Fascinating talk on ‘economics of open source support’ June 2nd
By Phil Verghis on May 24, 2010http://bit.ly/cg9iQW — I’ll be there…
http://bit.ly/cg9iQW — I’ll be there…
Sprint has a plan that allows international data roaming for $40 a month. In theory, it is very simple. You to call before you leave the country and sign up for an international data roaming plan (allows you to get mail, web content, radio etc. while traveling to countries where CDMA services are available) and cancel when you get back. This is significantly less expensive than paying by the byte. I’ve done it before, and it works well.
When it works.
My first hint that my last three week global trip may end up with a huge bill came when from ‘Jennifer’ at Sprint Customer Care called to see if I was aware my *upcoming* bill was going to be unusually high. When I asked how high, and she said well about $1,112.23 more than usual. We walked through the sequence of events, and it was clear Sprint had made a mistake. However, she could not authorize the refund because the bill hadn’t posted yet.
She promised to call me back after the bill had posted. I was skeptical, and set a reminder to call Sprint back a day after the bill posted. Well wouldn’t you know it — ‘Jennifer’ called back and informed me that I would get a paper bill for the higher amount, but to just pay the normal monthly charge and ignore the rest as she had taken care of it. Sprint sent me a survey after the call and I noted that while I was very happy with the support, I hadn’t seen the bill yet. Based on the survey answer, I got a call from another group following up, by which time the updated bill had posted. I also got a second courtesy call from someone in the Customer Care team making sure that all was fine.
Well done, Jennifer. Well done, Sprint. You have earned my loyalty.
Lessons for service providers:
Hats off Jennifer. Hats off to you Sprint. I’ve called to let Jennifer’s supervisor know of the work she did, and this is my public thank you to Sprint.
Andres Sanchez has published a book titled Technical Support Essentials – Advice you can use to succeed in Technical Support and has cited the Savvy Support model a few times as one of the new models for support.
Read all about it, and much more of what Andres has to say in his book.
(From the Dec ’09 issue of my newsletter, The Verghis View. Get your own subscription at my home page – www.verghisgroup.com )
Many of you have heard me refer to software maintenance fees as “bad” revenue. While it is very lucrative, it’s bad because customers are unhappy paying it – ask any CIO. To give you a sense of how massive these fees are, Oracle made $12 billion last year – no, that’s not a typo – $12 billion from services and maintenance fees, according to Information Week.
I did some research on how other industries demonstrate value for their maintenance fees, and found it in an unlikely source – aircraft engines. (From this article in the Economist.)
All the major players – Rolls Royce, GE, and Pratt & Whitney – reportedly lose money on the sale of the engine. They make up to seven times the revenue from servicing and selling parts.
Interestingly enough, Rolls Royce has embraced two concepts that go beyond what the vast majority of companies provide in the software space.
First, they abandoned the traditional “break fix” model. Instead, they have taken real-time monitoring to a new level. In a world of mind-numbing complexity, they have (thankfully!) assumed that customer-impacting failures are to be minimized.
In their operations center in Derby, England, vast amounts of data is collected in real time from thousands of engines in flight. This flood of data is immediately analyzed and, if a problem is detected, Rolls Royce informs the pilot in flight. Repairs are arranged at the next stop, rather than waiting for it to become a full-blown emergency.
The data analysis continues after each flight is over. This helps Rolls Royce anticipate future problems and reduce the number of emergency repairs – and unhappy customers. As you can imagine, whenever a plane is yanked from service, the ripple effect on an airline’s schedule, revenues and customer satisfaction is non-trivial.
Real-time information monitoring saves Rolls Royce lots of money in terms of better-designed engines, and increases the time between engine rebuilds (now up to 10 years).
The second thing RR does differently is to charge by the hour the engine is run. This makes perfect sense. The aviation industry’s equivalent of “shelfware” is idle planes parked in the desert. The struggling airline industry loves it. After all, why pay for maintenance on expensive engines when your planes are grounded?
The lesson? Don’t settle for break-fix when you can do far better than that. Your service and support team can actually improve your customer’s business, while charging fees that make more sense for the customer.
