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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Customer Service Has To Change

Comments (7)

I am regularly amazed at the amount of money consumer electronics, mobile device, and cell phone companies spend on “stupid customer service tricks.”  I got the following note from a friend that has a Sony Reader.

My screen cracked for some reason.  Probably got hit in my bag somehow.  I sent it in to Sony for service and they offered to fix it for $272; a new unit is $299.  I declined. I sent a letter to the Sony USA VP marketing.  I pointed out that when my ipod broke, I got a new one in 20 minutes at the store, no questions asked.  And the contrast in experiences is why my family of 4 has 8 ipods but is only likely to have 1 reader. I got a nice phone call last night and a new reader is on its way! 

I am a consumer electronics junkie – you name it, I probably have (or have had) it.  My best two customer experiences to date have been the Sonos (truly amazing) and Slingbox (we are investors so I’m glad it’s amazing.)  Apple has also been a happy place to be, as long as I walk into the store and give them my sad puppy dog look.  Most everything else sucks.  When something breaks (like my Sony DVD player did last month), I just buy another one to replace it rather than struggle through the six week “send it in and then pay us almost as much as another one to get it fixed” routine.)

The Sony Reader example above is completely consistent with my reality.  It’d be so easy for Sony to start by sending out another one and have a delighted customer.  The result would be worth much more than the cost of incremental customer acquisition and the customer destruction support function.  The strategy of “send me your broken thing and I’ll replace it” seems so logical today in a world where people shout from the rooftops about the great experiences – buying much more goodwill than a million banner ads. 

At least the Sony USA VP Marketing has a clue.  Maybe Sony should put her in charge of customer care!

  • Adam

    Amen. Someone ought to start a Customer Service revolution.

  • http://www.serviceuntitled.com Douglas

    That’s the thing with customer service. If you do it right, your customers will be really loyal to your company. If you do it wrong, they’ll do the exact opposite and tell people how bad your company and your products are.

    People really under estimate the power of customer service – I like to consider it one of the best forms of guerrilla marketing myself.

  • Evan R

    Successful companies always start out by catering to their customers. At some point, corporate customer service (for repairs, replacements, or rebates) nearly always becomes bluff-based: the first response to any service claim becomes a reflexive “no”.

    This is a trick learned from insurance companies and it is most successful (from the corporation’s perspective) when switching costs to an alternative are highest, but that is not a necessary condition.

    These businesses have learned that they can generally bank on inertia winning over indignation, at least in “round 1″.

    The corporations may cave when challenged, when the customer gets an attorney involved, or when PR is at risk, most of the time it won’t ever get that far and the money stays in their pocket.

    How do so many corporations get away with this under the consumer radar? The key is in recognizing the many different ways corporations say “no” without really saying “no”:

    One flavor of no is “the no of absurd repair costs”, as you experienced. Internally this is known as “the no of ‘fuck it, I’ll just buy a new one’”. This no is most often heard in conjunction with fragile products with time-limited warranties.

    Another “no” is the “no of infinite support tiers”, where you need to escalate 3 chains up to reach somebody who is in a position to understand (let alone resolve) your problem. The problem of course is that each tier is incented to prevent your complaint from escalating, and there is no accountability at any level (the call is never actually “being recorded for quality and training purposes” when you need it to be).

    Another “no” is “the no of endless paperwork”: drowning the customer in forms, process, and inexplicable waiting, as is often the case with manufacturer’s rebates, or furniture warranties. The game is to try to trick the customer into not following the written claim procedure, so the manufacturer can legitimately discharge its obligation. The industry even has a name for the frequency with which a corporation can successfully (and legally) weasel out of a service agreement: it’s called “breakage” and there are patents pending for breakage maximization techniques (lest anyone think this tactic is anything other than deliberate).

    Yet another no is the “no of inadequate remedy”. By example:

    “We’re sorry your $500 Treo 700p cell phone is broken, but you’re in month 13 of a 12-month warranty. How about $100 for it, or $100 off the brand new $600 Treo 755p?”

    “We’re sorry your flight was canceled and your baggage was lost and your rescheduled flight was delayed 6 hours. How about 5,000 SkyMiles for your trouble?”

    It’s getting better. Slowly. Thanks to Digg, the blogosphere, even Yelp (for local businesses) – companies are finding it harder to perpetuate bluff-based customer service, but it is still the standard at the F500 level.

  • http://resonancepartnership.com Marianne Richmond

    Had a similar experience with Sony customer service and a new Vaio laptop…and yet they are speaking at conferences on how they are customer centric.

    I have bought 2 laptops since my Vaio moment: an HP and a MACBook. The customer really is always right, one way or the other.

    Customer service should be a marketing strategy not an operational expense.

  • http://blog.offbeatmammal.com OffBeatMammal

    Having just had a pretty bad experience with an Acer and Circuit City (Acer were at least helpful, but having to send a 3 day old machine off for repairs wasn’t acceptable – Circuit City managed to lose a customer over it: http://blog.offbeatmammal.com/blogs/obm/archive/2007/06/14/aspire-to-despair.aspx) I’m feeling a little cynical, but this is pretty good to hear… especially from Sony.

    In the past I’ve had issues with them (very much the “send it to us and we’ll quote to fix it” response) but recently (case in point the Vaio exploding battery recall) they handled in a very pleasing way.

    As consumers become more informed and reputations are only a Live or Google search away from damage corporations will need to wake up to the fact that caring for your customers in an effective, delightful manner is no longer an option….

    At least, we can hope ;)

  • deepb

    In situations where a product is really truly broken, I think the “send me your broken thing and I

  • ARUN K SHUKLA

    I BOUGHT A SONY VAIO (AR 320E) FROM BEST BUY, CORPUS CRISTI,TX,USA ON 27 MAY 07.JUST AFTER 30 DAYS I STARTED OBSERVING TWO DISTINCT LINE OF 5 CMS ON THE SCREEN.I AM A SEAFARER AND WAS UNFORTUNATE TO APPROACH ANY OF THE SERVICE STATION IN USA.I CAME TO INDIA AND APPROACHED KOLKATTA SONY SERVICE STATION AND WAS ADVISED OF DEFECTIVE LCD BUT THE SAME WAS NOT AVAILABLE IN INIDA.THEY ADVISED ME OF INTERNATIONAL WARRANTY BUT THE SAME WAS NOT WITH ME.THEY TOLD ME THAT ITS NOT THEIR PROBLEM NOW WHAT SHOULD I DO….

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