A book of the same title was recommended to me by a colleague, so I picked this interview by Guy Kawasaki with the author as an introduction. Customer service is a huge issue for all companies, Bill Price offers some valuable advice here. He identifies excellent self service websites, one example I offer is a company I am close to Directski.com, the team there have strived continuously to improve the customer experience.
Bill Price was Amazon’s first Global VP of Customer Service. Before Amazon, Bill was a senior consultant at McKinsey (working closely with Peters and Waterman as they wrote In Search of Excellence). He recently co-authored a new book, The Best Service Is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs, with David Jaffe. (Mind you, I have had much hassle with Amazon.co.uk customer service in relation to their range of products available in Ireland but that’s another story).
In this interview he reveals the concept of “Best Service” and why it is important to small business.
From an interview with Guy Kawasaki for Sun Microsystems
1. Question: Why is “the best service is no service”?
Answer: Customers don’t want to call their bank or email their online retailer if something’s confusing or if there’s an error–instead, everything should work perfectly in the first place. A recent survey cited 75% of CEOs proclaiming that their companies provide above average customer service, yet almost 60% of customers said that they were “somewhat to extremely dissatisfied” with their most recent customer service experience. Clearly, there’s a large gap.
We need to reduce the rate of contacts by eliminating dumb contacts entirely, offering engaging self-service and being proactive, delivering great customer experiences when things do break down, and only then to deliver great customer experiences.
2. Question: Are companies stupid, lazy, or just don’t give a damn, so they don’t build things right from the very start?
Answer: All three, unfortunately! Some companies are stupid in not recognizing how much money and good will they are wasting, and letting bad measurement systems, processes, and Not Invented Here get in the way of what we call “Best Service.”
Some companies are lazy in that they think it’s too hard to fix service, and therefore better to “get by” and fix the symptoms than do the hard work on the root causes. And there are lots of “don’t give a damn” companies, too, particularly where a short-term profit motive dominates or they are fixated with an engineering culture.
3. Question: Which companies can you hold up as good examples?UK and Flight Centre out of Australia are also on their way. Dell, once criticized, has done some outstanding aspects of Best Service like listening to their customers and offering Windows XP. Even the New York Department of Motor Vehicles mended its ways some time ago.
Answer: Amazon clearly gets it the most. Apple, eBay, Kingfisher Airlines, McDonald’s, and Vodaphone are trying hard to get it.
4. Question: Which companies are in your hall of shame?
Answer: There are plenty of “bad cases” out there such as telecom companies and ISPs that are adding more contact centers and support agents as they add subscribers. Nearly every IT help desk and virtually every Internet banking customer care organization that has any care or tech support calls are on the list too. All you need to do is look for companies that hide their phone number on web sites.
5. Question: Can it be that it’s “just math” in the sense that it may cost less to provide lousy products and deal with issues than to do things right, so the companies are doing the financially rational thing?
Answer: No, it’s the opposite case. Most companies actually haven’t done the math to deliver Best Service because Best Service is always cheaper–or they do the wrong math. It’s not just “cost of making bad or confusing product compared to a good product versus associated cost of service.”
The equation must also include repeat contacts–what we call “snowballs”–recalls, legal costs, and brand damage, etc. In many industries it’s also not about good or bad product. In financial services or telecom providers, for example, adding complexity to products is seen as good by marketing or product design–they believe that they are making better products–when in fact many customers just want something that is simple to use and easy to understand like the Apple iPhone or Amazon’s 1-click.
Plus, there are the costs of the service operations themselves–that is, the help desks, call centers, and back-office departments are clearly the biggest single cost category, often 5-10% of sales. At most major mobile carriers, insurance providers, and even some airlines the biggest workforces are in customer service. Then, as service issues occur, there are increased costs of complaints such as legal remedies or compliance.
Mobile phone companies don’t even want you to know what you are really paying and invented new math: “$200 free calls on your $50 a month plan”, but it’s much more complex even than that when you read the small print. On the other hand, MCI in the old days, and Telstra today, analyze call pattern and then call their customers to recommend a LOWER-rate plan. That’s we like: being proactive, a core part of Best Service.
