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The Efficient Relationship Paradox

The New Yorker wonders why firms are more willing to sacrifice customer service departments on the altar of cost-cutting when bad customer service can be devastating for them [See Dave Carroll: “Dave Carroll’s ditty about United Airlines has racked up 3.7 million hits on YouTube and caused the airline’s stock price to plunge by ten per cent, costing shareholders $180m.”].

The real problem may be that companies have a roving eye: they’re always more interested in the customers they don’t have. So they pour money into sales and marketing to lure new customers while giving their existing ones short shrift, in an effort to minimize costs and maximize revenue. The consultant Lior Arussy calls this the “efficient relationship paradox”: it’s only once you’ve actually become a customer that companies put efficiency ahead of attention, with the result that a company’s current customers are often the ones who experience its worst service. Economically, this makes little sense; it’s more expensive to acquire a new customer than to hold on to an old one, and, these days, annoyed customers are quick to take their business elsewhere. But, because most companies are set up to focus on the first sale rather than on all the ones that might follow, they end up devoting all their energies to courting us, promising wonderful products and excellent service. Then, once they’ve got us, their attention wanders—and Dave Carroll’s guitar gets tossed across the tarmac. ♦

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