Paul Wallbank – Brilliant Communications

Tag: customer service

PayPal struggles with the Soviet customer service model
CNN reports that internet payment giant PayPal is looking at an “aggressive changes” to its fraud detection systems which see thousands of customers accounts frozen every year.

PayPal’s announcement follows last year’s promise by CEO David Marcus to institute a “culture change” at the company,

Our intention has always been to protect our customers. Not to mess around with our merchants.
I want to share two things with all of you:

#1 — there’s a massive culture change happening at PayPal right now. If we suck at something, we now face it, and we do something about it.

#2 — you have my commitment to make this company GREAT again. We’re reinventing how we work, our products, our platforms, our APIs, and our policies. This WILL change, and we won’t rest until you all see it. The first installments are due very soon. So stay tuned…

Screwing around merchants and buyers has become synonymous with PayPal and their parent company eBay who together are the poster children for the Silicon Valley Soviet Customer Service Model.

Reader comments to the CNN article cited at the beginning of this post give a taste of just how bad the problem is at PayPal.

Once your business attracts the attention of PayPal’s algorithms, you’re locked into a Kafkaesque maze of dead ends and arbitrary, made up rules.

To be fair to PayPal and eBay this problem isn’t just theirs, it’s shared by Google, Amazon and almost every major online company. Their view of customer service is to shoot first and ask no questions, they certainly won’t answer anything from their victim beyond a trite passive-aggressive corporate statement.

Part of the current Silicon Valley mania around web and app based services is that, along with providing free content, users will provide support for each other and that customer service is an unnecessary overhead which should be kept to a minimum.

In this respect, many of these new businesses are little different from the legacy airlines, telcos and declining department stores who have spent the last thirty years stripping away customer service with the result of locking them into shrinking commodity markets.

That failure to value customer service is the biggest weakness for companies like eBay, Amazon and Google. The very forces that favour them, the reduction of the entry barriers, also makes it easier for more customer orientated businesses to grab market share.

Just as Silicon Valley’s new businesses has challenged a whole range of incumbent operators, they too are at risk from upstarts who value their customers. This is something PayPal’s management can’t afford to forget.

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January 23, 2013
Firing your customers
Running your own business can be tough, but one of the therapeutic advantages of dealing with the stresses of self-employment is the ability to fire stroppy customers.

Steve Cody, the proprietor of marketing agency Peppercom, gives a list of five types of clients worth sacking in Inc Magazine.

It’s a good list although it misses the general “pain in the ass” client who demands a solid gold level of service for a pittance. These are particularly common if you pitch to the lowest end of the market.

Lists like Steve’s are good reminder of Pareto’s Law, or the 80/20 rule which is usually put in terms of 80% of business revenues come from 20% of customers.

The converse is also true, 80% of business hassles come from just 20% of customers and they are almost certainly not the most profitable ones.

Pandering too much to the bad customers can hurt your health as well – running your own business is stressful enough without dealing with troublesome clients.

So sacking bad clients is good, not only is it therapeutic but it also helps the bank account. It’s worthwhile doing whenever a customer drives you too far.

Go on, you know you want to.

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January 20, 2013
Transferring risk to the customer
AirBnB is one of the poster children for the “collaborative consumption” model of internet businesses where people can put their spare resources, in this case rooms, out into the marketplace.

Like most web based businesses though the customer service is poor and the proprietors try to push responsibility for the platform’s use back onto the site’s users.

A good example of this is an article this week in the New York Times where AirBnB hosts risk fines and eviction for breaching their leases or local accommodation laws.

When Nigel Warren rented out his New York apartment while he was out of town, he returned to find he was facing eviction and up to $40,000 in fines. Fortunately he avoided both but AirBnB did little to help him except to point him in the direction of the terms and conditions which required him to obey all local laws.

The New York Times asked AirBnB for comment and received corporate platitudes about how their service helps struggling home owners but no real response to the risks of falling foul to local government, landlords, building owners or insurance problems by sub-letting their residences.

Failing the customer service test is not just AirBnB’s problem, Vlad Gurovich was scammed by a buyer on eBay and now he finds PayPal is chasing him for outstanding money.