6. Question: What if the management says that they’d love to do the right thing, but they are in a cost-competitive market and would go broke doing so?
Answer: We have yet to find a company that couldn’t improve service and cut costs at the same time. There is a mistaken mindset that Best Service is more expensive, but poor service is a killer since you end up needing more of it for the wrong customers in the wrong situations.
7. Question: What web sites would you consider good examples of self-service?
Answer: Alaska Airlines, Amazon, CheckFree, Citibank Card eBay, First Direct, USAA, and Zappos are all doing a fine job in web-based self-service–what we like to call “engaging self-service” This requires that (a) customers don’t have to call or email or open a chat session to finish their order or ask about something; and (b) the companies listens to the customer’s requests and, if possible, eliminates the needs entirely. Also Directski.com
8. Question: What analog companies such as stores and restaurants are good examples of self service?
Answer: Pizza Hut enabled SMS ordering: simple for the customer and easier for them, a two-way SMS exchange so that customers can check and confirm and all those things you’d do over the phone.
Nordstrom has been legendary for its service, including two of the seven principles of Best Service: make it really easy to contact your company, and listen and act. The Palomino restaurant chain takes reservations on its web site, cutting maitre-de time to answer calls, and eliminating frustration to the diner. And many corner shops, dentist practices, and dry cleaners practice Best Service because they know that it’s essential to ensure repeat business.
9. Question: What’s an example of “proactive” service?
Answer: The German Autobahn is a 30+ year old case: if there’s congestion ahead, a radio signal turns on or interrupts car radios with a warning message, enabling the driver to seek alternative routes or at least understand why there’s a problem. Being proactive means connecting a “why” trigger with information or choices, and companies such as XM practiced it superbly after an outage last year. Amazon used to send “missed promises” email messages to customers so that they could cancel the order and shop elsewhere. Few did cancel, and those that did were very appreciative.
10. Question: What are the tangible steps for a company to take to fix a service problem?
Answer: There are seven steps, or principles, based on the foundation understanding the nature of service requests–that is, to really understand the demand for service and “challenge” why customers need to contact companies for service. Each principle includes sample frameworks and a series of questions to see if you’re on the path to Best Service, or headed the other way:
1. Eliminate dumb or avoidable contacts to free up capacity and slash costs.
2. Build self-service that works to free up even more capacity and cut costs even more.
3. Find ways to be proactive rather than reactive because it is often cheaper than waiting.
4. Engage the real “owners” of customer problems to work with the customer service team to fix the problems
5. Make it really easy to contact your business.
6. Use the contacts you get to listen closely to the customer, and act upon WOCAS (What Our Customers Are Saying)
7. Fix reporting metrics, processes, and the staffing side to deliver great experiences for customer contacts.
11. Question: How should a company measure customer satisfaction?
Answer: The rate of customer-initiated contacts that require personal support is the best measure of satisfaction. This is expressed as “CPX,” or “contacts per X,” where “C” equals calls + email messages + chat sessions, and “X” equals transactions or installations or invoices sent. Measured and shared weekly, companies achieving Best Service see 20-40% per year reductions in CPX and as a result much happier customers and lower costs too.
Our second killer metric is the rate of repeat contacts, or “snowballs.” Just like the snowball rolling down the hill, getting bigger and menacing skiers, repeat contacts are clear “customer dissatifiers” that need to be stopped–or melted–before they ruin the company’s reputation. CheckFree is a great example here: over the past five years their transactions have quintupled while customer support headcount is down 20%, at the same time that customer satisfaction rose by 20%.
12. Question: Has all the CRM (customer relationship management) software in the world improved the situation at all?
Answer: CRM software only helps when something else has changed. If CRM is used to create an organization that aligns with the way customers want to deal with the business, then good; if it’s been used to understand how customers want to deal with the company, and surface and circulate WOCAS, then good; if it’s been used to drive proactive service, then good; if it’s been used to turn three contacts into one, then good.
But if it’s just been used by marketing to drive offers and cross-selling, or to divide service into complex skill-based models that are hard to manage and deliver, or to segment service in a way that’s impossible to manage, then it hurts! Unfortunately, most CRM software has not really been used to improve service at all.