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Newspapers continue to shoot themselves through delivery failures. There’s a larger lesson in this tale for the many other companies that eschew customer service.

By Jeffrey Pfeffer
December 23, 2014

Without for a moment denying the technological, competitive, and customer challenges that newspapers face, much like many brick-and-mortar retailers, such traditional print media companies have consistently made decisions that worsen their fates.

You might think that an industry that has spawned a website listing the newspapers that have closed, curtailed frequency, or moved to a solely online model; an industry where 39% of subscribers have cancelled a subscription in the past five years; and an industry facing circulation that has declined by 10% in the last decade and advertising revenues that have fallen by half just since 2006; would also be an industry that might want to take good care of the 56% of American adults who still prefer a printed paper and have remained subscribers.

But you would be wrong.

This sad tale offers a lesson for many businesses that continue to make cost-cutting decisions that irritate and drive away their customers, spurning essential revenue.

There’s the Orange County Register, which told customers who did not receive their paper because the company failed to pay The Los Angeles Times for providing delivery service to “come pick it up” and asked its employees to field calls from unhappy customers. There are the newspapers that, for subscribers who lived too far away, decided to use the U.S. Postal Service for delivery—with dire results. A quick Google search using the term “newspaper delivery problems” reveals a plethora of complaints from cities all over the U.S. including Akron, Philadelphia, Portland, and Jacksonville, to name a few.

And then there’s the San Francisco Chronicle, coming in at No. 5 on a list of the top 10 newspapers in trouble, that, together with the venerable but equally foolish New York Times, decided to change its delivery service in the fall of 2014. The plan: hire a new vendor that would deliver both papers in Northern California.

The result, according to my many conversations both with newspapers’ circulation customer service lines and an area circulation manager: catastrophe.

I finally cancelled my Sunday-only Chronicle subscription because, as I told the nice person on the phone, I never received it. As for the Times, it does come occasionally, but it is never double-bagged so it’s always soaked whenever we have the good fortune to get rain in drought-stricken Northern California. Months after the problems began, nothing has improved, and the same nice customer service people tell me that their pleas to the higher ups have fallen on deaf ears. Of course, both papers are losing subscribers.

A spokesperson for The New York Times told Fortune that the company is aware of the problems with its delivery vendor partnership and that they are working to resolve those issues. The Times also said that it plans to hold off on a home delivery subscription price increase for those affected by the delivery issues in Northern California until July. Fortune did not receive a response to a request for comment sent to the San Francisco Chronicle.

Providing customer service is invariably expensive for companies in all industries. That is why my local Safeway, soon to be acquired by private equity firm Cerberus, had one checkout lane open in a 60,000 square foot store in the evening during a recent evening—with a predictably long line. That is why Uber and Airbnb have made it difficult to find a customer service phone number for real-time assistance. And why, even though we supposedly live in a service economy, many companies have cut their costs by providing limited to no customer service.

If you call an airline, you will go through a phone tree and then wait interminably. And service on airplanes has declined as companies either eliminate those free bags of peanuts or substitute with less expensive versions, for instance, of food and wine. Many retail stores are bereft of sales people, apparently believing that the merchandise will sell itself. And the list goes on.

But these companies—newspapers, hotels, airlines, and retailers—don’t have cost problems. They have revenue problems. And providing lousy or nonexistent customer service won’t improve revenues.

The most frequent comment I hear when I bemoan the absence of service is, “We can’t afford it,” whatever “it” is. Maybe, maybe not. It depends on whether strategically increasing costs to provide better customer experience will increase revenues by even more.

Consider Stanford University. The school, which also happens to be my employer, is building a new hospital because the old one is seismically unsafe. During the construction, parking has been disrupted and access roads can be a mess. Some people drive to Stanford for hours to obtain its specialty and acute care. But Stanford competes with many other local health systems for patients. What to do?

As one vascular surgeon explained, when hospital personnel told the CEO, Amir Rubin, that patients were experiencing frustration getting to the hospital and finding a place to park, Rubin implemented a valet parking service. Now people’s first impression comes from being met by helpful valets, not struggling to find parking in a construction zone. Sure, there are costs, but the hospital is creating a great patient experience that will drive patient loyalty. As Bain consultant Fred Reichheld noted long ago, loyalty produces revenues and profits.

Companies obsessed with cutting costs can always go all the way and cut it all down to zero—shut down. As this counterfactual makes clear, cost minimization is never, or at least never should be, the most important goal. And sensible, well-run organizations understand that fact.

So, to my friends in the newspaper industry: Grocers can and do deliver, restaurants deliver, Amazon and Google are making rapid delivery a specialty. What’s wrong with newspapers?

In the meantime, maybe the Times and its brethren can add an item to their ubiquitous holiday season product offerings: a newspaper dryer to help subscribers “process” wet newspapers, if they happen to get one at all.

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