Human Beings FTW: How Tech Companies Are Rediscovering the Power of Real People

By Sarah Lacy , written on May 16, 2012

From The News Desk

On Monday I broke my third iPhone in the last six months. These slippery devils have now shimmed into puddles, toilets, and in this most recent case, off my lap and onto concrete. I know, I need a case. I bought two Monday, so stop with the lectures.

But you know what? At some level, if I have to mess up the phone's gorgeously simple hardware design by effectively putting a rubber condom on it to keep it from breaking, THERE'S A DESIGN FLAW.

But that's not really the point of this post. I am working in Vegas this week, so instead of my usual trip to the Union Square - Genius Bar (holla, guys!) I went to the Apple Store out by the Vegas airport. We didn't have an appointment, and the service was tremendous. They worked us in and were incredibly nice.

And yet, there was someone standing behind me that was nit-picking about it not being even better. She said to another disgruntled customer the line something you hear a lot when you eavesdrop in Vegas, "Well, I work for the company that has the best customer service in the world so..."

She was, of course, talking about Zappos, and it was clear by listening to the ensuing conversation that this woman works at Zappos for one big reason. It's not the discounts on shoes or the crazy headquarters with different noisemakers on every aisle or the almost cultish, feel good all hands meetings. It's because she's insanely, ridiculously proud to work at the place that made insanely expensive customer service that almost no company could justify into a $1 billion exit. She lives her life looking for reasons to brag about that very fact to complete strangers.

That alone is an astounding fact, if you think about the trend corporate America was on with outsourced, voice recognition software and endless phone tree call centers just a few years ago. And Zappos isn't alone. Increasingly, middle America is reclaiming the call center. Don't call them "fly-over states" anymore, you coastal snobs. Thousands of people in America's heartland may no longer be farming or building cars, but thousands more are making all of our lives way better every day call by call.

Last week I did a story on Scottsdale-based GoDaddy, another dot com survivor that has grown to $1 billion in revenues, largely by refusing to outsource call centers when everyone else did. The company's take on customer service was outrageously expensive, and when GoDaddy was looking to go public in 2006, it was one of the things that bankers balked at. They demanded cost cuts there, and instead CEO Bob Parsons pulled the S1. GoDaddy does more than 12 million calls a year, and it only has 10 million customers.

Monday, I wrote about a $70 million investment in a little-known company called Qualtrics, based in Provo, Utah. Even though Qualtrics was bootstrapped until now, the company never skimped on customer service. Sirens go off at the company's headquarters, if a phone rings more than three times. It rings on every single person's desk -- even founder and CEO Ryan Smith. "There is no automated phone tree," he says.

Smith credits this attention to customers with Qualtrics insane growth, which has been almost entirely word of mouth. It's a company founded on the idea that the Web can automate market research, and yet its own business relies heavily on human beings answering phones. This is amazing really: The company had no outside funding and yet didn't skimp on customer service.

And several months ago, I spoke with Bill Ready of Braintree Payments, a Chicago-based company (sensing a trend here?) that powers payment back-ends for more than 2,000 online companies such as OpenTable, Fab, and Airbnb. It's processing some $4 billion in payments annually. The company's big edge: You can talk to real people. The company's white glove service warns clientele of potential fraud, rather than just cutting payments off at what can be a vendor's biggest sales push of the year. PayPal's system, in contrast, is so automated that it's hard to even get a person on the phone to explain why payments have been shut down. This has won the small company huge accounts.

Something well beyond Zappos is happening here. And it's similar to the move from commerce mega sites to curated content-driven experiences. It's not too dissimilar from our own ethos at PandoDaily that page views are not what build a big business, rather seemingly crazy investments in what we consider to be good work does. It's a move from a slavish reliance on machines and metrics towards things that humans are uniquely good at, things that can not be automated. It's a reaction against the phone tree, voice-recognition software, the algorithm and any too-good-to-be-true shortcut that companies embraced over the last five to ten years.

Is it too much to say that the outsourcing wave was wrong, that the business pendulum is swinging back en masse to expensive investments in making customers happy? Probably. (Unfortunately.) But these four companies -- and doubtlessly others like them -- are setting an important precedent in how short-sighted the outsourcing and automated customer service boom was.

I've noticed anecdotal differences as a consumer -- even with non-tech companies. I used to dread calling my bank to tell them I was traveling and not to cut off my debit card if someone tried to use it in, say, Nigeria. It was so awful navigating the phone tree, keying in information, saying "menu," and all that hoop-jumping that I usually just gave up and hoped the card didn't get cut off. But the other day when I called the bank for something, I was immediately given an option to route the call to a real person who was incredibly helpful. I was stunned.

There is simply no such thing as a shortcut when it comes to customer service. You can provide an alternate service, if you don't want to invest in a local call center of friendly competent people armed with helpful databases of customer information. But don't call this customer service, because it isn't. To call a person reading from a script a customer-service representative is like calling a middle school play Broadway. You might as well not have an 800 number.

Zappos, GoDaddy, Qualtrics and Braintree have proven that spending money on customer service isn't throwing money away -- it's investing in the business. Done well, good customer service is the difference between a mediocre business and a great one. You can get shoes anywhere, and Zappos' site design has never been that amazing; its entire success is wrapped up in treating people well. GoDaddy doesn't view its call center as a "cost center," arguing it has actually generated more than $100 million in annual revenues. And Qualtrics -- and loads of other new enterprise companies like them -- have effectively substituted these call centers for expensive sales people and marketers.

Everything in business moves in cycles. If this is the beginning of a move back, it'll be a temporary one. At some point, skimping on customer service will again be on the vanguard of cost-cutting. But until then, let's enjoy the pampering.