Customer Service as a Competitive Advantage

In the first season of the Masters of Scale podcast I heard Reid Hoffman tell a story about the early days at PayPal. I couldn’t figure out which episode it was from, but he told the same story to the Harvard Business Review last year:

We faced this issue at PayPal. In early 2000, payment transaction volume was growing at a compounding rate of 2% to 5% per day. That kind of growth put PayPal in a deep hole as far as customer service was concerned. Even though the only place we listed our contact information was in the Palo Alto phone directory, angry customers were tracking down our main number and dialing extensions at random. Twenty-four hours a day, you could pick up literally any phone and talk to an angry customer. So we turned off all our ringers and used our cell phones.

Their strategy at PayPal was literally to ignore customers! Big companies and companies that scale fast have horrible customer support. It’s a tradeoff they often make, and often as a calculated business decision. Customer service is something they’ll figure out later, when they have more resources.

This, my friends, is a huge opportunity for you and I. When you’re just getting started there’s a lot that you can’t do better than the competition, but you can almost always provide better customer service. Customer service, by nature, is hard for big companies and easy for small companies, provided that you make it a priority, which you absolutely should. Great customer service requires that you’re able to respond quickly, that you care, and that you’re able to actually resolve the issue…easy for a tiny company, really hard for a big one. The best part? It’s free, earns you goodwill with your customers, and the bar is set so low that even a B+ job usually delights customers who are used to being ignored. And those customers that you help are the people who are most likely to be your future customers, the ones who are most likely to post a positive review on social media or tell a friend. It is, in my opinion, the best free marketing out there.

The other good news: we’ve all experienced so much poor customer service that we almost all intuitively know how to provide great support. It’s a craft for sure, and being great at it takes a lot of practice, but anyone can be good at it by just treating people the way that they would want to be treated, which can basically be boiled down to:

  • Respond quickly. For emails I think anything less than a few hours during business hours is exceptional.
  • Take the time to understand the problem. Read what they wrote or listen to what they’re saying. Ask them follow-up questions if needed.
  • Reply like a real person, by which I mean actually address their concerns and offer a solution. Text expansion or canned responses are fine, as long as they’re used as a tool and only applied properly.
  • Fix the problem, even if it costs time or money (so long as you don’t suspect that their abusing your product/service).

I’m a big fan of primarily providing support via email, social media, and voicemail box…at least at first, because you can batch process those a few times per day while still allowing plenty of time to work on the other things that are important to your business. You’ll look like a rock star for replying to emails every 3 hours, trust me. Phone calls, texts, and live chat, have their place, but are also interruptive in nature so you have to consider your situation a bit more before proceeding.

2 comments on Customer Service as a Competitive Advantage

  1. Rob says:

    > Fix the problem, even if it costs time or money (so long as you don’t suspect that their abusing your product/service).

    I’m not sure if you said it on here a few years back or if I read it somewhere else, but one great bit of advice I try and aim for is to only ever fix each problem twice. Once for the immediate issue/customer in front of you, and then again in a way that means this issue will never arise again.

    Of course, this isn’t always possible. No end of internal tweaking will fix errors with your courier service, but for many issues can the negative effects can be heavily mitigated by taking the right action – usually this involves making processes and instructions clearer or providing more information at a critical point.

    As you say, I think a lot of big companies fall down here. Particularly if you’re dealing with minimum wage phone drones who hate their life and either couldn’t give a crap about improving the company or have tried in the past and been ignored.

    • Adam McFarland says:

      Yes, absolutely! It’s amazing how many companies won’t put in a tiny bit of effort to prevent that email from happening in the future. I don’t blame the reps, like you said they’ll often try and be ignored. It has to come from the top, you have to empower people to fix things.

      Also, I like the phrase “minimum wage phone drones” 🙂

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