Software and Technology Customer Service

An under-rated competency, which should be considered more important to software and technology companies, is customer service. I guess that’s only natural; tech companies are very focused on gaining strategic advantage via technological advances and product differentiation. Once the product is in good shape, companies shift there focus, and become hell bent on marketing and sales activities to attract new customers.

But what about taking care of existing customers?  And how about the operational details of what happens when someone—be it a prospect, new customer or existing customer—contacts the company for assistance? I find these are areas that software and tech companies aren’t “naturally good at”. It’s not part of the DNA of most tech companies. Very seldom will you see a founder or CEO who came up on the support, or customer service side of the tech business.

Because of this, customer support is quite often an afterthought, a detail that senior management never seems to have time to get to—as they struggle with the issues that are viewed as strategic: product development, marketing and sales.

Now I won’t pretend to espouse that if you have good customer service and support, all is good, you’re going to be successful. Nothing could be further from the truth. Yes, building great products and marketing them effectively is still of critical importance to growing a tech company. But I have seen many companies with otherwise good products and market penetration techniques, who mess it up big-time in the customer service area. Below are some of the ways to waste all of the hard work you’ve put into acquiring hot prospects and new customers:


Unfriendly User Interfaces
This doesn’t seem to fit in the category of “customer service”, and technically it doesn’t. But bad user interfaces are a primary reason that your customer service organization becomes overwhelmed. So put extra work into getting your interface right—you will benefit greatly, through less “negative call” volume, and resulting strain on customer support.

Viewing Customer Support only as a cost center
Customer service and support is viewed almost universally as a cost center. I will admit that I viewed it that way when I was managing a P&L. With this view, it is very easy to put Support first in line, when you need to cut money out of next year’s budget. Beware of doing this too often. Excellent customer support leaves a lasting impression with clients—and bad customer support leaves an even BIGGER impression. I have had money with Fidelity Investments for years, and this long term relationship is due in great part to their consistently excellent support. I also have an account with ETrade, whom I am intrigued with due to their innovation business practices. But if you actually need to speak with a real person at ETrade—oh boy, can it be painful. So the bulk of my money remains with Fidelity. Dell Computer is a company that I believe is jeopardizing their historically dominant position lately, via reduced support quality. They will no longer support the software that comes on their computers—just the hardware. And even a basic hardware warranty costs extra. I understand the concepts of unbundling and customer choice, but I find this extreme. And unfortunately personal computers are just pieces of metal; they are complex hardware/software systems. Supporting software really isn’t optional, if you want a good user experience. Dell has also taken their Call Centers overseas to save money. While it’s still possible to get an excellent support rep on the line from their faraway call center, it’s become quite spotty, and you more frequently get someone that can’t help at all. I’m sure some operations VP received big bonuses for reducing support costs through these, and other steps for Dell. The cost savings no doubt look huge. But is the true cost in reduced sales, and fleeing of long-time customers (like me!)? This reduction is sales is not as obvious as the direct cost savings, but no less real—and probably more important to the business in the long run.

Voice Mail Hell
This is my pet peeve and the pet peeve of many other people as well. I’m a tech guy, and love the application of leading edge technologies to reduce labor costs. But enough, already! A number of otherwise good companies have taken automated voice mail attendants way too far. They make you feel like a mouse in a 6 square mile maze. Companies need to remember that when you pick up the phone to call, it’s with the intention to TALK TO SOMEBODY. Using technology to quickly route people to the correct department, or answer simple inquires like directions to the company, is an efficient use of technology for both the company and customer. But making it extremely hard to get through to ANYONE, even after wading through seemingly endless nested menus—is just ridiculous. The only purpose it serves is too alienate your customers and prospects. This is truly the definition of “penny wise, pound foolish”.

Untrained or under-qualified customer and technical support reps
After waiting in voice mail hell, you think it can’t get any worse. But wait. After the one half hour wait, your call is now answered by someone so green, so incompetent or so rude that frustration turns to rage. You are asked to enter your account number on the phone pad. Then the rep answers, and again requests the exact same information. You haven’t reached the right department, of course, so you are transferred to another department, where the rep asks you, yet again, for the exact same information. After this rep finally fills in his or her form (not answering ANY questions until it’s complete), you ask them about your situation, that cries out for an exception to normal company policy. The rep robotically and coldly repeats the company policy—which you already knew. Think someone will want to do business with this company again? Customer and technical support is CRITICAL in the long run. It’s one of the true long term differentiators in the market. Spend a little more to hire and retain good people, train them well, and empower them to actually take care of real world customer issues. It will pay back many times in the future.

Unfriendly Hours of Operation
I’m on the West Coast of the US, so this happens all the time. Try to call customer support in the early afternoon, but the office closes at 5P Eastern Standard Time. This is a particularly important issue for those of you serving consumer markets—many people can’t easily call support lines from work, without putting their employment in jeopardy. In this day of inexpensive, fast communications technology and worldwide commerce, there is no excuse for inconvenient business hours for the markets that you serve.

