Everyone is talking about the tough economy in no uncertain terms. These are difficult times, and the general wisdom is that they’re going to get worse in 2009. What does it mean for Customer Service?

John Ragsdale has an excellent thought provoking piece on what to expect and how to deal with this economic climate. One of the best things about John’s analysis is that it harkens back to the relatively recent economic crisis of 2001 and gives us the experiences learned the last time around. As the old saying goes, those who do not understand history are doomed to repeat it, so let’s avoid the traps uncovered last time around.

Here are some of these traps:

It’s a mistake to view Support as a cost center . The trouble is that cost centers invite an unfair proportion of cost reductions in bad times because they’re viewed as not driving revenue. Unfortunately, we increasingly live in an age where service matters and cutting service leads almost immediately to reductions in revenue. As Ragsdale points out, service is no longer a cost of doing business, but instead has become a primary value driver, especially for technology companies. Many have even created a Chief Customer Officer or similar role to underscore the importance.

It was a mistake to assume short term cuts won’t have long term impacts . The experience in 2001 as John points out was:

We tried every conceivable way to cut support costs 5-7 years ago, and customers voted with their feet. Maybe I’m naive, but I think C level execs today understand the link between customer satisfaction and customer loyalty, and I’m hopeful they won’t make knee-jerk cost cutting moves that drive away customers.

It’s a mistake to trust your Customer Service Experience to the lowest cost outsourcing bidder . This is just another cost cutting measure that was tried and failed in the last go round. The Customer Service from these vendors was so bad that many companies faced costly publicity about how bad it got. This even led some companies to pull back from some of their offshoring initiatives.

It’s a mistake to assume self-service will solve all these problems . Traditional thinking has been that self-service can be the silver bullet. Let customers help themselves by accessing a knowledge base and all will be well. The process is popularly called deflection. Unfortunately, Ragsdale just finished another blog post immediately before the one we’re writing about that shows how far from reality this assumption can be. Call incidents are up in 2008, but the success rate using self-service is down. In fact, there has been a steady downtrend in the success rates for the self-service approach:

That means costs to service customers directly have been steadily rising, and at a time where satisfaction matters and companies can least afford to pay through the nose to deliver service because of the tough economy.

What’s the answer?

John ends on a high note when he advises Customer Service departments to push communities. At Helpstream, we’re all about the advantages of integrating communities with traditional Customer service tools like case management and knowledge bases for self-service. We like to say that deflection is bad, but engagement via community interaction is good. This should come as no surprise.

Customers need service when they have a problem. There is seldom a lonelier time than when you have a problem and don’t understand how to fix it. Being greeted with a blizzard of knowledge base articles is one answer, and if you know getting to a person that can really help is going to be hard, time consuming, or expensive, it may beat that alternative, but it remains a lonely business. In many cases customers can help themselves successfully. A lot of questions can be answered fairly simply. But in other cases where the customer is really lost or confused, they need help from a real human being to get back on track.

Communities deliver that help. They let people feel a sense of participation, get help from a real human being, and in many cases, talk to someone just like themselves who has already seen the problem before and knows immediately how to fix it. The other big advantage of communities is they throw off more useful information for the Knowledge Base in a timely fashion. Answer a question once, and that answer is there for the next customer who has the same question to find. Waiting for a Knowledge Base to be brought up to date for the latest crop of questions often means the answers are too late.

Are you pushing your customers to try your community? Do you have a community? Try Helpstream. We’ll make it easy for you.