This is a pretty typical problem for PayPal and eBay customers – as Vlad has found, the various seller protections often prove to be useless when dispute resolution favours scammersand PayPal’s philosophy of shutting down accounts unilaterally and without appeal exposes sellers to substantial risks.

Interestingly, PayPal’s president David Marcus claimed earlier this year that he was trying to change this culture within the company. It seems that’s not going well.

PayPal, eBay and AirBnB are alone in this of Soviet customer support model – Amazon, Google and most web2.0 businesses have this culture.

In many ways it’s understandable as dealing with customers is hard. In the view of the modern business world, cutting deals is glamorous while looking after customers is a grubby, low level task that should be outsourced whenever possible.

Pushing the risks onto users also makes sense from a business perspective, that makes the billion dollar valuations of these services look even better.

For the founders of these services, none of this is a problem. By the time the true costs and risks are understood, the founders have made their exit and the greater fools who bought the businesses have to deal with the mess.

While the greater fools can afford to carry the costs, the real concern is for users who may found themselves out of money and out of a place to live.

That’s why the founders of these businesses need to be called to account for their ethical lapses.

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December 7, 2012
Reinventing the connected bank
Yesterday the National Australia Bank had a media briefing to show how they, like their competitors, are revamping their entire business around new technologies.

The investments are substantial and the re-organisation of the business is too as the old model of branch based banking only available from 9am to 4.30pm is superseded by the always on model of Internet banking delivered through tablets and smartphones.

One of the notable points the NAB executives made was their move to authenticating customers through voice recognition. A trial had found the system reduced fraud and social engineering attempts dramatically.

The use of voice recognition makes sense as it reduces the reliance on users remembering passwords or having to give over personal information that can often be gleaned off social media sites.

Again we’re seeing data security evolving away from passwords.

On the social media front, NAB are also offering their small business customers Facebook selling tools in collaboration with social media sales platform Tiger Pistol.

While it’s questionable that businesses will get that much from a Facebook store, it’s a good attempt from the bank to add some value and encourage their commercial customers to move online.

The move online is essential as the bank noted that online sales through their merchant platforms are up 23% as opposed to an anaemic 2.5% in general sales.

Along with passwords dying, the NAB also found that the cash register is dying and being replaced with smartphone and tablet apps. The bank itself is moving its online platforms to being ‘device agnostic’ so as not to be locked into any one technology.

What the NAB, and its competitor the Commonwealth Bank, are showing is the importance of having modern systems which are flexible enough to evolve with changes in the marketplace.

Smaller businesses could learn from the banks on just how important this investment is. The organisations who aren’t making these changes are steadily being left behind.

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November 21, 2012
Beware the business trolls
“A psychopath will enter everyone’s lives at one time. When yours arrives, your job is to get them out of your life as quickly as possible.”

That little gem was handed down to me before the internet gave everyone a global megaphone to entertain themselves with. Today it’s likely a dozen psychopaths a week could enter your life through the web or social media.

One of the manifestations of this ability for anyone to post to the web regardless of merit or sanity has given rise to the phenomenon of “trolling”, of which there has been much recent media attention.

At its most basic, trolling is about getting attention. The troll hopes to get a reaction from something outrageous they’ve said or done. In that respect they aren’t too different to radio talk back hosts or SmartCompany editors.

Business has its own types of trolls: the ‘squeaky wheel’ who hopes that by making a complete pain of themselves you’ll succumb to their unreasonable demands; the perennial tyre kicker who wastes your sales staff’s time; or the late payer who enjoys toying with you and your accounts people but has no intention of ever paying the bill.

The effects of these business trolls can be just as debilitating as an online troll, with the added bonus that they distract you and your employees from getting work done.

Sometimes the business owner makes the mistake of taking things personally. This often happens when a bad debtor upsets us so much we make it our life mission to get what we deserve to be paid.

Hundreds of hours and thousands of dollars later we surrender and accept we were never really going to get that relatively trivial sum.

The worst of all the business trolls is the recreational debtor. These business psychopaths take delight in ringing up debts they have no intention of paying and then treating your attempts to get the money back as a type of game where they will thoroughly mess with your mind.

These are the people to get out of your life as quickly as possible. It could be writing off the debt, giving them the refund or just kicking them out of the store.

So beware of the business trolls, they are as likely to appear in your outstandings file as on your Facebook page.

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November 9, 2012