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What your example demonstrates though is how much of a difference happens when a company thinks of CS as a profit center rather than a cost center. That's great

What your example demonstrates though is how much of a difference happens when a company thinks of CS as a profit center rather than a cost center. That's great for you guys but there's lots of industries where CS genuinely is just a cost center and should rationally be treated that way, with all the attendant pathologies that go along with that.

shostack 12y ago
I've heard this argument before and with all respect, I don't buy it. Can you provide any examples of industries where there is no opportunity to turn CS into a profit center vs. a cost center? Sure it might be very difficult to model and prove out the exact impact it has on the bottom line, but I'm not convinced there are any scenarios where pissing off your customers with a poor experience is better for business than making them feel loved and, well, supported. :)
- shalmanese 12y ago
  Sure. The airline industry, for example, has been notoriously unfriendly towards most attempts at differentiation based on quality. Margins are razor thin (http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-than-6/ http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-...) and customers are incredibly price sensitive. While many consumer's stated preferences are for things like more legroom and less delays, their revealed preference is they'd rather save $5 on a $300 ticket and suffer the indignities. I would argue you're seeing the same narratives play out in the ride sharing space right now. Lyft tried to compete with Uber with their friendlier drivers vs we'll get you there faster and cheaper messaging and we'll see how long that differentiation lasts since Lyft seems to be rapidly backing away from their branding and into competing on purely on price. Markets which are natural monopolies like Comcast also don't profit from extra CS. When your choice is shitty broadband vs no broadband, there's little CS, good or bad can do to sway your decision. Markets where the purchaser is not the end user like enterprise sales also benefits from investing more money in sales than support. Every doctor I've ever been to has bitched at length about basic usability issues with the software they're forced to deal with but they have no real power so the software stays uniformly bad. Markets where purchases happen infrequently. I recently had to buy a spare part for my refrigerator. Amazon didn't carry it, and the sites that did seemed uniformly low rent and amateur. I ordered from 1 site that said it was in stock and chose reasonably fast shipping. After not hearing from them for 2 days, I sent an email and they got back to me saying that due to a clerical error, it was actually out of stock and wouldn't be shipping out for another 4 days. Meanwhile, the website still listed the part as in stock. They didn't care, what's the worst I could punish this retailer for? Denying them all of my future spare fridge part purchases? Sure, there's always exceptions to be found in all of these areas but by being the exception, you relegate yourself to a niche of the market and it becomes hard to expand outside of that niche.
  - gnopgnip 12y ago
    In the Bay Area Megapath competes with Comcast by offering the same exact connection but much better service with value added options like proactive monitoring. The same physical line in the ground will get you internet access. They will almost always cost more than Comcast, but it is worth it to many people to not have to deal with automated phone systems that waste your time and ineffectual support.
    - shalmanese 12y ago
      Right, so what you see is in areas where people have a choice, Comcast rationally decreases prices and increases service levels. That's the entire logic behind Google Fibre. But for most of the country, there's literally no choice of broadband and there's no incentive for Comcast to improve.
  - shostack 12y ago
    I had a feeling you might cite some of these examples :) Admittedly the Lyft example was unknown to me--I'll have to dig in, sounds interesting. Specifically to airlines, I'd direct you to some interesting info on Southwest[1]. While TBH the case study doesn't really prove to me the causation of success by being customer-centric, it does show that they can compete in that industry with that approach and be successful. For the cable industry I'd argue that Sonic.net has carved our a nice business for themselves in part because of their amazing service. That doesn't really disprove your statement that it relegates a business to a niche of the market and makes it hard to expand outside the niche, but I again think back to the question of correlation vs. causation. Comcast, TWC, etc. were all well entrenched before Sonic.net even existed. So it is hard to say how much of a factor that played in their limited ability to compete vs. the fact that they focus on customer service. Respectfully, what I still remain unconvinced of with your examples is what exactly Comcast and others like them are leaving on the table by not having awesome customer support experiences. You don't necessarily need to break the bank to have one, but you do need strong direction and culture, and that comes from the top down. I go back to the notion of customer acquisition costing potentially 5x as much vs. retention costs (all hypothetical averages of course). If an industry has razor-thin margins and cost-focused customers, wouldn't you think it would make them a lot of money to maximize the LTV of said customers? [1] http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case-studies/pdf/6-0031.pdf http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case...

