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The Value of Customer Service

Long Story Short

I know not everyone likes reading long posts, so if you’re looking for the reasons why customer service is so valuable and why you should consider paying more for something with better customer service, they are listed below
-Good customer service gives peace of mind to a purchase
-The company believes in their product and are willing to stand behind it
-You can tell a lot about a business by the way it treats its customers
-You don’t realize its value until you use it so think of customer service like an insurance plan: do you want the cheapest insurance plan that might pay your claim when you are in an accident or a more expensive plan that will surely pay you out

Warning: This story may sound like a rant but it will go to show why paying a bit more for a service/ product that has better customer service is worth it. Your experiences with these companies may differ from mine, but it can be very useful to search up reviews from other people as well.

My emotions in a photo

The Lenovo Debacle

It’s the year 2017 – I’m a freshman at university and need a new laptop for my classes. I do some research and really like the Lenovo Thinkpad X1 Carbon. The Thinkpad was bought out by Lenovo from IBM and it was a brand with great legacy. I bought the laptop during a great sale that Lenovo had (but looking back, the constant sales they had on their website should have been a warning sign). I bought the laptop and for the first couple of months, I was a very happy student…

Then the screen one day was just dark. It wouldn’t turn on, and with assignments on the line, it was a royal pain in the ass. Of course, I immediately called Lenovo on their customer service support line (which was extremely slow with a lot of items on its phone menu) and got in contact with an agent. I was told that they would send a box for me to send in my broken laptop and then they would send me another laptop to replace it. It seemed like it was a temporary week hiccup until…

Fast forward another couple of months and the brand new replacement laptop failed on me. Now, you may think that I am just cursed with technology (which I may be lol), but my laptop was still under the full warranty. I called up Lenovo customer service and they told me that they would just repair the product and that could take a couple of weeks until they could get it back to me. I was pretty mad because as many of you who own a laptop to do daily tasks or work know, a laptop is critical to productivity. At that point I had become an angered customer with Lenovo as their products had already failed me once. But, I bit my tongue and let Lenovo work on the repairs.

Low and behold, a week later I get an email saying “we lost your computer”. That’s when I really started losing it and got on customer support right away. They told me to hang tight while they searched for the computer and would let me know in another week if they could find it. All my personal data was on that computer and I was even told to not remove my hard drive as that would void my warranty. I still can’t believe that customers don’t have the right to remove their own drives from a security standpoint for repairs and the fact that they lost my data in the warehouse made it all the worse. For all I know, someone could have stolen the laptop and to this day, I have no idea where it went. At this point, I was looking at the timing of everything and realized that if they could continue stalling me from getting my laptop back, they could essentially give my laptop back a month or two before the warranty ran out. Note: Lenovo warranty at the time did not reset with each replacement unit, but started based on the original date of purchase.

I knew that I could not afford for this fiasco to happen again.

I requested for a refund instead and had over a dozen calls with different agents until I was finally in contact with the regional manager of sales. I was given the option for the newest generation Thinkpad X1 (yep, with all the back and forth, a new version had already come out). I explained my situation and tried to get them to commit to their product with a year of warranty on the new Thinkpad X1, but that didn’t work out. To me, it seemed like Lenovo did not stand behind their product (…and maybe that’s why they have all those crazy sales to empty inventory). After arguing for at least another week, I was approved for the refund check which was lost in the mail (how convenient) and had to have them ship another one which I finally received.

From that day forward, I vowed to be a smarter consumer and try to buy more reliable products.

Dell XPS 13 – AKA Lenovo Debacle 2.0

At this point, you must be thinking, this guy must have already learned his lesson and is buying stuff from a more reputable company to make sure the same situation doesn’t happen again.

Well, you would be partially right. Dell is a fairly reputable company, especially in the business world for their enterprise products and great design in their XPS lineup. But, as I learned the hard way, their customer service was terrible (might I even say worse than Lenovo’s).

