Last Impressions, Lost Customers
Nightmare billing processes cost companies resources as well as customers.

A. Blanton Godfrey

Not long ago, several friends and I discussed some of the dumb things companies do to lose customers. We cited a hotel with lousy showers as a sure way to leave a negative impression because customers so often shower in the morning, pay their bills and leave--usually never to return. Bad coffee is another culprit. Many pleasant evenings and good meals are ruined when the coffee comes. In such cases, customers literally leave the restaurant with a bad taste in their mouths. We all agreed, however, that billing errors win hands down.

The bill is almost always the last memory of the service event or goods purchased. An error often causes dissatisfaction, frustration and loss of the customer. Perhaps the worst part of billing errors is trying to get them corrected. The process seems intentionally designed so that correcting the problem is difficult or even impossible. We end up suspecting the company’s strategy is to harass the customer to the point where he or she writes off the loss of time and money.

In the intensely competitive cellular phone business, customer turnover is the biggest problem facing providers. Each tries to lure other companies’ customers away with increasingly attractive offers. Although they spend fortunes in advertising and promotions, they’re all apparently bent on driving as many customers away with absolutely ridiculous billing procedures. A recent New York Times article described customers’ frustration with complicated bills that were 20 to 30 percent higher than the advertised “flat-rate plan.” The companies’ excuse was that because everyone else in the business engaged in misleading ads, they had to as well in order to remain competitive.

Recently, I gave up on Cingular, my wife’s cell phone service provider, after nearly two years of billing errors. Earlier we’d moved out of state and transferred her account. For months, we received bills detailing overdue amounts, late charges and even reconnect fees. Then we’d receive a refund check from the original account. Eventually we determined that Cingular was depositing the checks into the old account, billing us for late charges on the new account and then, several months later, refunding the money deposited in the closed account. Trying to get this corrected was a nightmare.

Finally, I thought the simple solution was to cancel the service and start over with another provider. Was I naïve. Canceling cell phone service is a special nightmare unto itself. Because contacting the company via telephone is a task only for those with lots of time, I decided to write a careful letter canceling the service. In the meantime, I’d found another (by this time outdated) refund check aging in a drawer; foolishly, I included it along with the letter. Even more foolishly, I mailed both in the envelope in which I’d enclosed payment for the last bill.

I learned many lessons: Never ask a service provider more than one question at a time. Never include a letter in the envelope with the bill. Never return a check.

We subscribed to a different cell phone service and stopped using Cingular. Several months went by, and then we received another bill from them. Then another. Finally I called to find out why the company hadn’t stopped the service. The service representative was quite polite but explained that it was all my fault. I should never have included a letter in the bill, which goes to an office several states away from the customer service headquarters. Instead, I should have called or written to the address on the stub of my bill. I had the bill in front of me and asked where the address was. After several minutes, she admitted it wasn’t anywhere on the bill. Perhaps the correct address was printed somewhere on the avalanche of literature they’d sent when we’d started service.

The next catch was that customers could only stop service on certain days of the billing cycle. The service representative explained that I owed for service up to that date. At this point, even though by my calculations the company owed me about $70, I simply wanted everything to be over. I told them that if they’d just stop service, they could keep the money.

But no, it wasn’t over. The service rep kept me on the line for another 10 minutes while she calculated the final bill, verified my address and then explained that it might take several months for me to get my refund. It would be an interesting exercise to calculate the total cost in time and labor to the company that were required to straighten out this mess. And in the end, they lost their customer.

How many times does this happen every day? Most companies have incredibly poor processes for dealing with customers and correcting problems. They spend the valuable time of both their people and their customers, only to lose their business in the long run. This problem is one of those “hidden gold mines” that could be lucratively addressed through corrective action.

About the author

A. Blanton Godfrey Ph.D., is the co-editor of Juran’s Quality Handbook, Fifth Edition (McGraw-Hill, 2003), and co-author of, Modern Methods for Quality Control and Improvement, Second Edition (John Wiley & Sons, 2001).