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Home > Blog > Companies I Am Looking to Dump
Out of Our Minds
Wednesday, March 29, 2006 3:39 AM
Companies I Am Looking to Dump
David Batstone on Business

How likely is it that you would recommend a company with which you do business to a friend or colleague?

That one-question survey likely serves as the best metric of customer satisfaction. So many customer satisfaction surveys are opaque and bury as much data as they reveal.

In a commentary published in The Financial Times last week, Fred Reicheld and James Allen - consultants with strong ties to Bain & Company - argue that a direct satisfaction metric helps a company focus on earning customer loyalty. General Electric and American Express agree, according to Reicheld and Allen: '[They] focus on one statistic that nets the percentage of customers who are unhappy (scoring 0-6 out of 10) from the percentage who are loyal promoters (scoring 9 or 10). The Net Promoter Score [NPS] provides a single number as clear and actionable as net profit or net worth...GE ties a significant portion of managers' bonuses to meeting NPS goals.'

The FT essay got me thinking about which companies I do business with, and my level of satisfaction and commitment to them. Indeed, my ratings on these two areas show my willingness not only to recommend the company to a friend, but also how likely I would be to bolt the stable if an attractive competitor came along.

My insurance company would be the first to go. I presently am insured with California State Automobile Association (popularly known as Triple A) for both home and auto. Last year I had a burst water pipe in my home that ruined some flooring and insulation, so I made a claim and had some repairs done. Now my insurance premium has risen significantly. When I called in to ask why it had gone up so much, I was reminded that I had made a claim. I can't believe that I am 'penalized' for making a home claim. It's not like I rammed into somebody with my car. It really begs the question: Why do we have insurance anyway? We end up paying one way or another for the insurance we do use. Like the premiums we pay are what we owe the insurance company, rather than money that they hold for us in security.

Sadly, I have not found a single insurance company that I admire. But if an insurance company came around that offered real value and fair exchange, I would switch in a second. Capricious pricing in the insurance industry contributes to my dissatisfaction. Because pricing is so arbitrary, we feel like we are getting gouged (and we likely are). \n\nI feel the same about my cell phone bill. It is so obtuse that I am not sure exactly what I am paying for. I currently use T-Mobile, and have passed through Cingular and Sprint with good riddance. Frankly, most customers are in the wrong mobile calling plan and overpay for their usage. \n\nReicheld and Allen make reference in their FT commentary how a cellular phone operator calculated that if it put customers in the plan that was best for them it would cut their profits 40 percent. No wonder most of us would give our cellular phone company the heave if we did not get hit with a high penalty for doing so. Some of us scratch digits on our wall counting the days until we are free from our plan.\n\nBanks also nickel and dime us to death with fees. Retail banks now depend on extra fees for as much as a third of their earnings. They may gain revenue in the short term, but with their rapacious attitude banks are doing major damage to their customer loyalty (see the J.D. Power study on the right column of today's WAG).\n\nFinally, high on my list of 'do not recommend' are service workers - plumbers, electric garage door repair, auto mechanics - who double charge me for fixing my problem. It's a trend: I received a bill last week for 'service' and 'labor.' When I asked the mechanic to explain his bill, he said 'service' was simply taking a look at my problem, and labor was actually doing something about it. Check them off my list.\n\nCustomer service would change if companies realized that satisfaction and commitment of their customers had a direct impact on their bottom line. Reicheld and Allen demonstrate that damage to company reputations and poor service throttles business success. They relate the experience of Enterprise-Rent-a-Car. Branches with higher customer satisfaction scores grow faster and are more profitable on average than branches with lower scores. For that reason, Enterprise branch managers receive their customer satisfaction scores - from the simple one-question survey - every month along with their income statements. Enterprise employees working in branches scoring below the corporate average are ineligible for promotion. \n\nNow that's taking customer satisfaction seriously.\n


Monica Ricci - 5/7/2006 11:56:23 AM
Ack! The cable company. Let me just say I know I choose to have cable, so I should stop whining. But dang it's pricy. A little competition would be nice, but alas, it is not to be. As for companies that I love, my insurance company, believe it or not, always scores high marks with me. I have USAA, which is a not-for-profit company which serves only military officers and their dependents. It's consistently rated very high with AM Best, and I've been a very happy member with USAA since 1987. Plus, every year I get a refund check which is a nice little bonus. ~Monica
Suzanne - 3/30/2006 12:01:21 AM
It's not just Triple A, your experience of being hit with significantly higher premiums following filing a claim is similar to many people whom I know. It is is not a new practice either. I have heard such horror stories wherin the home or auto owner ends up in a year or two having paid in raised premiums what it would have cost to simply have paid for the repair themselves,except that the higher premiums and the strike against you for having filed a claim continue well past the point of the cost of the claim.

So, even though I have suffered various losses, I have never made a claim. And I would not unless it was total devastation.

And then there is what has happened to Hurricane victims: folks in Florida, Louisiana and Mississippi have been denied rapsirs do to mold damage caused by property remaining waterlogged. Even though ther is nothing in the policies saying mold damage is not covered, the insurance companies are claiming it is not covered. Many houses have been condemned by health officials for toxic mold growth, yet the homeowners cannot collect from their insurance companies. I also have firends who are buying a home in Florida who are finding it impossible to even get insurance. The answer they get is that the company is no longer writing policies there.

So, back to your question -- what is the point of insurance if it conducted like this?

ing Small Business for People, Community, and Place (Hardcover)
by John Abrams,
Janet Auty-Carlisle - 3/29/2006 11:40:37 PM
Oh man where do I start? I will leave this at one for now...on the news that Anita Roddick of the Body Shop has sold out to L'Oreal...that's it, we're done..I cannot support a company whose premise was based on no animal testing, recycling and more and who now are saying...'We are looking forward to teaching L'Oreal all about the reasons to not test on animals...' while still allowing their products to be sold by them...give me a break...I am once again searching for a company that doesn't test on animals, uses organic, encourages small business and recycles....Help anyone? ps...I live in Canada....Living la vida fearless, and today, frustrated, Jan
Whitney - 3/29/2006 1:45:48 PM
I would ditch my cable company, both at the local level and the parent company level (Adelphia).

Next to go would (and will) be my credit card company.

Companies I'd keep: my car insurance company (Geico -- 23 years of genuinely hassle-free auto insurance) and my neighborhood bank.
Grant Henninger - 3/29/2006 11:29:33 AM
All these companies are doing is cashing out on their brand equity. It's no different than selling off a factory. It just decreases the companies future ability to grow in exchange for higher profits now.


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