I won’t bore you with all the details in a rant similar to my Lenovo experience, but all you really need to know was that I had 3 Dell XPS 13’s fail on me. For those of you familiar with supply chain or six sigma in operations, having that many “coincidental” failures is really poor quality control (I recommend reading reddit for some of those stories). The failures after the first one happened from them sending me faulty refurbished products and they couldn’t even send out the exact model that I had as they didn’t have those in stock (they were being super cheap and constantly tried to send back a lower value product).

Wow, I must sound like a really bad consumer, but enough ranting…

Paying More for Customer Service

Now before you call me an Apple fanboy, I want to let you know that I have owned both Android and Apple phones in addition to Windows and Mac laptops. I’ve tried the whole spectrum and all products have their own individual strengths and weaknesses, but by far Apple has been one of the companies with better customer service experiences.

After I got the final Dell refurbished product, the first thing I did was sell it and I sold it at a slight loss because I no longer trusted the quality of that machine. I did my research and then bought a MacBook which as most people know sells at a premium for the same specs compared to a Windows PC. But, I was willing to pay extra because it seemed like Apple was more willing to help out the customer when things were to go wrong.

The funny thing is that the Mac stopped working at the end of my first week with it (there seems to be a trend with me and technology just breaking down). But unlike many of the painful customer services I had before, I was told to just go to the store and they replaced it with a brand new one on the spot. I know this was a one case scenario, but that premium I paid for the laptop paid itself off for me right there because I knew I would be covered if I were to come into tech issues. To this day, that customer service treatment has been one of the best in regards to tech, but this ideology expands to almost everything in life.

For example, with credit cards, American Express offers some of the best customer service agents in the business that actively try to help you instead of trying to always screw you over (cough cough, Bank of America). We have a review of different cards here for your benefit. There are all sorts of scenarios where customer service can prove to be critical.

In fact, Geoffrey who loves to design Reverse Target Data funds is a huge fan of Fidelity. In regards to financial products, customer service can prove critical because who want their money in an entity they don’t trust? Btw, I recommend checking out his article here 😉

Looking Back and Doing Some Research

How could I have known the customer service wasn’t going to be good? Well, we could have first looked at messaging boards and forums for experiences from other people.

I probably should have done that to begin with, but discussion boards typically have biases with those that have the best or worst experiences tend to be the most vocal and can skew opinion (keep that in mind).

But, we can look at this from a higher business perspective and see what a company really values and therefore where it will invest its money. For Lenovo, over 70% of their revenue comes from their PC division, but that includes enterprise level products. They unfortunately don’t show the breakdown in revenues in their consumer vs commercial products, but I would guess that commercial products are where they are investing more of their money in and therefore care less about the consumer side.

Next, we can dive into Dell’s 10k to see where their growth drivers are. For Q4 2019, they reported commercial revenue at 7.8 billion (9% growth) and consumer revenue at 3.1 billion (6% decline). We can see that commercial revenue is double that of consumer while also being a growing segment. It makes sense for Dell to divert more resources to commercial projects and as a result they are probably cutting out expenses such as customer support for their consumer oriented products.

Finally, we can look deeper into Apple’s 10k. Immediately what jumps out is that Apple makes majority of it’s money from the iPhone and other consumer products. There next growth segment is in their services and has been steadily increasing in revenue. The company as a whole is very consumer oriented as that’s where its products are market towards and it makes sense for Apple to invest more in customer service to keep the market it’s catering toward happy.

What Did I Learn

You might be thinking, wow this guy is really unlucky and this would never happen to me. If that’s you, good luck taking your chances.

For myself, I have now been asking myself the following questions:
-Will I be able to get my money back
-What’s the customer service situation like
-How much could I be losing if I went with another product/ service
-Does this company actually care about the product/ service in its long term strategy

I often now do a double take when I see something at super bargain prices. I ask myself, why can this company afford to mark something down this much and why? They may be cutting expenses in areas that you care about and for me, that’s customer service. Don’t just instantly buy the cheapest thing you see in the future. Rather, think of what the true value proposition is as you may be surprised how valuable customer service can be down the road.

For those of you that don’t really care about customer service, that’s cool and I don’t know why you would read this article. Still think about where you want your money going and do your due diligence as you want to make sure your purchases count.

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