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Customer service - Journal of Omnifarious

Aug. 8th, 2005

04:04 pm - Customer service

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I have a theory about customer service...

Industrial processes benefit greatly from economy of scale. Producing 10 megawatt hours of electricity is not twice as expensive as producing 5 megawatt hours. Producing 100000 widgets is not twice as expensive as producing 50000.

I believe that customer service does not have this property. I believe that for a particular organization providing an equal level of customer service for 1000000 people is more than twice as expensive as providing it for 500000 people. I believe this is true because there are essentially no economies of scale, and many extra levels of management for all the extra people you have to hire.

This means that large organizations will provide inherently worse customer service for an equally priced product as a small organization. So, for products where customer service is a crucially important thing (such as, say, providing Internet service) that there is an optimum size for the organization doing the providing, and that if it gets larger, it provides a significantly worse, or significantly more expensive experience for the customer.

I've been thinking about this because I've been thinking about why all big telecommunications companies are so incredibly awful to deal with while regional ISPs tend to be at least mediocre.

BTW, the FCC has recently made a couple of rulings stating that for the purposes of data (ie Internet) lines, the big telcos do not have to lease their physical infrastructure on an equal basis to all comers. This effectively means the end of ISPs capable of providing any kind of broadband connectivity, and IMHO will make decent quality broadband impossible to find. I think it's the worst ruling the FCC has yet made, and that it will be even worse for the industry than the ill-concieved broadcast flag.

Current Mood: [mood icon] thoughtful

Comments:

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From:earnan
Date:August 8th, 2005 11:29 pm (UTC)
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I disagree a little.

While you are correct as far as personnel goes, there are other service enhacements that a larger organization can bring to bear.

A larger organization can invest in infrastructure. They can have multiple customer service locations (think colo), so in the event of a disaster, network outage, etc. at one location, another can take over calls.

A larger organization can invest in greater technology. Self-service websites, Voice Response Units or Integrated Voice Response so you can get answers without having to talk to a person, customer service support software to assist in rectifying common problems, etc. They can invest more money in creating training materials and performing training for employees.

On the other hand, the larger the organization, the more likely you will be talking to "Bob" in India these days. :)
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From:earnan
Date:August 8th, 2005 11:31 pm (UTC)

Addendum

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What is more likely the case is that to a business of 1,000,000 subscribers, you are a number, and not that important of a number. To a business of 20,000, you are much more critical. :)
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From:ohpun
Date:August 10th, 2005 07:43 pm (UTC)
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A larger organization can invest in greater technology. Self-service websites, Voice Response Units or Integrated Voice Response so you can get answers without having to talk to a person, customer service support software to assist in rectifying common problems, etc. They can invest more money in creating training materials and performing training for employees.

These are the heart of lousy service. Any time you are not talking with a knowledgeable person who can actually answer your question or do something to help you, you are getting lousy customer service.

"Let me look that up." Long pause. "Sorry, there is nothing in the database about this problem. Let me try a different keyword." Another long pause. "What was the problem again?"

At several organizations I have automated internal routine processes. However, people are not standard. They do not all have the same levels of knowledge or observation or abilities to describe the problem. I had a problem with a computer and the only help was on a pay-by-the-minute call. I called, someone answered, I described the problem, he told me the solution, and I was off the phone in less than a minute. My ex-wife said she never could have done that. She would have spent several minutes telling her story about how the problem happened. Help can not be automated except to highly technical (in their field) people. I can search a problem database before calling and it may save me time. But I only do that with technical products that I am very familiar with. I'm sure there is a database for lawnmowers or VCRs, but I don't even bother to try and find them. An "oh I remember this problem" from an experienced tech is usually much faster for me, the customer.
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From:omnifarious
Date:August 20th, 2005 12:54 pm (UTC)
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Yes, I was thinking that, but not quite sure how to make the point. The things large organizations try to use to scale up almost invariably severely degrade the quality.

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From:hattifattener
Date:August 9th, 2005 12:43 am (UTC)
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Administration should go as n*log(n), assuming(!) a non-dysfunctional company.

There are some economies of scale to be had in user support, but I think they mostly consist of separating out the tasks requiring less skill, and either automating them or giving them to less-skilled workers (who can therefore be paid less). That results in IVR systems, canned responses, and "first-line tech support" which has little knowledge of what they're supporting but can still handle most of the inquiries. (Some first-line support will have more knowledge — but that won't be the rule, especially in a larger organization.) I'm guessing it's really, really easy to let these changes result in crappy support.
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From:xaotica
Date:November 25th, 2005 10:31 am (UTC)
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came over here via slashdot. since i am a former tech support employee for a small local telcom, i thought i'd throw my 2 cents in.

working in a smaller company is often more enjoyable than for a large corporation. people know you by name vs. employee number, and treat you more like a human vs. a statistic. if you're happier working there, typically there'll be less employee turnover.

how does this relate to customer service? well, an employee who just got hired yesterday could find even a mundane question challenging. one who's been doing the job for 5+ years will know the system(s) inside and out.

i do think it's possible for larger corporations to treat entrylevel employees with enough respect that they'd want to stick around. but most don't. they treat them like a dime a dozen, so the employee themself is often depressed/hostile/unmotivated before the phone even rings.


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From:omnifarious
Date:November 25th, 2005 02:16 pm (UTC)
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This is also true. Perhaps there's a similar thing that's true about human resources. :-)

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