Sick of rotten service? See it as a Buy signal

‘The customer is always right,’ said the 19th-century American retail pioneer Marshall Field — and shoppers at his Chicago store became so enamoured of their omnipotence, and of his assistants’ assistance, that they spent enough to make him the wealthiest businessman in the city. His retail innovations — unconditional refunds and consistent pricing — soon inspired imitators. In Philadelphia, John Wanamaker replicated the model and elevated shoppers at his Grand Depot to the rank of royalty with his derivative decree that ‘The customer is king!’ A new era of customer service was ushered in that, over the ensuing 100 years, saw stock flying off the shelves, and stock prices flying high.

But in the 21st century, the business model seems to have changed. Companies that persevered with old-fashioned values have seen their stock fall — as investors in Marks & Spencer and British Airways have found. At the same time, companies with the worst reputations for customer service have been among the best performers on the stock market — as shareholders, if not customers, in Centrica, Carphone Warehouse, Ryanair, First Group and NTL will appreciate. If the customer is king, then the chief executive is now Oliver Cromwell. The attitude to customers may be cavalier, but the management pragmatism is decidedly roundhead.

British Gas owner Centrica is arguably the clearest example. Last month, the company was named ‘worst energy supplier’ for the second year in a row, in a customer survey by Uswitch.com. This followed a record number of complaints about the company to the consumer body Energywatch. Between October 2006 and March 2007, there were 21,427 complaints about British Gas compared with only 7,644 about all the other UK energy suppliers put together. According to Karl Brookes of Energywatch: ‘What consumers find unforgivable is the failure of British Gas to offer help and the high standards of customer service that consumers deserve.’