In this example Rolls Royce gets paid very lucrative services revenue only if the service is being used. So it’s in both Rolls Royce’s and the airline’s interest to keep planes in the air – one of the key drivers to reducing cost per passenger.
Look ahead to 2010. How can you use customer information to improve their business – and your own?
After almost 4 weeks of travel (just crossed the 100,000 mile mark with United Airlines this past weekend), I’m back in Boston for a few weeks.
One of the reasons I’m back is the Third Annual Voice of the Customer conference hosted by the First Wednesday Group. There is a terrific lineup of speakers and participants. If the past two years were any indication, it should be a fun event with a lot of provocative ideas. I’m looking forward to seeing many friends, colleagues and customers there.
(Disclaimer, I am one of the producers of the First Wednesday Group.)
The Voice of the Customer Conference 2009
Boston, November 3-4
Some of the strongest, most active communities in the social media world are based on post-sale customer support relationships. User groups, online forums, advisory boards, expert networks, survey panels–a growing number of “voice of the customer” channels now provide a rich dialog between companies and their customers.
A great place to learn more about how social media is influencing the support world is the First Wednesday Group’s annual Voice of the Customer conference, which will take place Nov. 3-4 at a conference center outside of Boston.
This is a boutique event–highly interactive, small in scale, with an impressive lineup of expert speakers and an audience of managers with a good deal of hands-on experience with social media in a customer support environment.
If you’re looking for great conversations and lots of real-world data, this is the place to be.
Registration is $385/day. For speaker and program details, please visit
Ah the simpler days of the Internet. Way back in 2002, during my Akamai days, we had team members manually mining public forums for customer comments during live events to ensure that we could pin point and resolve issues close to real time. Of course it would be impossible to scale staff enough to do that smartly today.
That’s why today’s New York Times article (free registration required) on some of the tools available to mine blogs, Twitter and more caught my interest. Selected quotes from the article:
Scout Labs recently introduced a subscription service that allows customers to monitor blogs, news articles, online forums and social networking sites for trends in opinions about products, services or topics in the news.
Jodange offers a service geared toward online publishers that lets them incorporate opinion data drawn from over 450,000 sources, including mainstream news sources, blogs and Twitter.
Bo Pang, a researcher at Yahoo co-wrote “Opinion Mining and Sentiment Analysis,” one of the first academic books on sentiment analysis.
To get at the true intent of a statement, Ms. Pang developed software that looks at several different filters, including polarity (is the statement positive or negative?), intensity (what is the degree of emotion being expressed?) and subjectivity (how partial or impartial is the source?).
For example, a preponderance of adjectives often signals a high degree of subjectivity, while noun- and verb-heavy statements tend toward a more neutral point of view.
How are you tracking sentiments about your organization? Have you been able to strike a good balance between a rapid response and appropriate response (i.e. not over-reacting) ?
After years of being able to use the proverbial 80/20 rule, anecdotal evidence seems to point to it being even more skewed with online knowledge bases. Growing evidence from my own clients and listening to other knowledgeable observers points to a new 2/98 rule. For a sample size of thousands of documents, one or two percent of the documents account for close to 50% of all the ‘hits’.
Note: If there is great seasonal variance (for example back to school time for an University or tax time for a financial software company) then look at your usage statistics split out by season so you don’t lose the trees for the forest…
From the August 2009 edition of the Verghis View newsletter. Feel free to sign up for your own free subscription at http://www.verghisgroup.com/
Today’s Most Common Service/Support Traps
One of the reasons I have been so busy is because of a number of service assessments I have been performing for various organizations around the world. Over the past few months, savvy executives have been getting a jump on their competition by seeking a blueprint on the best ways to prepare their leadership teams and organizations for the inevitable growth period that lies ahead.
Some companies have found their support infrastructure under increased stress. Others have found the support landscape has grown far more competitive, as customers rightfully demand more value for what they pay.
