What is the value of customer service in a monopoly?

An important justification for investment in customer service is that it is a competitive differentiator. If you serve customers poorly then they will purchase from your competitors in future, but what if you have no competition?

It’s a far more common situation than you might think. Most government agencies require a customer service function and yet there is almost never any competition for those services. Many utilities, such as water, are provided by a single company. In this case the choice is defined by where you live rather than which company you want to buy from.

A recent feature in Forbes magazine outlines three key reasons why organisations in this enviable position should still pay attention to service:

  1. Not worrying about customer service at all may breed competition. Of course it’s difficult to create an alternative tax collection agency, but some monopolies could be replicated if the regulations or rules change – utilities for example.
  2. The mistakes made by not caring about the customer interface cost far more to resolve than just treating the customer well and getting service right the first time.
  3. Your team will be less stressed and will have a more enjoyable and productive work environment if they don’t have to face a barrage of customer abuse day after day.

These are good points. I’d also add that customer expectations have risen dramatically in the past few years. People expect services to be available and easy to use, even if they have no choice of provider. It’s also far easier to complain and to collaborate with other disgruntled customers. It’s far easier to just treat the customer well than to invite organised protest!

What do you think about the importance of getting customer service right in monopoly services? Leave a comment here or get in touch via my LinkedIn.

Monopoly Justice

 

Photo by John licensed under Creative Commons

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