give bellmen and airport porters $2/bag (or $5 total). They tip cabbies the least, about 14% of the fare.

The majority of Executive Travel readers (51%) believe technology has helped improve customer service. However, 1 in 4 (27%) believe technology has made it worse.

Readers consider the most important customer service enhancement to be having immediate access to a live person (2.20 rating, 1=most important). Similarly, they want faster access to customer support via phone (2.86). It's all about being able to find someone—fast—to help them when they have a problem.

The ability to upgrade their airline seat or hotel room is middle-of-the road in importance. It's a nice perk, but not more important than having their issues addressed and remedied.

Two-thirds of readers believe that e-check-in at the airport and e-tickets in general are most responsible for improving their business travel experiences (64% claim that each service has "improved their experience a lot").

Two-thirds of Executive Travel readers (67%) claim that the customer service experience they have with a company is "extremely important" in influencing whether or not they do business with that company again.

When they experience poor customer service, readers are equally as likely to say nothing, but never do business with that company again (34%) or escalate their complaint to a supervisor (33%). Nearly 1 in 4 (23%) claim they take the time to write a letter to the company to complain.

The best advice Executive Travel readers can give their fellow frequent airline travelers in order to ensure they receive good (or better) service: smile, stay calm, be polite and find someone who actually has the authority to help you. As one subscriber put it, "You get more bees with honey than vinegar."

* Note: the term readers refers to the respondents to this survey.