Predatory Support Costs
This is something that has continually degraded for customers over time. It used to be that technology companies supported their products for free. The economics of competition has, in the long run, made this go the way of the dinosaurs. Many times, this is with good reason. A well-priced maintenance contract, from a B2B software company which provides an 800 number, unlimited supported, and all major and minor updates, can be a really good value. If it is priced at the industry standard 18-20% of product cost, and enables the vender to provide excellent support—that’s great. But what if the support is lousy and it’s priced at 30% of the cost of the product annually? Or how about a consumer software company that is charging $100/hour, without even the benefit of a free 30 day startup window, to troubleshoot their buggy and non-intuitive product? Give me a break! If you want to stand out in today’s market, try providing an intuitive, bug free product, coupled with free or reasonable support (there won’t be many support calls needed if you do this!). People will beat a path toward your door—and tell every friend they have. This won’t show up in the Controller’s cost control report—but the benefits to your company’s top line will be enormous.

So these are some of the low tech ways to screw up a high tech business. Software and Tech CEOs, keep your eye on the customer service ball. Otherwise, a savvy and opportunistic competitor, with lesser product technology, may take advantage and steal a piece of your market share.

Feel free to add to this discussion—post your own views on how you provide great customer service in the comments below.

Phil Morettini
PJM Consulting
www.pjmconsult.com
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Flattening of the Growth Curve

In every company’s history there comes a time (or two or three or four times!) when your momentum slows, and the sales curve begins to flatten. This can be one of the most trying and frustrating times for software and technology companies. It’s certainly not as difficult as the startup phase, when “crib death” is an ever present fear. And a no growth, flat revenue scenario is much preferable to declining sales combined with negative profitability that follows, which leads to a “death spiral” if no effective action is taken.

I do find this situation is often more confusing to company management than either the start up or death spiral scenarios. This is because it often occurs just after a period of fast growth and prosperity, where it seems that the company can do no wrong. As a result, senior managers are often in denial about what is happening—whereas in the startup or death spiral situations, the situation is much more obvious, usually motivating folks to take fast, decisive action.

Search for the Culprits, Blame for the Innocent

With flattening growth, it’s easy to blame things that may not be the true cause. I often here excuses and tactics such as the following:

“The marketing department just needs to put out better promotions. Fire the VP Marketing and bring in someone who will get the job done”.

“The sales force isn’t selling hard enough, they just need to close more deals. Get the VP Sales off the golf course and tell him to kick some butt, or he’ll be the next to go”.


“The channel is useless; they’re taking 30% but they aren’t pushing the products—take more deals direct”.

“We just need to charge more for our products; we’re leaving money on the table”.

“Cut the price to stimulate demand.”

“The UK distributor is fat, dumb and happy—sign two more of his competitors to motivate him and maximize sales in that country.”

Now some of these reasons may even be accurate, and some of the proposed tactics could be possibly be useful. But I have found, quite often, that things of this nature aren’t the fundamental issue, and beating up the sales force, cutting or raising prices, or messing with your channel balance may exacerbate the situation and make things worse—not better.

The Real Problem

Sometimes the answer is as simple as “All good things must come to an end.”

Growth cycles don’t last for ever, as much as every software & technology company CEO, VP marketing and VP Sales wishes it would. There is almost a natural cycle that occurs with revenue that often coincides with the life cycle of your products. Also, the economy changes, competition heats up, novel marketing programs age and are copied—which reduces their effectiveness, market segments get saturated, and customer budgets are retargeted to the “next new thing.” Stuff happens—always. The only real question is when.

So what’s a befuddled and perplexed tech company CEO to do?

Finding a Solution

Well, the first thing I recommend is to really spend some time getting to the bottom of things. Instead of shot-gunning blame that may be misplaced, or impetuously blowing up established pillars of the business—conduct a real, objective analysis of the nature of the slowdown. I don’t suggest paralysis by analysis by any means, but do take the time to gather some data, so that your actions will be based on more than knee-jerk reactions.

Past that, it’s hard to generalize on a course of action, because the proper action will depend upon what you find in your analysis. But for the sake of discussion, let’s say that while there are a few factors that you find which could be leading to slower growth, no there isn’t a “silver bullet” reason that can be “fixed” to get the revenue curve again pointed up and to the right. Below are some general ways that I’ve found may enable you to “restart growth”. I might add that many of them are most effective if you begin them prior to actual revenue flattening:

Try marketing programs you haven’t used before
Usually when you get in a period of high growth, there is a workhorse program or two that has worked well for you, and there is a tendency to “keep doing what works”. Unfortunately, even the best conceived marketing programs eventually run out of steam. One of the keys to having consistently good outbound marketing, is too be constantly testing new ideas, placing small bets, and fine-tuning them if there is enough success to continue. As I’ve said many times before, product marketing is part art, and part science—with the art portion unfortunately upfront. You need to do a little trial and error to find a good program, and then the science kicks in, using data you’ve gathered to optimize it. But the key is to be constantly testing new ideas, in good times and bad. If you wait until your growth has already slowed, you may scramble for quite a while, trying to find an answer.

