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Businesses Designed to Not Help Their Customers

April 6th, 2005 by Bob Bly

Are there certain industries whose business model is dependent on not helping customers?

Here are some that have been suggested to me by various people:

1. Insurance ? my late father, an insurance agent for five decades, once said, ?Insurance companies want to write fire insurance policies for pig iron at the bottom of the ocean.? They want to collect fat premiums for policies they will never have to pay off, and often make it difficult for policyholders to collect on legitimate claims.

2. HMOs and managed health care — see #1 above.

3. Psychotherapists ? if the psychotherapist quickly cures every patient in a few weeks, the lifetime value of each client diminishes drastically.

4. Stock brokers ? Wall Street is rigged against the individual investor. Brokers are told to push shares their firms underwrite, not those stocks that are the best investment. If the stock they recommend loses you money, they make commissions three times — first when you buy, then when you sell, and again when you put it into something else.

5. Advertising agencies ? have a financial incentive to sell you ad campaigns that are (a) the most elaborate and expensive (increases billings) and (b) win creative awards (which helps win them new business).

I don’t mean to imply that everyone, or even the majority, of practitioners in these fields are out to cheat customers.

I am just observing that there is an incentive inherent in each business model NOT to always do what is best for the customer (which a smart practitioner knows is canceled out by the business benefits of delivering superior customer satisfaction).

Would you dispute any of the above? Or do you agree wholeheartedly? Any other industries you?d add to the list?

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This entry was posted on Wednesday, April 6th, 2005 at 4:56 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

86 responses about “Businesses Designed to Not Help Their Customers”

  1. Peter said:

    I think they are all supporting examples, and rather good picks.
    From my relation to a good number of people who’ve gone to state schools, I’m very skeptical of higher-education that’s not specialized. They try to push so many fluff classes on you to keep you for longer than 4 years, it’s ridiculous. With the attitudes of most students, it’s not too dissimilar to the prolonged “treatment” model mentioned above.

  2. Steve Slaunwhite said:

    Bob, I think your second last paragraph says it all.

    A few years ago I, and a design partner of mine, walked away from an opportunity for a lucrative project with an F-100 company. We said, “We’re not your best choice. Go with the other guys.” The next week I received a testimonial letter from the client praising my integrity. The next year, the client offered me a lucrative retainer — rare for a copywriter. These days, I earn tens of thousands of dollars annually from this client.

    Now, I’m far from perfect when it comes to customer service. But I have learned that there’s a difference between winning the business and winning the customer. And when it comes down to a choice between the two, I always pick the latter.

  3. Cathy said:

    Insurance, health and otherwise are definitely at the top of the list!

  4. Cathy said:

    Oh – I forgot one that should be right up there – drug companies. Their profit is not in a cure, it is in getting people to think they need a certain medicine, whether they do or not and then getting them to take if for life.

  5. RichW said:

    Chiropractors. Haven’t met one yet who didn’t string me along for weeks.

  6. Fern said:

    Bob, of course I have to disagree about the therapist comment. First, I don’t think a therapist’s job is to “cure” you — the goal is to help you understand why you think and do the things you think and do. Second, each person goes to a therapist for a different reason, so there can’t possibly be a set time to go and “be cured.” Going to a therapist has changed my life in so many positive ways — and she was happy to see me move on and not need her anymore. Any good therapist has that same goal. Are there bad therapists out there? Sure, just like every profession.

  7. Douglas Sorocco said:

    As a lawyer, I know from the inside — while not all lawyers are this way, in most, deep down there is a sense that if the problem is solved, the billable hours will end. Chaning the practice of law and moving away from the billable hour model is just one step in rethinking the practice of law. Thanks for the thought provoking post.

    Douglas

  8. brent ashley said:

    Dentists.

    I used to go to the dentist once every 6 months for a cleaning and every time there was a small fix or filling to come back for. Then in the 80s I went overseas for two years and came back for my first cleaning and there was – you guessed it – one small fix to come back in for. I figured I saved myself 3 cleanings + 3 fixes for at least $750.

    I now go to the dentist once every 18 months, and since I’ve related my story, I’ve only rarely had a callback after being throughly informed about the exact nature of it in a very apologetic way.

  9. Barbara Saunders said:

    Personal training has evolved with such a business model — much to the chagrin of many trainers themselves. When I practiced, I had the most fun with clients I could educate about their bodies, do a little feedback and correction cycle, and send them on their way to exercise on their own. That required constantly getting brand nuew clients. Bread-and-butter clients were those who didn’t get results and kept on the hook for years!

  10. L. Marinus said:

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  11. CaityLady said:

    The classic example is the police, who would be out of a job if they eliminated crime. I believe that most service professions have the same dilemma – if the service is focused around solving a problem, there is only motivation to solve it in the short-term, not the long-term. When you get down to it, isn’t it the same with most businesses? If cars were made to never break down, no one would ever need to buy a new car. The same with printers, computers, most of the items we use on a daily basis. When you really think about it, there are few businesses that are truly motivated to permanently “solve” the problem, or permanently meet the need, that gives them business.

  12. Michael Martine said:

    Banks. Under the guise of helping you store, save, and make money, they just keep taking it away with their fees and shoveling what is truly horrible customer service down your throat. I have NEVER seen a good bank.

  13. Mark Worthen, Psy.D. said:

    I agree in general and with one of your specific examples, psychotherapy. The “cash cow” incentive is one reason the four-times-a-week Freudian psychoanalytic approach has lasted so long after scientific evidence showed it to be no more effective than much shorter forms of therapy. But, then again, maybe I’m being “resistant” because of “unresolved Oedipal conflicts” causing me to question authority . . .

  14. Daniel Thompson said:

    Bob,

    I just read this and I too have made this same observation. It came during the following situation that had happed to me:

    A few year ago I need to make a phone call when my car broke down. I went up to a “rack” of three payphones at a 7-11. I put my quarter in the phone and dialed my home number. When someone at home picked up the phone I quickly found out that the microphone on the payphone didn’t work and the person on the other end of the line could not hear me. So I went over to the next payphone put in my quarter and that phone took my money too. Final I tried the last phone and was able to complete my call home about the car braking down.

    Having worked in a section of the telecom business that dealt with coin payphone providers I was upset at their poor maintenance of their equipment…

    Then it hit me…

    Not only did they get to save on the costs of maintaining their equipment but they also tripled their revenue of a single phone call from one quarter to three.

    By overt plan or by accident it was working in their favor.

    -Daniel

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