Good Customer Service Part 2

Level 2 customer service is all about supporting the first echelon personnel and helping them to resolve situations that are beyond their ability. How you go about this, and what style of management you use, are dependent upon the nature of the company, the industry you are in, and individual style and experience; I’ve seen everything from a coaching style (like the coach of a basketball team) to a commanding style (like a drill sergeant leading a squad), and any of them can work if done properly. Second echelon personnel will need a more extensive knowledge of the product than the first level people do, and they will have to carry a higher financial limit – the ability to authorize larger refunds, make larger purchases, or spend whatever funds are needed. Even if you can promote Level 1 personnel into the role, you will need to make provision for additional training, regular refresher classes, and more extensive background checks – and this may prove problematic anyway…

Growing your own supervisory personnel is always a good idea; it saves money on recruitment, training and retention costs, and improves morale for anyone who wants to be promoted in the future. Unfortunately, it isn’t always possible to do so, since the skills and temperament to be a good supervisor aren’t always the same ones you need to be a good CSR. A customer service supervisory (hereinafter CSS) needs at least a rudimentary understanding of management topics, including organizational behavior and human resources theory, and a significant level of leadership ability, in order to be effective in the role. Someone who can’t handle enforcing company policy, reprimanding people when required, or any of the less pleasant (but still necessary) parts of the manager’s role won’t do well in the CSS position, and anyone who can’t handle issuing orders to people they perceive as personal friends – a common perception after years of working closely with someone – will not succeed in making the transition to supervisor…

Whatever their origins, the CSS should understand all of the aspects of the CSR position well enough to train new personnel, or settle matters that confuse existing CSRs, and be able to step in and take over the CSR function without further discussion. However, the CSS should rarely if ever do so; his or her job is not to provide customer service, but rather to direct the people who do. And while no one should ever be rude to a customer, it is the CSS’s responsibility to stand up for his or her personnel, refuse to allow anyone to abuse them (verbally or otherwise), and politely but firmly settle any disputes that a CSR can’t handle in the first place. When I did this job I generally took the position that they were my CSRs, and nobody – not the customers, not the CEO, not God Himself – was going to mess with them while I was still around. It’s not a coincidence that units whose supervisors behave that way generally outperform every similar group in the company…

The other thing to keep in mind is that the Level 2 personnel shouldn’t be analyzing performance, forming strategy or setting policy; their job is to keep the first echelon people going and handle anything complicated, confusing or disturbing that comes up in the process. They may serve as the gate keepers for higher headquarters, but they don’t have time to take care of higher functions as well as doing their own jobs. Shooting trouble is the responsibility of the customer service manager, operations manager or group manager, depending on what the Third Echelon supervisor is called in your company…

Good Customer Service Part 1

After my posts about the PayPal and Yahoo customer service failures hit, I got a few messages effectively telling me that “good” customer service isn’t possible, and asking why I think differently (since I clearly do). If you were one of those people, I’m glad you asked – and even if you weren’t, you might want to stay tuned, because what follows is a multi-level explanation of how customer service can be made to work. At this point I’ve had about 10 years of customer service experience, plus another 7 years of management consulting and 6 of graduate school, and I’ve noticed a few things that might help settle this question. Just keep in mind that I said good customer service was POSSIBLE; I never said it was cheap, or easy to accomplish…

At the first level of customer service, everything depends on the customer service representative (hereinafter CSR), and specifically on the training, support, and authority that is given to those individuals. Most companies don’t bother with any of these requirements because of the turnover in CSRs; if people will move on (or get fired) after a few months, there is no point in spending money training them – and they certainly can’t be trusted to make any decisions. This usually comes down to wages: if all you are paying the CSRs is minimum wage, you can’t really expect them to stay on the job once a better position opens up, or to care much about the job in the first place. Where this becomes a problem is when the low quality of your CSRs (and the low quality of the service they provide) starts to cost you customers, thus increasing the market share available to your customers and reducing your own…

