Business failure because of poor customer service?

November 12, 2008 11:09 AM

Documented business failure because of shoddy customer service?

I am looking for documented cases where a business failed because of their poor customer service. The bigger the company the better. I have searched Google without much luck. Any help is greatly appreciated.

posted by mjger to work & money (11 answers total)

Well... some of Circuit City's decline has been traced back to their decision to fire all senior level retail employees in order to pay new hires less. You can extrapolate that this lead to poor customer service and fewer sales. See this article on Consumerist.
posted by kimdog at 11:33 AM on November 12, 2008

Quark (they're still hanging on, but have burned a lot of bridges; google "angry Quark customers" or visit some InDesign forums).
posted by LuckySeven~ at 11:59 AM on November 12, 2008

Seconding Circuit City. Bonus points for topicality!
posted by Jupiter Jones at 12:03 PM on November 12, 2008

What about DHL pulling out of the US? Maybe not documented, but they did have some of the worst customer service I've dealt with.
posted by cestmoi15 at 12:10 PM on November 12, 2008

Awesome, thanks. You guys are great.
posted by mjger at 12:20 PM on November 12, 2008

Sprint comes to mind. Eight years ago I had several repeating issues with my phone. Not only did Sprint send out an overnight replacement twice, they also credited my account a bit as an apology for their error.

When I added my fiancee to the Sprint family plan three years ago, sprint charged me for two lines. Every month I had to call, wait through the queue, and get my problem fixed. Which they did, but to *have* to do this every month wasted my time.

Once, I was talking to a representative that was extremely terse and said, "OK I've taken care of the issue and your bill this month will be $25.00 plus taxes." It wasn't, but I didn't find that out until the next bill arrived. I was still being charged for 2 separate lines. I've heard that management wants reps to complete calls within 3 minutes...anything longer than that and the company loses money.

Two years ago after raising text messenging rates twice in six months or so, I left the company for at&t. Sprint is hemorrhaging customers into the millions per quarter.

The last rep I talked with, to disconnect, pleaded with me to remain with sprint...offering new phones and reduced rate plans. We chatted about how the company was years ago, he agreed things had changed, and not only for the customer.
posted by bach at 12:20 PM on November 12, 2008

Well, a decade or so ago, Pacific Pipeline, an independent book distributor in Seattle, switched to a new inventory system that didn't work, making it pretty much impossible to provide any sort of customer service, despite the best intentions of their reps.

They went out of business soon thereafter.
posted by Good Brain at 12:23 PM on November 12, 2008

Seconding Sprint, they deserve to fold.

Gateway went from great to horrid, to failing.
posted by Ponderance at 12:33 PM on November 12, 2008

I can think of a number of cases where customer service severely damaged a brand. The best-known is surely McDonald's, which ran into deep trouble (by their standards) a few years ago, but engaged in an aggressive revamping and turned around.

Customer recommendation is closely linked to success, of course, and customer service is part of that.

On the one hand, customer service per se may be considered usually a secondary cause of business failures, because usually the primary cause is a cash crisis of some kind. Now, they may be related, in that bad customer service just plain indicates bad management and inattention to the business, or it may be a casualty of a cash-strapped business cutting corners willy-nilly. So finding cases where it's the root cause may be difficult, as opposed to finding cases where failure and bad customer service are merely proximate.

I'm finding via Google that a lot of airlines see their customer service go into the toilet when they approach bankruptcy, for example.

Other cases may be obscured because a successful brand buys out a less successful one.
posted by dhartung at 3:38 PM on November 12, 2008

Dell.

And I can tell stories from both inside and outside the structure. Dell made a corporate decision, after building their entire brand on customer service, that they would outsource almost their entire customer service division.

Look at the price of their stock now, vs 10 years ago. Dell will fail. It's been failing for about 3 years, ever since the massive brain drain started. All that's left at the top are sycophantic toadies and inane MBAs that should be clubbed like baby seals.

Not that I'm still holding a grudge because I had to call the VP of Legal Affairs and the Texas State Attorney general to get my business machine's warranty issue addressed or anything.
posted by dejah420 at 5:38 PM on November 12, 2008

This Delta Airlines post we wrote over a year ago is still attracting regular comments from angry customers. Whether it's causing failure, I don't know.
posted by vincentv at 5:42 AM on November 15, 2008