"Your Call Is Very Important to Us"

Any free-market company that doesn't see its self-interest as including prompt, efficient customer service is deluding itself. It makes itself vulnerable to the customer-oriented competitor.

But I do see Brad's point; sometimes you have to cut and run.

Hodak,

It turns out there is another advantage to customer incidents. A customer who goes through a successful support incident is more loyal than one who enjoys a trouble-free product or service. At least, I know this is true for HP and Dell, but I wouldn't be surprised if the same is true elsewhere.

At HP, at least, this wasn't taken to imply that faults should be deliberately built in. The product groups have their own reputation and marketing issues to deal with. A sub-standard quality level and killer support may be a great way to retain customers or maybe make a few extra bucks out of them, but it is not a great way to acquire new customers.

This seems like an example of where the economic theory is incomplete. This incompleteness would result in what one might call a distracted business model.

A business can, almost by definition, be in only one business at a time. An airline is in the business of serving passengers desire to get from one place to another, not answering customer questions per se. Once one makes answering customer questions a profit center, someone in the company now has an incentive to maximize those profits, i.e., create lots of customer questions to be answered. The airline is much better off figuring out how to organize its business model so as to minimize the questions it raises among its customers, e.g., steering them to on-line resolution platforms, or organizing itself well enough that those questions don't even come up. That's what management is really about.

I got a sense of the perverse incentives of a 'distracted' business model when my wife found a problem on her doctor's bill because of a failure by her insurer to pay. It turns out her insurance company, in a sense, charges people to resolve these disputes if they take too long to resolve. This kind of makes economic sense from Don's narrow (in this case) perspective, but it's easy to see how this undermines the efficiency of this insurance company. They have every incentive, now, to create disputes and to take a prescribed, lengthy period to resolve them. I don't see how a firm intent on competing can benefit from this example.

Spencer,

I don't think the guys at GMU believe they have access to the revealed truth. I think they believe that a free market will reveal the truth. And I agree.

Brad --

I agree. Your comments reminded me of an article I wrote several years ago here

Henri makes an important point. Software companies have dealt with this free/paid/premium support level thing since the late 1980s. I've dealt with many big enough companies that have obviously used support to encourage expensive customers to go elsewhere. I'd count Sprint and (recently) Earthlink among these. They're a good deal and great to deal with when you don't have problems. But when you do, it might be cheaper and faster to switch companies than get your problem resolved. I'm sure that a lot of outsourcing customer support to India is driven by not wanting customers to expect top flight service, as perverse as that sounds. In some industries, it may be most profitable to encourage expensive customers to self-select out.

I can also personally plead guilty to handing difficult/expensive customers to competitors. Some people are just poison when they're asking for help.

Some companies do offer a way to pay for faster access to agents. It's usually a different line, though. This is common in the high-tech industry, where support programs are often tiered. If you pay for the 'Platinum' level, you get immediate access to a knowledgeable agent. If you miser out and go for the 'Basic' level, you get to wait twenty minutes for a script-reader who will take you through the common and generally useless reboot-scenarios.

If God were running the company's switchboard, He wouldn't rely upon this first-come, first-served method to allocate agents' time

I know you guys at GMU believed you have the revealed truth.... but claiming that God told you how he would organize the economy seems to be taking the concept a little too far.

Did he call you on the phone since burning bushes are now so old fashion?

Sort of like a Google auction --

"The current bid for the next available agent is $12.50, please use your touch tone pad to enter a higher bid, or continue to wait for the next auction ..."

I think that might leave a significant number of people on permanent hold. A lot of airlines currently have paid membership cards and preferred customer service numbers, there are also third party agents like AMEX. In my thinking, an upgraded service path already exists -- and the frustration of holding is one of the best reasons to opt into one of the existing options.