I’d like to share some of the most common themes I’ve seen emerge during my recent assessments. If you are interested in your own service assessment, please check out http://www.verghisgroup.com/consulting/support-assessment/
TRAP #1. TREATING ALL CUSTOMERS THE SAME
Trying to be all things to all customers is a disaster waiting to happen. It’s an unsustainable business model. The fact is, customers are not all the same. For a startup, revenue is paramount, so you do whatever it takes to get and keep a customer. But when an organization matures, you need to adopt a more pragmatic approach: getting and keeping your profitable customers.
But if you can’t be everything to everyone, what is the alternative? Is it giving some customers excellent service, while others receive something less? Absolutely not! You can give everyone excellent service. Here’s how to do it.
Give customers in each segment better service than they expect — and better than they can get from the competition.
How do you manage to deliver great service to all your customers? Begin by dividing your customers into segments, and understand exactly what each segment really wants. But how do you segment your customers? If you’re part of a larger company, it has no doubt already been done for you. Talk to your marketing or product management team about your company’s “target market.”
If you’re with a small company or have never done this kind of customer segmenting before, here’s one simple approach.
Just divide them into high, medium and low-revenue customers. This is a decent first pass if you have nothing else to work with.
Next, find out what each segment of your customer base likes, and what your competition does in this space. Note: These days, “competition” refers to more than just your head-to-head competitors. It also includes service experiences across all companies, like Amazon.
Finally, tweak your processes and align your resources to address the needs of each customer segment.
There you have it – a simple way to segment your customer base and deliver exceptional service to everyone.
TRAP #2. MISSING THE TREES FOR THE FOREST
When I hear people citing their Customer Satisfaction, Customer Engagement or Net Promoter Scores, my first question is usually, “What customer segment does that score refer to?”
My advice: Stop aggregating key performance indicators like customer satisfaction scores across your entire customer base. This is particularly true if you have a large customer base (like one of my clients, who has 60+ million customers). Aggregating customer satisfaction scores across multiple customer segments tends to obscure important details.
In the example above, I’d want to know the sat scores for each segment of the customer base. Ditto the survey return rates. If you have a Technical Account Manager relationship and some customers are paying you a lot of money for a percentage of a senior person’s time, the response rate for those customers should be far higher than for those who only pay you a few hundred dollars a year.
TRAP #3. IGNORING IMPORTANT DETAILS
Look at the companies who are reporting profits these days. Aside from one-time events that may have bumped up revenue, most increased profits by cutting costs. While you cannot cut your way to greatness, this should be part of your ongoing strategic business review.
The aviation industry is a good example of profiting from attention to detail. When fuel costs soared, airline profits evaporated like a vapor trail in the sky. A careful review of costs uncovered this fascinating tidbit: 20% of a large passenger jet’s fuel is consumed carrying the fuel itself! This discovery led to critical changes in procedures. Instead of topping off the fuel tanks and lavatory water after each flight, they added only the necessary amount.
Result: Savings of thousands of dollars per flight — often the difference between a profitable flight and an unprofitable one.
There you have it – three simple lessons that can help you get ready for the recovery ahead.
One of the most under-rated yet powerful tools we have at our disposal as customer support/service folks is a well thought out customer lifecycle plan (complete with a timeline). This involves formally mapping out customer touchpoints along the customer lifecycle starting with the transition from sales to support all the way to ‘exiting’ the customer when they leave the business.
As part of this lifecyle and timeline, the first few days of a customer relationship is recognized and treated as importantly as in a personal relationship. A little effort at the right time will go a long way in making the relationship smoother.
I was given a powerful reminder of this yesterday while visiting ValueLabs as part of a client engagement in Hyderabad, India yesterday.
I was welcomed at the airport by a driver with a sign, and an admin assistant. I was given a local Indian cell phone with all the numbers I would need pre-programmed. If you travel a lot, you know that the cost of using your cell phone internationally can take a year off your retirement savings, and figuring out all the local codes vs. national codes is not a trivial matter. This was a most welcome touch.
When I arrived at the facility the next day, the cab driver (arranged by the company) had clearly been given instructions to call ahead to let them know I was on the way. I was welcomed with flowers and a ‘VIP’ badge. Very nice touches, and it showed an attention to detail for the customer experience that is unusal.
What are you doing to make your new customer experience a special one?
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