This isn’t to suggest that you will need to pay MBA wages to get good CSRs; offering $3 per hour above local minimum wage ($7.40 in Michigan as of this writing, so $3 higher would be $10.40 per hour) will get you your pick of entry-level hourly personnel, and offering double minimum wage (still less than $30,000 a year) will bring in applicants with college degrees and years of work experience. But given the cost of recruiting, screening, background checking and training new personnel, any increase in employee retention generated by these modest wage increases will pay for itself very quickly. And if you can offer even rudimentary health benefits you can attract and retain some very good people without any additional effort…

Once you’ve got your first-level CSRs, the next critical step is training them, and specifically teaching them what a customer is and is not. Someone who wants to give the company money in exchange for goods or services is a customer; someone who might give the company money in the future (or encourage other people to do so) is a potential customer; somebody who wants the company to do something that will cost money and provide no benefit whatsoever is not a customer. A CSR must also have enough knowledge of the product or service to answer questions and handle minor problems, the authority to correct problems or issue refunds, and the ability to refer anything the CSR can’t handle to higher echelons that can resolve the issue. Exactly how much knowledge and how much financial responsibility a Level 1 CSR needs will depend on the product or service offered and the industry you are in, but they can’t be expected to handle anything really involved or placate anyone who is truly irate (e.g. swearing, cursing or threatening). That’s where the second echelon comes in…

Failure Analysis: PayPal

By now you’ve probably heard about the dust-up between PayPal and the folks who run the Regretsy web site over the use of the “donate” button and who can use it for what purposes. I’ve been a little distracted this week, and by the time I’d read up on the facts of the case there had been an announcement about things being patched up, but I can’t help thinking of it as one of the best demonstrations of the importance of first-level customer service and the supervision and training of the people who work those positions I’ve seen in a long time. People who know me well have probably gotten tired of hearing about this issue, and are off looking for more amusing content (which shouldn’t be too hard), but if you’re still reading I’d like to go over why this topic is so important – and why PayPal’s handling of the Regretsy case may be the biggest failure I’ve seen yet…

The facts of the case aren’t really in dispute at this point; the Regretsy website put up a “donate” button where anyone who wanted to could donate $2 towards Christmas presents for children from poor families, and a large number of people chipped in. Then PayPal decided that this did not comply with their rules for charitable giving and started giving the Regretsy people a series of increasingly bizarre and contradictory demands, culminating in PayPal freezing not only the Christmas fund but several other accounts completely unconnected with the situation. Subsequent analysis indicates that none of the company’s published regulations were actually violated by these activities, nor were there any legal, ethical or even business-related justifications for any of PayPal’s actions. From the facts presented I can’t identify any way that a donation program of this type could possibly damage the company in the first place, or anything they could gain by shutting it down…

Now, I’ve stated before in this space that I’m not a big fan of PayPal; my own dealings with the company (as a vendor) have failed to impress me, and the fact that the company operates seemingly without any regard for customer relations, public image, business law or common courtesy annoys me. In the present case, the communications between the company and its customer read like a textbook of things one should never say (or do) in a customer service situation (condescending to the customer, telling the customer that their request is not important, refusing to escalate the call to higher authority, threatening to monitor the customer to make sure they can’t do what they want, threatening punitive action if the customer is detected doing what they want; the list goes on). What makes this a failure of a new and highly impressive kind is that PayPal collected at least three commissions on each of the transactions they are requiring their customer to refund, and then kept all of those funds as well as freezing all of the customer’s accounts (not just the relevant one)…

If a bank or financial company did anything like that they’d be up on criminal charges even before the first lawsuits were filed; it would be interesting to see if anything was left of the company by the end of the fiscal year. But PayPal isn’t a bank, and unless they actually violate Federal law (they don’t appear to have done so in this case, but it’s early yet) there isn’t much you can do except vote with your feet: take your business to a competitor and tell PayPal where they can put their idiot regulations. A few years ago there really wasn’t much competition; PayPal was the first mover, and they’re still the only company of their kind that most people have ever heard of. But this sort of spectacular failure doesn’t just cost you the current customer and anyone who sides with the customer; it also creates one more customer for your competition – and that sort of thing adds up after a while. Unlike a normal customer service failure, where an annoyed customer might tell an average of 27 people how badly you treated them, this one is making PayPal look corrupt, greedy and stupid in front of millions or hundreds of millions of Internet readers…

I don’t know how long PayPal can go on looking this bad and offending this many customers; I’m just saying that the money they think they’re saving on customer service personnel doesn’t look like much of a bargain to me…

Zombies Aren’t Real?

