Wednesday, March 25, 2009

Commoditization vs. customer support

One problem with commoditization is that it does away with the juicy profit margins that allowed for expensive things like human contact.

The exemplar of this new model is Google, which commoditizes everything with free services but makes no claim of any support whatsoever. As summarized by Randy Stross’s book, the entire model from day one has been to design out any human contact which (inherently) does not scale — a key difference from Yahoo’s origins with the hand-built web directory.

In some cases, this is not so bad: the Dell website is probably more accurate and honest than the average 1990s computer salesman.

But then there is tech support. Tech support as a way to resolve a specific problem is getting squeezed out wherever possible. Despite its high gross margins, Apple is doing their darnedest to eliminate human contact (even via email) unless you pay for a premium service plan.

Even if companies nominally provide service, that doesn’t mean that it’s competent — or that customer service reps have the authority to do something. I’ve been fighting Sprint for two months over replacing my broken Samsung i500; I’ve been paying for an “equipment protection” plan which will provide me with a phone I can’t use, but not the only direct replacement — their last remaining Palm OS phone, the Palm Centro. The polite telephone reps promise than an “escalation team” will call me back but no one has.

And then there is the black hole of nominal support. I bought a digital download from Amazon on February 24 but it didn’t download due to a bug in their software. I’ve contacted them twice via their online form but they’re ignoring me. If I’d purchased it with a credit card I could dispute it but I used a gift certificate so I’m stuck.

On Tuesday, Barbara Philips of the WSJ reviewed a book studying call centers, written by Emily Yellin. The book is cleverly titled Your Call Is (Not That) Important to Us.

Here is the relevant factoid du jour:

"The approximate cost of offering a live, American-based, customer service agent averages somewhere around $7.50 per phone call," Ms. Yellin says. "Outsourcing calls to live agents in another country brings the average cost down to about $2.35 per call. Having customers take care of the problems themselves, through an automated response phone system, averages around 32 cents per call, or contact."
Even if Phillips thinks the book reads like a series of magazine articles, it still seems like a useful read for anyone in an industry that supplies (or uses) human customer support.

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