In one of the episodes of Clarkson's Farm, Jeremy Clarkson attempts to record a new born calf with DEFRA (Department for Environment, Food & Rural Affairs). This is a task carried out by phone and is automated. At least it attempts automation because you are instructed by recorded instructions to match identifying numbers of the mother cow with new numbers for the calf. Clarkson struggles just as we are led to believe most farmers do when attempting this required procedure. Clarkson is so angry with the difficulty of performing this task that when asked in a subsequent interview what changes he would make to improve farming, he immediately says “close down DEFRA”.
DEFRA is a government agency and it doesn't have to deliver great customer experience. It probably believes there is no incentive for it to spend money developing an easy-to-use system because there is a legal obligation to register cattle whether you like it or not.
Government departments and monopolies do not provide us with many examples of excellent customer experience. They are in the privileged position of having might on their side. We live in Manchester and suffer appalling rail services from TransPennine and Avanti West Coast. It is not unusual for a third of the scheduled services to be late or cancelled.
Now we know that in competitive markets great customer service leads to satisfied customers, loyal customers and higher profits. It reduces customers’ price sensitivity and it reduces related costs. Could this be the case for monopolies?
Abhi Bhattacharya, Neil A. Morgan, and Lopo L. Rego, three American academics, explored the relationship between customer service and profits by utility companies in monopolistic markets. They used customer satisfaction data from the American Customer Satisfaction Index of US public utility firms between 2001 and 2017. They found that there was a positive link between utility firms’ profits and levels of customer satisfaction. High levels of customer satisfaction meant the utility companies’ costs were lower. They didn't need to spend money dealing with customer complaints and they could readily implement changes because they had the trust and goodwill of their customers. The companies in the sample were huge and an improvement of just one point on a 100 point satisfaction scale was associated with an average of $29 million per annum in savings per company in operating costs.
So, wake up DEFRA, wake up TransPennine and Avanti West Coast. You could make your life a lot easier and your operations more efficient and profitable if you recognise that great customer experience isn't just a nice to have, it really will benefit your organisation.