Years ago, when the Internet was just starting to catch on with a mass market, one of the strongest forces on the scene was Yahoo, which served many of the same functions (and niches) that are covered today by Google, Facebook, Blogger (or any other web host for blogs), Craig’s List and even eBay. Along with AOL and CompuServe (remember them?) Yahoo was one of the giants of the new digital age we all thought was coming – and I expect that someday children or grandchildren of today’s kids will be asking me (and the other tribal elders) to tell them of this time. But sadly, not much is left of Yahoo today – the company has wasted away to where it is almost the desiccated remains of its original self, lurching around like a b-movie zombie. However, that’s still no excuse for subjecting innocent people to zombie SPAM attacks from a former customer…

You can pick up the story from the CBS affiliate station in Tampa Bay if you want to, but the basic idea is that a Yahoo customer passed away in 2009, and about two months ago a hacker managed to take over her account and started beaming SPAM to everyone in her address book. It’s unclear from the story if the miscreants in question are actually earning or scamming any money by doing this, or if they just enjoy inflicting emotional distress on the family (and it’s possible that no one really knows). What we do know is that Yahoo has resisted all efforts to date to disconnect, disable or cancel the account, and is insisting that the family provide them with a copy of the death certificate (which is proving difficult to come by). Meanwhile, the hackers involved keep changing the passwords, moving to different referral accounts, and generally making it impossible for the family (or any other user) to shut down the account from the user interface side…

Now, I don’t mean to suggest that Yahoo – or any other email provider – shouldn’t take great care with their online security, and especially with verification of identity before deactivating an account or deleting online files. What makes this case so egregious is that their security has already been buggered six ways from Sunday; if the user account contained any sensitive information in the first place it would have been sold to anyone who wanted it by now, and if there was anything that could possibly be used to steal their late customer’s identity you can be certain it has been. We can’t be sure from the events cited here if the company is doing anything about the original data intrusion or not, but it certainly appears that they’re limiting their response to making things difficult for the family…

It probably doesn’t help that you can verify that the original user has passed away by any number of other methods, including several public websites. That is, such sources don’t really do anything to help the company verify the information (all of these sources can be defrauded in different ways), but the combination goes a long way toward making Yahoo look like a bunch of incompetent buffoons who are more concerned with covering their own behinds than they are with doing the decent thing. I can’t tell you how close the company really is to shuffling off this mortal coil; many companies continued lurching along for decades after everyone has given them up for dead, in a sort of half-living state that approximates a monster-movie zombie was well as any purely legal entity is ever likely to. I can only tell you that screw-ups like this make it seem as though Yahoo doesn’t have a brain OR a heart…

So go on; tell me that zombies aren’t real…

The Ethics of Rules

Early on in this blog I wrote a post talking about how much I hate the expression “rules are rules!” when it is used to prevent the user from actually having to make a decision, take a stand, or (especially) do any actual work. All too often you will encounter a situation that doesn’t fit neatly into one of the templates in the rule book – or in which some factor the people who wrote the book never considered is happening – and find that some short-sighted, spineless and/or bone-idle idiot has decided that since saying yes will cause extra work or trouble they’re just going to say no. This sort of thing offends me in a professional sense, because I believe in the importance of good management practice and any such case involves either a front-line manager abdicating his or her responsibility or a front-line manager who can’t be bothered to train and/or support his or her personnel when they have to deviate from the rule book…

Unfortunately, sometimes there’s more to these discussions than just under-paid twits declining to stick their necks out; sometimes there really are two sides to the question. Consider, for example, the case that turned up this past week involving US Air and a customer who had purchased four non-refundable tickets for the trip of a lifetime. Tragically, in this case “trip of a lifetime” is not a figure of speech; between purchasing the tickets and the date of departure the customer was diagnosed with stage 4 cancer, and was unable to travel. The customer explained this to the airline, which expressed their sympathy and offered to allow the customer to rebook the flights without the usual $100 per ticket rebooking fee, or transfer the credits for those tickets to any other member of the family (which is usually not permitted at all). When the customer complained that she wouldn’t live long enough to use the tickets or credits, and no one else in her family wanted them, the airline said they were sorry, but rules are rules, and non-refundable tickets can’t be refunded even if the customer who bought them is dying…

