This parrot what I bought not half an hour ago…

I trust all my readers are familiar with the classic example of customer service that is Monty Python’s Dead Parrot sketch. If not watch it, I’ll wait.

One of the things we take for granted, more or less, in today’s Free Market Capitalistic world is that if we get something that doesn’t quite work right, we can complain to the provider and expect that it will be fixed/replaced etc. A while back over at Samizdata, Brian Micklethwait documented his attempts to purchase a new monitor and, in the process of describing his problems with overheating Samsung S24F356 monitors, drew some useful lessons about the difference between goods and services obtained via the free market and those provided by the state or (a state supported/enabled) monopoly. He is absolutely correct but I think it is worth expanding on what he writes without getting bogged down in the problems of overheating Samsung monitors or Curry’s PCWorld.

One lesson sales and marketing folk are taught is that it is far more cost-effective to retain an existing customer than to try and get new ones. This means that it is often worth going beyond any legal duty to respond to a valid complaint. This is particularly the case in today’s internet connected world of Yelp reviews, tweets and so on, because the complaining customer may blog, tweet etc. his dissatisfaction and have it be picked up by other potential customers. When companies don’t do this (coff United Airlines coff) they tend to lose future business. On the other hand when they do, they significantly raise the chance of positive word of mouth advertising that creates loyal customers. Amazon is a great example of a company that does this (usually).

It is worth considering examples of excellent customer service that I experienced recently. We were visiting Bath, UK and I screwed up the hotel booking so that when we showed up where I thought we had booked it turned out there was no room at the inn. However I’m very happy to recommend SACO Bath for others because the gentleman who gave us the bad news there also told us that the Gainsborough around the corner was available and even rang up to confirm that. SACO Bath is a relatively inexpensive hotel, the Gainsborough rather less so, but they offered rooms on a last minute basis at a not too nose-bleedingly high rate and given that it was the end of June and Bath was heaving with tourists there I decided to book there rather than faff around looking for other hotels that might well be worse.

I’m very glad I did so because the Gainsborough earned every penny of their room rate. It is a magnificent hotel in a listed Georgian building (actually I believe it is officially two adjacent ones) with courteous and helpful staff and its own spa with water from the underground springs that have been the reason for people coming to Bath for the last 2000 years. One of the great things about it is that, unlike many high-end hotels, it doesn’t screw around trying to charge you extra for every little thing. As it says on the website, each room has (my underlining):

Complimentary WiFi • Tea and Nespresso coffee making facilities • Flat screen television • Powered safe • Complimentary minibar • Asprey toiletries • 24-hour room service • Guest laundry service • Sky Sports TV • In-room climate control • Selection of international newspapers • Complimentary Bath House experience at the Spa Village, with access to the natural thermal pools from 7am to 9am and 8pm to 10pm

I’ve stayed, on occasion (and generally on someone else’s dime), at other high end hotels and it is my general experience that what you end up paying at the end of the stay is considerably higher than the quoted price because they add on fees for internet access, resort access, minibar, water etc. and in fact often they add those fees even if you don’t use the service. The only thing the Gainsborough charges extra for is breakfast (of which more later) and, essentially, parking, because there isn’t any so after you’ve dropped off your bags you have to drive to the Southgate car park and park there at your own expense for about £15 a night. The staff gave us suggestions about what to see, how to get there (walking in our case) and drew attention to the closing times so that we got into things before they shut. They offered to sort out a restaurant reservation, either at the attached super posh restaurant – £60 for a 6 course tasting menu looks to be excellent value and we may try it when return – or somewhere else, but we decided to just walk and see what met our fancy. When we returned the bar staff were happy to make my wife a custom cocktail and offer various single malts for me before we retired to our room.

The only fly in the ointment really was breakfast.

This was delicious, but luxuriously priced at £25 for the cereal/toast etc. buffet and £30 if you wanted a proper fry up. Given that the same place does a Sunday Roast Lunch for the same price as the fry up this did rather fly in the face of the “everything is included at a reasonable price” of the rest of the stay. However, despite this, I have no hesitation what so ever in recommending the place if you want to visit Bath despite the cost of breakfast, because when I complained about it in the feedback website they provided I got a personal response from the hotel manager saying that he would look into this. I’m fairly sure that this will indeed be attended to because the level of response to my gripe on the feedback form was exceptional outside Japan.

Talking of which.

I’ve had various people ask why I would like to like in a country where I’m (visibly) an alien and which has a reputation for being both expensive and somewhat racist. The answer is simple. Things “just work” and when they don’t you can complain and the person who sold it to you comes around and fixes it – generally for free.

It’s true that yes you do pay more upfront but Japanese manufacturing has spent 70 plus years paying attention to detail (sometimes excessively so) and to product quality and that has resulted in high expectations from Japanese consumers. The improved reliability and install quality means that things last longer and you don’t have to call for a plumber/electrician/mechanic or similar to fix your new purchase shortly after you took it home. People in Japan take pride in their work and what they produce. In the 1950s/60s “Made in Japan” meant cheap and probably not very reliable. Now it may still be cheap(ish) but it will not be poor quality because most businesses in Japan have internalized the concepts of attention to detail, zero defects, employee empowerment and so on. (Employee empowerment is a great way to incent people to be proud of what the do, which in turn means they’ll want to make sure what they produce is good quality).

It is notable that places where you can complain tend to be places where you get better service, and places where you can complain tend to be where there is competition between suppliers. It is of course noteworthy that government services are very rarely a part of a free market and that it is rarely any good complaining when said government services don’t work. Hence all the (usually justified) jokes about the DMV and their robust attitudes to dissatisfied customers and also from the old monopoly telecom days “We don’t care. We don’t have to. We’re the Phone Company“.

To go back hotels, here’s another hotel story. Once upon a time I went to the Soviet Union and we stayed in a hotel that was uniformly horrible. The shower barely worked, the lifts smelt of sewerage and so on. There was no point in complaining or even writing a bad review because there was no choice. You paid a reasonably exortionate amount and Intourist booked you in the hotel it felt like booking you in for that money. You got the food they felt like offering and your choices were limited to borsht or borsht. And so on. Assuming the same hotel exists today (it has I hope been knocked down and replaced) I’m sure it provides better service and more choice because even in the not terribly free markets of modern Russia there’s enough competition and enough feedback by means of yelp/trip advisor etc. that if the shower doesn’t work and the lift smells of sewerage you either pay a lot less or you know to go to a different hotel. Sometimes it makes sense to stay in the garbage hotel anyway because the price is so much less. Other times it doesn’t.

You can typically tell whether there is enough competition for a particular service in a particular locality if the service providers can get away with poor service and customer satisfaction. This, by the way, is one reason Uber has done so well in disrupting the taxi trade. In many cities taxis are heavily regulated so that there is a limit to the number of taxis allowed at any one time and the drivers/owners who are in have no incentive to offer a good service because there is far more demand than the licensed taxi drivers can supply. This of course is what Uber noticed and the result is that Uber explicitly makes it easy to increase supply of drivers when demand increases so that more supply is available. Yes sometimes surge pricing causes people to be shocked but the fact is that such a flexible pricing model is key to incentivizing more drivers to offer their services when at peak periods.

Feeback loops are how things get better. Monopoly providers tend not to have them so things don’t get better. The feedback loop of the ability to complain about something is a key part of a free market / free speech environment and it is one way we incent suppliers to provide better stuff at lower prices.