Tim Weyland worked in the culture change world when we were colleagues at McKesson. It was good work, hard work, and a tough challenge to move an organization from an efficiency and hierarchy mindset to a customer focused and effectiveness mentality.
Recent experiences with Apple, AT&T and web services company Dotster are examples of the type of thing Tim’s work illustrated, and how the lessons he guided apply to everyone. Fact is, unless your last name is Brin or Getty and you’ve moved to a remote island, everyone is a customer service business. Once again with feeling: everyone is in the customer service business.
Tim trained people to understand the "3 R’s" of customer service, and they are as valid today as they were a decade ago. The "customers" in these cases might be clients, investors, or internal clients – anyone for whom you provide a service.
Those 3 R’s are:
- Reliability (does the customer get what they reasonably expect to get every time.)
- Responsiveness (when the customer wants something different, do you respond to provide what’s reasonably requested.)
- Recovery (when things bounce and the client does not get what’s expected, how well do you react and correct the issue.)
Why is this important?
The dynamics of how to acquire and retain customers affects everyone, whether it’s a hedge fund, venture capital firm, retailer or a single practitioner consulting practice like mine. Thinking of yourself, your department, or your company as being in the customer service business as a primary goal ensures that you’re focused on the things that keep you in business.
On top of that, in the "old" days, maybe three years ago, bad news traveled slowly. Now, thanks to social messaging via Twitter, Facebook, etc., bad news – the type of news that’s likely to be the first keystroke when a customer or internal client gets disappointed – moves into the blogosphere at lightening speed . It means the margin of error – how much latitude do you have to screw up – is slim and recovery – getting your story out before people tune you out is daunting.
What’s the research say about the 3R’s?
Of the three R’s of customer service, reliability costs the most to get right initially, but costs the least over any extended period of time. Why does it cost the least? Because costs skyrocket in the land of rework and change. Recovery, where costs get burned like wildfire, is the place all customer service people should avoid. Customers who get pushed in the recovery stage are customers likely to consider leaving: feeling fooled once, they’re likely to look elsewhere for their business.
If you take a look at the costs involve, using commonly accepted statistics related to customer retention and churn include (source: "Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy), aquiring new customers can cost five times more than satisfying and retaining current customers. A 2% increase in customer retention has the same effect on profits as cutting costs by 10%, and the average company loses 10% of its customers each year. Last, a 5% reduction in customer defection rate can increase profits by 25-125%, depending on the industry.
Data ("Companies Don’t Succeed – People Do!", Graham Roberts-Phelps) also shows that companies with high customer retention also grow faster. In most businesses, existing customers are the most valuable assets that a company has. Why? Because acquiring new customers can cost 5 TIMES more than satisfying and retaining current ones
Apple, AT&T, and Dotster
Three examples – think of them as the good, the bad, and the ugly – come to mind as a way how to work the Reliability – Responsiveness – Recovery paradigms.
When I recently changed iPhones I ordered the new phone via Apple. It arrived on time as scheduled via UPS. When I installed it, the call function worked, the data function – e-mail, web browsing – didn’t.
I called AT&T [Disclosure: AT&T is a client] mobile services to troubleshoot the problem. In fairness, AT&T has had a monumental job in molding a number of separate businesses and regions together over the last few years; Cingular, their mobile phone business; the regional Bell companies such as Southwest Bell, Pacific Bell; the old AT&T with the new merged AT&T entity; and last, not least, a cable company. I can’t think of any other company who has had that type of challenge, and who has pulled it off to the degree AT&T has. Last, ironically, AT&T pioneered the ultimate in reliability – land line dial-tone.
The customer service people at AT&T were not helpful – and at this point the "R" that should have been ringing in the customer service rep’s head was Recovery. After asking me three security questions, I bounced on the fourth – what was my account (not phone number, but account number) as I drove to drop off my son. She said she could not do anything with my account, though she said she would not know what to do. Even with the account number, the customer service rep said the best thing to do was "hope that the problem somehow sorts out." She said she could not give me her customer service ID number or contact details (Susan was her name) in case I needed to call back – something I’ve learned to do to avoid backtracking on prior calls to a customer service department.
Scorecard: If I couldn’t get it resolved I would be moving to another carrier and phone based on their service. No reliability, no responsiveness, no recovery.
Later that day I took my phone to the Apple store at the Stonestown Galleria. Despite a crowd of would-be-buyers, Apple service representative Sara Johnson flagged my and heard my tale. First, she called somebody in tech support who she thought might be able to help me. Second, she personally walked me up to the AT&T store on the second floot to get a new phone SIM card for the phone from a somewhat perplexed phone store service rep. New chip installed, she suggested it might take awhile but gave me her business card which had her work mobile phone number on it in case things didn’t clear up with the swapped out phone card. One hour later I was up and running with both data and phone access, just as she suggested would happen.
Scorecard: Not Apple’s issue on reliability (the phone worked fine, data access via the carrier was the issue), and great responsiveness. Flawless recovery, keeping one satisfied customer for them, and for their partner AT&T.
This past Friday, July 3rd web hosting company Dotster lost service to some of its customers when a fire hit a shared data center at Fisher Plaza in Seattle. The fire, which happened at 11 PM on a Thursday, meant that companies ranging to Authorize.net, the travel portion of Microsoft’s Bing service, and my business Back West, Inc. went down. E-mail was also suspended.
Dotster had no status change on their web site support page when I called at 8 AM (holiday hours – I had left a message earlier that morning), though the service rep I got on the phone was aware of the issue. A status update was posted a little later around 8:10 AM that morning, indicating that the fire was "near their data center" and they were working to resolve the matter. Later around mid-day a further update indicated that service should be up in 5-12 hours. A note that I posted on Twitter late in the afternoon was responded by a folks having similar problems, as well as by Dotster. The Dotster folks indicated they were working on the problem, though Dotster posted slightly different answers to different posts on the status. Approximately 27 hours after the outage service was restored.
Scorecard: Dotster apparently had no switchover mechanism, which meant no reliability when the fire hit for its customers. Responsiveness, for example e-mailing an update to customers if they had non-dotster addresses on file, telephoning customers, or initiating posts on Twitter was absent. Recovery, in terms of getting information to customers and getting the sites back up (see reliability) was poor. Short answer for me is that I’ll be looking at other hosting options . I chose Dotster on a recommendation, and the fact that they’re based in the Pacific Northwest where I grew up. So much for local loyalty.