The Quantum of Customer Service

I’m not a big fan of seeing movies on opening day. It’s always a zoo, and the movie will look exactly the same way two days later. But for certain films, waiting two days is not an option. Quantum of Solace qualified.

So I got a group together (which included fellow Overthinker Stokes), we bought tickets online, and we showed up at the AMC Loews Kips Bay an hour early. I was so busy debating the number of times Daniel Craig would appear shirtless, I didn’t really notice that they were keeping us in the line for a suspiciously long time. Finally, an annoyed murmur made its way through the crowd: technical difficulties in the previous show, broken projector or something.

Now, this happens. Totally understandable. But what happened next, I take issue with: they offered us all either a pass to another movie at the same theater, or a refund of the ticket price.

I suppose in a manner of speaking, this is fair – they were unable to provide a service, they refunded our money. But everyone there wasted about two or three hours, between going to the theater, waiting in the line, and then drifting off to whatever the evening’s Plan B was. This was a big inconvenience and a big bummer. And while a refund might have met some minimal standard of fairness, it didn’t seem like AMC Loews was really trying to apologize.

That’s probably not by accident. AMC Loews is a big ol’ company, and I bet they’ve thought through their options here. They could have given us a consolation prize, like two free passes each, or a voucher for free popcorn. That would cost them money, but gained them goodwill.

But does anyone pick a movie theater based on your feelings towards the management? Of course not – you pick a movie theater based on location and showtimes. People don’t even really pay attention to the corporate identities of their movies theaters – you just ask Fandango what your choices are and go to the most convenient one.

Contrast this to the restaurant business. A restaurant lives and dies by word of mouth. People need to like the restaurant to recommend it. And while a lot of the restaurant experience is food, bad customer service can be the kiss of death. That’s why if you don’t like the wine, you can send it back, no harm no foul.

And now we’re getting back to Philosophy 101. A lot of the time, people act  ethically not because it’s the right thing to do, but out of an enlightened self-interest. Being a good person brings you good things. Similarly, “the customer is always right” sounds like an ethical position, but it’s really just good business. Here’s Adam Smith from The Wealth of Nations:

The real and effectual discipline which is exercised over a workman is that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.

But if circumstances change so customers will continue to use your business even if they don’t like you, then why bother trying to get them to like you?

A good example is the airline industry. It used to be (pre-internet) that it was nearly impossible to compare prices between every available airline. You’d either just call your favorite one and book a flight, or let a travel agent do the comparison shopping for you. Either way, the airlines had a lot of incentive to make you like them. Of course, they didn’t always succeed, but at least they tried.

Now, thanks to the web, people can pin down the lowest priced flight, regardless of airline. Once you know that one flight is $30 cheaper, it’s hard to pass it up just because they were rude to you last time. And as a result, airlines start cutting amenities and generally treating people like crap. If all people are looking at is the price, than cutting customer service is actually one of the best ways to save money.

We like to think of good customer service as our inherent right. But customer service is another item on the ledger, and as a result, it’s subject to the principles of economics. We get exactly as much customer service as is consistent with maximum profits.