Monday, July 07, 2008

Under the Heading of "Duh": Outsourcing Can Lead to Plummeting Customer Loyalty

Ars Technica has a terrific article about the effect outsourcing customer support has on the "perceived value" of a company's goods to the average consumer:

Study: outsourcing can lead to plummeting customer loyalty

To sum up, the results aren't good. Who would'a thunk it? Apparently, when customers are shunted aside and treated like an irritating distraction to the important business of making money for overpaid executives and stock-price-obsessed stockholders, they tend to resent it, and their loyalty to the product in question and the company that makes it suffers considerable damage.

Why, I wonder, is this news? American business has been marching down this path to self-destruction for decades now, replacing the old business mantra that "customer is king" with a new mantra along the lines of, "the customer will take what we give him and like it or else." Is it surprising, really, this sort of contempt for consumer relations has a negative impact? Are corporate executives really so out of touch with the customers they purport to care about they can't begin to imagine how badly buyers feel when they're treated like crap?

Almost twenty years ago, I had an argument with a small business owner over the issue of office voice mail. I bemoaned the fact that more and more, when I called a company I was trying to do business with, I found myself routed through a rats maze of impenetrable and ultimately unhelpful voice mail options. "To reach technical support, press one; if your call concerns a new installation, press two; if you'd like to pay a bill, press three," and so on and so forth. Usually, what I wanted wasn't an option provided by the option tree. What I wanted was to speak with a real, live, helpful human being, who would point me toward another real, live, helpful human being who'd do his or her best to solve whatever problem prompted my call. Even twenty years ago, this was becoming increasingly difficult, and I suggested to my new friend that businesses did themselves harm by treating their customers, and would-be customers, like interchangeable cogs in a voice mail grinder.

"But it's really cost effective for us," he replied. "It saves us money and it keeps us from having to hire someone to deal with routine customer interaction. It's a great business tool."

Yeah, a great business tool for him. For anyone trying to reach him, or do business with his company, not so much. I couldn't seem to get this idea across. He kept repeating it was a money-saver, it was efficient, it weeded out unnecessary, routine customer interaction. But what if "routine interaction" had the potential to create new business? What if interacting with customers helped management respond to customer needs before problems arose? What if actually dealing with customers taught companies how to satisfy customers and build customer loyalty?

How can a robotic, dead-end voice mail option tree ever accomplish any of those basic business goals?

Obviously, it can't, and businesses that rely on automated customer interaction, and its vile evil stepchild, customer-service outsourcing, are reaping the contempt they sowed.

American business management has spent the last several decades doing everything it can to erode employee and customer loyalty in the blind pursuit of quarterly profit and increasing "shareholder value." But how does it create value for shareholders when you deny the value of the people working for you, as well as the customers who buy your product?

It makes no sense to me, but then, I didn't go to Harvard or Yale Business School, and I don't have an MBA.

And if you've got an MBA, who needs common sense?

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