Have an internal “growth” brainstorming session
Ideally you are doing this before you fall into a revenue rut. But regardless, do bring together people in your organization, to bring out the ideas they may have to give the top line a kick start. Do hold these sessions in an open, non-threatening and non-political environment. It’s important that people are able to speak freely, and not be ridiculed, if they come up with an idea that’s “too far out of the box”. That is often where strategic breakthroughs are made. And don’t just limit these sessions to executive managers. Remember, the people at the bottom of the org chart are often the ones closest to the business, and are sometimes able to more easily spot a big opportunity that the company could capitalize on.

Hire some outside help
Consultants have a very bad name in some areas—unfortunately, sometimes with good reason. But bringing in someone with deep marketing or management expertise, with a different viewpoint than the internal management team, can sometimes be the quickest way to new approaches that will turn the ship quickly. I’d recommend staying away from folks that that have a cookbook formula, have only been consultants and not operating executives, or take too much of an academic approach. Every company, market and point in time is different, and needs to be analyzed as such. But hiring the right outside consultant or firm who is creative, analytic and “been there and done that” can have a big impact. PJM Consulting has often worked as a change agent in these situations, and increasing or restarting traction is an area of specialty.

Look at entering an adjacent market
If it’s determined that your current market space is getting saturated, one of the first things to do is to look at adjacent spaces. Preferably, look somewhere that you can leverage your current marketing, distribution and brand, but also possibly where you can apply existing company technology to a different customer’s problem. The key here is don’t go to a complete green field, that looks attractive because it’s large or growing fast, but where you have no real business competing. Again, it’s best to be taking this step in anticipation of slowing growth in your current business—rather than waiting until it happens. Getting traction in new areas can take some time.

Consider M&A to fill out your product line or distribution system
If you’ve been caught by a surprise slowdown and you need to do something quickly, a strategic acquisition can sometimes be the answer. I warn you to proceed with caution here. M&A is fraught with danger—statistics show that most acquisitions don’t work out well. You need to think it through, proceed carefully, and don’t get overly excited by the thrill of the deal chase. If done well, however, a strategic acquisition can be a real shortcut to entering an adjacent space, filling out your product line for an existing strong distribution system, or adding sales channels to your strong product offerings. This is another area where PJM Consulting has strong experience, and can offer assistance.

Think it through before you start shooting

There are obviously endless other potential ways to explore, when attempting to jump out of a revenue rut. I wanted to suggest a few to stimulate your thinking—and more importantly, steer you away from some “knee-jerk” reactions, that often make your situation even worse.

What have you done in the past when you need to restart growth? Post a comment below and fill us all in.

Phil Morettini
PJM Consulting
www.pjmconsult.com

Online Journal for Internet Marketing Program Testing

It's time to fill you in on another great Internet Marketing Resource that I have encountered. This one is called Marketing Experiments. MarketingExperiments.Com is a member of the MEC Labs Group and a division of Digital Trust Inc. MEC is an online laboratory with a simple (but not easy) five-word mission statement: To discover what really works. The Lab tests every conceivable marketing method on the Internet. The research is done by MarketingExperiments.com and funded by their Research Partners. A portion of the results are published in the Marketing Experiments Journal.

Internet Marketing lends itself to much more objectivity than most offline methods due the ability to gather data quickly and quite competely. However even online, everytime you start a new campaign, you're essentially beginning from scratch and likely to waste effort and money prior to either getting it right or abandoning the effort. The great thing about the Marketing Experiments Journal is that they are continuously publishing objective results on real campaigns, designed from the beginning to be measurable.

Recent research published includes:

• The Power of Small Changes — How minor changes to your website can have a major impact on your conversion rate.


• Click Fraud - Research indicates that as much as 30% of paid search traffic may be fraudulent.


• Optimizing Subscription Pathways — How simplifying the sign-up process can result in a dramatic increase in the number of subscribers to your newsletters or subscription services.

Upcoming research activities listed on the site include:

1. Overstock Auctions as a Marketing Channel Tested


2. Order Paths Tested


3. Subscriber Retention Tested

I have found the research to be comprehensive, useful and interesting. So whether you are researching the efficacy of a specific type or program, or simply trying to increase you knowledge about "what works", give MarketingExperiments.com a look. I believe that you'll be glad that you did.

Phil Morettini
PJMConsulting
www.pjmconsult.com