Get it right the first time

Bill Price was Amazon.com’s first global vice president of customer service. Since leaving Amazon.com, Bill formed Driva Solutions to help clients deliver great customer experiences. He recently co-authored a new book, “The Best Service Is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs,” with David Jaffe. In this interview he reveals the concept of “Best Service” and why it is important to small-business owners. 

Question: Why is the best service no service? 

Answer: Customers don’t want to call their bank or e-mail their online retailer if something’s confusing or if there’s an error — instead, everything should work perfectly in the first place. A recent survey cited 75% of CEOs proclaiming that their companies provide above-average customer service, yet almost 60% of customers said that they were “somewhat to extremely dissatisfied” with their most-recent customer-service experience. Clearly, there’s a large gap. 

We need to reduce the rate of contacts by eliminating dumb contacts entirely, offering engaging self-service and being proactive, delivering great customer experiences when things do break down, and only then to deliver great customer experiences. 

Question: Are companies stupid, lazy, or just don’t give a damn, so they don’t build things right from the very start? 

Answer: All three, unfortunately! Some companies are stupid in not recognizing how much money and good will they are wasting, and letting bad measurement systems and processes get in the way of what we call “Best Service.” 

Some companies are lazy in that they think it’s too hard to fix service, and therefore better to “get by” and fix the symptoms than do the hard work on the root causes. And there are lots of “don’t give a damn” companies, too, particularly where a short-term profit motive dominates or they are fixated with an engineering culture. 

Question: Can it be that it’s “just math” in the sense that it may cost less to provide lousy products and deal with issues than to do things right, so the companies are doing the financially rational thing? 

Answer: No, it’s the opposite case. Most companies actually haven’t done the math to deliver Best Service because Best Service is always cheaper — or they do the wrong math. The equation must also include repeat contacts — what we call “snowballs” — recalls, legal costs, and brand damage, etc. Plus, there are the costs of the service operations themselves — that is, the help desks, call centers,and back-office departments are clearly the biggest single cost category, often 5% to 10% of sales. As service issues occur, there are increased costs of complaints such as legal remedies or compliance. 

Question: What if the management says that they’d love to do the right thing, but they are in a cost-competitive market and would go broke doing so? 

Answer: We have yet to find a company that couldn’t improve service and cut costs at the same time. There is a mistaken mindset that Best Service is more expensive, but poor service is a killer since you end up needing more of it for the wrong customers in the wrong situations. 

Question: What Web sites would you consider good examples of self-service? 

Answer: Alaska Airlines, eBay, CheckFree, Citibank Card, First Direct, Amazon.com and Zappos are all doing a fine job in Web-based self-service — what we like to call “engaging self-service.” This requires that (a) customers don’t have to call or e-mail or open a chat session to finish their order or ask about something; and (b) the companies listen to the customers’ requests and, if possible, eliminate the needs entirely. 

Question: What companies are good examples of self service? 

Answer: Pizza Hut enabled SMS (short message service) ordering [via text messaging]. It’s simple for the customer and easier for them, a two-way SMS exchange so that customers can check and confirm and all those things you’d do over the phone. 

Nordstrom has been legendary for its service, including two of the seven principles of Best Service: make it really easy to contact your company, and listen and act. The Palomino restaurant chain takes reservations on its Web site, cutting maitre-de time to answer calls, and eliminating frustration to the diner. And many corner shops, dentist practices, and dry cleaners practice Best Service because they know that it’s essential to ensure repeat business. 

Question: What’s an example of “proactive” service? 

Answer: The German Autobahn: If there’s congestion ahead, a radio signal turns on or interrupts car radios with a warning message, enabling the driver to seek alternative routes or at least understand why there’s a problem. Being proactive means connecting a “why” trigger with information or choices. Amazon used to send “missed promises” e-mail messages to customers so that they could cancel the order and shop elsewhere. Few did cancel, and those that did were very appreciative. 

Question: What are the tangible steps for a company to take to fix a service problem? 

Answer: There are seven steps, or principles, based on the foundation understanding the nature of service requests — that is, to really understand the demand for service and “challenge” why customers need to contact companies for service. Each principle includes sample frameworks and a series of questions to see if you’re on the path to Best Service, or headed the other way: 

1. Eliminate dumb or avoidable contacts to free up capacity and slash costs. 

2. Build self-service that works to free up even more capacity and cut costs even more. 

3. Find ways to be proactive rather than reactive because it is often cheaper than waiting. 

4. Engage the real “owners” of customer problems to work with the customer-service team to fix the problems. 

5. Make it really easy to contact your business. 

6. Use the contacts you get to listen closely to the customer, and act upon WOCAS (What Our Customers Are Saying). 

7. Fix reporting metrics, processes, and the staffing side to deliver great experiences for customer contacts. 

Question: How should a company measure customer satisfaction? 

Answer: The rate of customer-initiated contacts that require personal support is the best measure of satisfaction. This is expressed as “CPX,” or “contacts per X,” where “C” equals calls + e-mail messages + chat sessions, and “X” equals transactions or installations or invoices sent. Measured and shared weekly, companies achieving Best Service see 20% to 40% per year reductions in CPX and as a result much happier customers and lower costs, too. 

Our second killer metric is the rate of repeat contacts, or “snowballs.” Just like the snowball rolling down the hill, getting bigger and menacing skiers, repeat contacts are clear “customer dis-satisfiers” that need to be stopped — or melted — before they ruin the company’s reputation. CheckFree is a great example: over the past five years their transactions have quintupled while customer support headcount is down 20%, at the same time customer satisfaction rose by 20%.

Guy Kawasaki is a managing director of Garage Technology Ventures, an early-stage venture capital firm and a columnist for Forbes.com. Previously, he was an Apple Fellow at Apple Computer Inc., where he was one of the individuals responsible for the success of the Macintosh computer. He is the author of eight books, including his most recent, The Art of the Start, which can be found at www.guykawasaki.com.