The High Price of Bad Customer Service

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Good customer service more important now than ever beforeApple (AAPL) has earned my loyalty for treating me better than I deserved after I "dunked" two different iPhones. Too bad more companies don't look after their customers this well.

Details of the iPhone incidents are not important. Suffice it to say I was sober both times, and my wife wanted to wring my neck, particularly after the second occasion. I felt like an even bigger idiot when I lied to the Apple Store genius and told him that I couldn't understand why my $200 phone stopped working.

They saw right through my fibs both times and gave me a new iPhone even though I violated the smartphone's warranty.

That's great customer service, and as a recent survey by American Express (AXP) indicates, it's in woefully short supply.

Treating Customers Right? Priceless

According to the survey, a whopping 70% of Americans are willing to spend an average of 13% more with companies that provide "excellent" customer service. That's up from 2010 when 58% of Americans said they would spend an average of 9% with companies that treat them exceptionally well.

Sadly, 60% of Americans believe that businesses have not increased their focus on providing good customer service, while 26% think that companies are paying less attention to service.

With the growing power of customer review sites such as Yelp and Angie's List, that's a huge mistake.

Be Nice or I'll Walk

"Getting service right is more than just a nice-to-do; it's a must-do," Jim Bush, American Express' executive vice president of world service, said in a statement.

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In these tough economic times, people won't put up with subpar service because they don't have to. In fact, American Express found that 78% of Americans have quit a transaction because customer service was poor. Almost 60% of Americans have lost their temper with a customer service worker.

Bad news spreads fast, too. Data from the survey found that consumers tell about twice as many people about the times they are treated poorly compared with the times they were treated well.

What Really Irks Us

Following a customer service script isn't the way to win hearts, minds and money. The American Express survey measured exactly how annoyed we get when we can't get a human being on the horn to answer our questions:

Common Phrase
General Population Most Annoyed By This Phrase
Most Irritated Group
"We're unable to answer your question. Please call xxx-xxx-xxxx to speak to a representative from xxx team."
27%
People age 18-29: 32%
"We're sorry, but we're experiencing unusually heavy call volumes. You can hold or try back at another time."
27%
People age 50+: 34%
"Your call is important to us. Please continue to hold."
26%
People age 50+: 29%
Source: American Express.

Good companies don't need surveys to tell them that treating people right is good for business. For example, my family and I recently ate at one of the most mismanaged McDonald's (MCD) we had ever seen. As an experiment, my wife decided to vent her frustrations over Twitter. Less than an hour later, someone at McDonald's tweeted back and asked us to fill out a customer comment form. What made the gesture particularly noteworthy was that it happened on a Saturday.

Customer service is like the weather because everyone talks about it. But unlike the climate, it's a problem that often can be easily solved.

Besides dining at McDonald's, Motley Fool contributor Jonathan Berr owns shares of McDonald's. Follow him on Twitter @jdberr. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of McDonald's and Apple; and creating a bull call spread position in Apple.

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