Archive for October, 2011
Whar Can Netflix Teach Government Shared Services About Customer Service?
Organizations that excel at customer service listen and take note. They benchmark and apply the best practices and processes to their organization. They also learn from mistakes – both their own and others. To this end there is a lot government shared services can learn about customer service from Netflix.
Some background. Netflix is a streaming video and dvd by mail service. It was a favorite of investors, customers and Wall Street since start up in 2007. Its subscriber base went up quarter after quarter along with stock price and revenue. It pioneered the dvd by mail service that knocked Blockbuster out of the box and was one of the first companies to deliver movies via the internet. Investors loved it, customers, myself included, even more so. That is until July of this year. In July Netflix announced they were raising the cost of a combined dvd and streaming video subscription by 60%! The reason: customers were relying too heavily on the dvd by mail service (the least profitable method for delivering content) and not enough on streaming video (the most profitable method of delivering contemt). The price of a share of Netflix dropped 61% in 3 months as 800,00 customers left the company in the 4th quarter.
In September about the time the higher rate went into effect Netflix announced they were separating its streaming video service from its dvd by mail services with separate web sites and separate bills. Customers would search for content on one site and, failing to find it, log in and search for the same content on the other site. More customers left. It was no urprise that when Netflix released its 4th quarter earnings statement it was worse than the most pessimistic analyst projections. Netflix stock dropped another 26%. The company had lost 75% of its market value in just 3 months.
What can Netflix teach shared services about customer service?
1
Don’t blame the customer. Netflix said customers’ stubborn insistence on clinging to the outdated dvd format was the problem. In fact, I ordered dvds by mail when the content I wanted was not available for streaming. Having framed the issue incorrectly (customer preference vs the unavailability of streaming content} the solution was incorrect. Ask the wrong question and you get the wrong answer every time.
2
Don’t treat your customers like captives. In raising rates 60%, Netflix forgot that their customers had choices. A lot more now than in 2007. Treat your customers like they have a choice even if you don’t think they do. You could be wrong.
3
Service recovery is important. How you recover from a service failure can be as bad as the failure itself. To add insult to injury, Netflix followed up the announcement of a 60% rate hike with an announcement of their intent to separate its streaming video service from its dvd by mail service. Normally this would mean absolutely nothing to customers except Netflix added that they were creating a separate web site for customers to manage their dvd subscription and customers would be billed separately for dvds. At a time when all their energy should have been focused on recovery they announced their intent to inflict more damage.
4
Put yourself in your customer’s shoes or go barefoot. Apparently the executive suite at Netflix did not consider how onerous it would be for customers to manage two different accounts, use two different web sites and pay two different bills if they wanted to keep both services, They could not have. By making it harder to keep both services the company guaranteed a large number of customers would drop one or both,
5
Some humility is in order. Netflix aborted its plan to separate dvds from streaming video but the price increase stands. To the ground swell of complaints, wave of disgusted customers and 800,000 former customers Netflix had only this to say: we won’t even try to woo back the customers we lost by increasing subscriptions by 60% and our botched plan to subject the remaining customers to the laboriousness of managing two separate accounts. Our decisions were right but our timing was off. In other words, we should have waited awhile longer before announcing our second idiocy.
6
The climb to the top may have been too long but the fall to the bottom is always too short.
No CommentsWhat Steve Jobs Can Teach Us About Shared Services
Like millions of others I was deeply saddened by Steve Job’s passing. I have read, viewed and listened to many documentaries, editorials, newscasts, blogs etc. about his life and achievements since. As a result I have been thinking seriously about the profound impact this one person had on our lives and our times. To say he was gifted and a visionary the likes of which we may not see but once or twice in a century sounds trite but it is true. One of the articles I liked most was The Legacy of Steve Jobs: 10 Innovation Lessons, by Don Reisinger . And so with due credit to Mr. Reisinger here is what Steve Jobs can teach us about shared services..
1
“Don’t Worry About the Cost”. Invest in the shared services infrastructure. This does not mean reckless spending. What it means is knowing when, for what and how much to spend. Things like a contact center to manage customer interactions, a business intelligence system to give you insights needed to run your business are fundamentals of shared services. They should be considered given costs without which you cannot do shared services or call yourself a shared services organization. And as Steve Jobs proved over the years, when you get these right the costs is just a footnote compared to the return.
2
“Give Customers What They Don’t Know They Want”. Shared services customers don’t know what they need until you show them. They want fast, reliable and cost effective services but it is your job to translate this desire into products and services. . “And then they won’t be able to live without it.”
3
“Don’t Be Afraid to Create New Markets”. Look for new ways to increase the shared services value proposition. ”
No CommentsMoving the Needle on Government Customer Service – Part 3
In Part 1 of Moving the Needle on Government Customer Service I talked about the state of customer service in government and compared customer service in industry and in government. In Part 2 I talked about the impact of government’s haphazard approach to customer service on employees, organizations and the public. In this third and last post on the subject I cover why government customer service as a whole lags behind industry and what to do to move the needle.
What’s wrong?
1
Government has been slow setting up call centers. Do not confuse a receptionist who answers the phone and routes calls with a contact center. Businesses know intuitively that product and service go hand in hand. A good product but poor customer service will have the same affect over time as selling a lousy product. To businesses customer service is part of the product life cycle. To government customer service is an add-on, a necessary evil.
2
Government employees are not trained in customer service. This doesn’t mean that government employees receive no training in customer service. Rather since customer service is not a job in and of itself, the training is general in nature. Contrast the customer service training the HR specialist who also answers customer calls in government gets with the customer service training that a customer service representative who also handles HR calls in industry gets.
No Comments