Now, as you’d probably expect, US Air is getting flamed all over the Internet for being cruel, heartless bastards who were more interested in making money then in doing “the right thing” and refunding this customer’s money. All of this may be true, in fact, but it rather ignores the larger issues. First, non-refundable tickets are offered at a lower price exactly because you don’t have to worry about people randomly changing flights, thus making it possible to run fuller flights, operate more efficiently, and keep your prices down. The airline isn’t just being difficult; they have a real interest in not refunding non-refundable tickets. Second, the airline is correct in thinking that if they start allowing exceptions they will eventually be asked to make one for every customer who oversleeps and misses their flight – and that every one of these people will claim to be gravely ill or to have some other heart-rending reason they can’t fly that day. And third, as we’ve discussed with other legal matters, if you ever make an exception to your rules, you will have no defense if you’re ever sued for refusing to make an additional one…

One could argue that the airline’s responsibility to humanity is greater than their responsibility to their stockholders (or any of the people who make money working for or selling things to the company), but when we consider that the customer had already received a discounted rate for selecting the non-refundable tickets, and could have prevented the whole issue with a trip insurance policy that costs about as much as two large pizzas, we could also argue that the customer and her partisans are effectively demanding that the airline make up for someone else being cheap. So I have to ask: does the company have an ethical responsibility to save its customers from their own lack of foresight, even at the cost of its own survival? Do they have a responsibility to their owners and employees to do whatever will result in higher profits and wages, no matter what the consequences? Or should they just offer a service under a set of unequivocal rules, stick to those rules, and require their customers to take responsibility for their own lives and their own fortunes, good or bad?

It’s worth thinking about…

Writing a Business Plan: Marketing

Once you’ve established what your new venture is going to do, you need to explain how you expect to make money by doing that. After insufficient capitalization, the single most common cause of failure in new businesses is probably cash flow problems, and a lot of those come down to not understanding where the money is coming from – which is to say, who will pay you for doing what you do, and how much? As I’ve noted previously in this space, the science of marketing is an intensely complicated discipline, based even more on statistical analysis than management is, and I don’t even pretend to understand all of it. Fortunately, all that really matters at this point are the fundamentals, and those are simple enough that even a management scientist like me can explain them…

First off, who are your customers, and what do they want from you? Specifically, what strategy have you adopted to generate a competitive advantage within your new industry? If you’ve chosen a differentiation strategy you will be looking for customers who want whatever value you’ve managed to add to the product, and are willing to pay whatever markup you are charging for that. You will also need to figure out what advantages you offer over the existing products in the field, and whoever makes those. If you have decided on a low-cost strategy you need to establish parity with the competition, and explain how you are managing to produce a comparable product at a lower price. Either way, you need to define who your target audience is, and how many of them you expect to serve…

Ideally, of course, you would want to determine how big the market for your product is – that is, how many people in the community, state, country, region or world (as appropriate) want to buy what you make, and of that number, how many of them will actually be able to. But if your strategy is correct, you should either be offering a better product than the competition, offering a comparable product at a lower price than the competition, or offering a specialized service to a segment of the market that have never been specifically served before; the question of how big the market is in absolute terms is only important if there is more capacity than customers (which will drive down prices) or if you have more potential output than you can effectively sell. For the purposes of the business plan, what you need to establish is how many people you can reasonably expect to reach and what percentage of those people you expect to become your customers…

As previously noted, if you expect that one out of every 500 people you hit with spam emails will end up buying your product, and you need at least 1,000 sales each month to break even, you need to explain how you will reach 500,000 people with spam email each month; if you expect that one out of every 1,000 people who see your television commercial will become customers, you need to explain what sort of commercials you are going to make, where you will place them (channel, market, time slot, etc.), and why you believe that 1,000,000 people will see them. If you’re going to purchase a table at a local event or sponsor a local activity, you will need to account for how many people will see you, how many will want to do business with you as a consequence of such a sponsorship arrangement, and how many of those people will actually fit the profile of your customers…