shostack 12y ago

I've heard this argument before and with all respect, I don't buy it. Can you provide any examples of industries where there is no opportunity to turn CS into a profit center vs. a cost center? Sure it might be very difficult to model and prove out the exact impact it has on the bottom line, but I'm not convinced there are any scenarios where pissing off your customers with a poor experience is better for business than making them feel loved and, well, supported. :)

shalmanese 12y ago
Sure. The airline industry, for example, has been notoriously unfriendly towards most attempts at differentiation based on quality. Margins are razor thin (http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-than-6/ http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-...) and customers are incredibly price sensitive. While many consumer's stated preferences are for things like more legroom and less delays, their revealed preference is they'd rather save $5 on a $300 ticket and suffer the indignities. I would argue you're seeing the same narratives play out in the ride sharing space right now. Lyft tried to compete with Uber with their friendlier drivers vs we'll get you there faster and cheaper messaging and we'll see how long that differentiation lasts since Lyft seems to be rapidly backing away from their branding and into competing on purely on price. Markets which are natural monopolies like Comcast also don't profit from extra CS. When your choice is shitty broadband vs no broadband, there's little CS, good or bad can do to sway your decision. Markets where the purchaser is not the end user like enterprise sales also benefits from investing more money in sales than support. Every doctor I've ever been to has bitched at length about basic usability issues with the software they're forced to deal with but they have no real power so the software stays uniformly bad. Markets where purchases happen infrequently. I recently had to buy a spare part for my refrigerator. Amazon didn't carry it, and the sites that did seemed uniformly low rent and amateur. I ordered from 1 site that said it was in stock and chose reasonably fast shipping. After not hearing from them for 2 days, I sent an email and they got back to me saying that due to a clerical error, it was actually out of stock and wouldn't be shipping out for another 4 days. Meanwhile, the website still listed the part as in stock. They didn't care, what's the worst I could punish this retailer for? Denying them all of my future spare fridge part purchases? Sure, there's always exceptions to be found in all of these areas but by being the exception, you relegate yourself to a niche of the market and it becomes hard to expand outside of that niche.
- gnopgnip 12y ago
  In the Bay Area Megapath competes with Comcast by offering the same exact connection but much better service with value added options like proactive monitoring. The same physical line in the ground will get you internet access. They will almost always cost more than Comcast, but it is worth it to many people to not have to deal with automated phone systems that waste your time and ineffectual support.
  - shalmanese 12y ago
    Right, so what you see is in areas where people have a choice, Comcast rationally decreases prices and increases service levels. That's the entire logic behind Google Fibre. But for most of the country, there's literally no choice of broadband and there's no incentive for Comcast to improve.
- shostack 12y ago
  I had a feeling you might cite some of these examples :) Admittedly the Lyft example was unknown to me--I'll have to dig in, sounds interesting. Specifically to airlines, I'd direct you to some interesting info on Southwest[1]. While TBH the case study doesn't really prove to me the causation of success by being customer-centric, it does show that they can compete in that industry with that approach and be successful. For the cable industry I'd argue that Sonic.net has carved our a nice business for themselves in part because of their amazing service. That doesn't really disprove your statement that it relegates a business to a niche of the market and makes it hard to expand outside the niche, but I again think back to the question of correlation vs. causation. Comcast, TWC, etc. were all well entrenched before Sonic.net even existed. So it is hard to say how much of a factor that played in their limited ability to compete vs. the fact that they focus on customer service. Respectfully, what I still remain unconvinced of with your examples is what exactly Comcast and others like them are leaving on the table by not having awesome customer support experiences. You don't necessarily need to break the bank to have one, but you do need strong direction and culture, and that comes from the top down. I go back to the notion of customer acquisition costing potentially 5x as much vs. retention costs (all hypothetical averages of course). If an industry has razor-thin margins and cost-focused customers, wouldn't you think it would make them a lot of money to maximize the LTV of said customers? [1] http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case-studies/pdf/6-0031.pdf http://digitalstrategies.tuck.dartmouth.edu/cds-uploads/case...