As you write this section, you need to explain to your audience why you have selected each type of promotional activity, and how you expect to gain customers through each one. Even if all of your assumptions are good, and you are reaching all of the people you wanted to, none of that is going to matter if you don’t have some means of generating revenue at the end of the process. Putting product or service information up on the Internet serves no purpose if there is no way for customers to purchase anything from you once they have viewed the information, and running television ads serves no purpose if the spots don’t tell people where or how they can obtain your product. You can’t sell people anything if they don’t know you’re there, but no matter how well you publicize your product or your company, you’ve still got to sell it…

Here again, the key question to ask yourself is what would you want to know if you were being asked to invest your own money in such a venture. If it’s not clear to you how you expect to make money on the venture, then it’s also not clear how an investor could expect to make back their money, let alone turn a profit. You may not be able to show a simple equation of this many people will read our ads online, this percentage will be interested, and this percentage will call us, resulting in this many pitches, this many sales, this many returns, and this many stolen credit cards and cases of identity theft – but that’s no reason not to try…

An Oblique Attack

I noticed two items online this week that don’t at first glance appear to have any connection, but when you stop and think about them are really just two sides of the same coin. If you study history or finance, or worst of all, economic history, you already know that virtually every major financial crisis in Western history has given rise to protests that seek to blame the woes of the poor and downtrodden on the wealthy classes of their society, and demand redress, usually in the form of redistribution of that same wealth. In the Twentieth Century this tendency became permanently associated with civil rights and social justice movements, and with the usually (very) young people who make up the core of such groups, resulting in a perception of not just rich versus poor, but also of young versus old, crude versus cultured, liberal versus conservative, those who feel entitled to wealth and privilege versus those who (for whatever reason) actually have money and the advantages that go with it. And if you have read up on that history, you know that both halves of that perception are dangerous…

First, you have a story off of the Oregon Live site (quoted from the Oregonian), which tells about the mess and damaged caused by Occupy Portland, and how city officials are saying that cleaning up and repairing everything will cost around $85,000 from an already overtaxed city budget. The author does a good job of staying neutral in the report, but there isn’t much room for interpretation here anyway; the work descriptions and costs being reported are official, and they don’t paint a nice picture of the situation in Oregon. Even if you support everything the Occupy movement stands for, the fact that the encampments caused a huge mess, disrupted life in the area, and attracted a crowd of homeless people (and others who exploited the situation) can’t really be disputed. Given that most people around the country still don’t really know what the movement is trying to accomplish, all the average reader is seeing is a bunch of hippies demanding something or other while contributing nothing to society and draining money from taxpayers and social services (not exactly the 1%, whoever they might be). But that’s still the milder of the two stories…

The second was a piece on Fox News – quoted here by a conservative talk-radio broadcaster from Boston – about a college professor asking his students to write essays about what the American Dream means to them and getting a bunch of answers that expect the national government to take care of them and provide for their needs. Both the video and the site make a big point of emphasizing that the students repeatedly stated that rich people should have their money taken away and distributed to poor young people (like themselves). The authors then comment that since this seems to be the prevailing attitude, it’s no wonder that there have been public demonstrations by people “demanding free stuff.” The implication is that the Occupy have no real grievances or true reform agenda; they’re just spoiled kids who want everything but don’t want to actually work for it. The implication is snide, underhanded, and unfair to all of the people in the movement who would gladly take jobs and invest in their own future if they could get jobs, access to capital, networking opportunities, and all of the things the conservatives seem to forget that they already have. Unfortunately, the comments on the levels of entitlement currently prevailing in America aren’t incorrect – or even unfair…

Now, I don’t mean to side with either group in this scenario. I’ve taught undergraduates for the last three years, and a lot of them do have entitlement issues – but a lot of them are determined, hard-working people who will accomplish amazing things if they are allowed to do so. And I’ve seen the same stories you have about banks refusing to extend credit while they demand that the government bail them out – and then issuing billion-dollar bonuses to the people whose incompetence caused the financial crisis in the first place – but I’ve also met people who started with nothing and had nothing handed to them who have earned the riches they have; where is the justice in demanding that they give all away to people who have never worked a day in their lives? The truth is, both of these positions are nothing more than an oblique attack on the other side of a social-political issue, and the only ones who can possibly benefit from this innuendo are those political and social forces who are busily stirring the pot…