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The culture of service

I recently finished reading Punching In, a book by Alex Frankel. It’s about his experience working as a front-line employee in a variety of companies, from UPS to Apple. The book is focused upon corporate culture, the indoctrination of customer-facing employees, and how such employees influence the customer experience. And that got me thinking.

Culture may be the distinguishing characteristic between managed hosting companies. Managed hosting is a service industry. You make an impression upon the customer with every single touch, from the response to the initial request for information, to the day the customer says good-bye and moves on. (The same is true for more service-intensive cloud computing and CDN providers, too.)

I had the privilege, more than a decade ago, of spending several years working at DIGEX (back when all-uppercase names were trendy, before the chain of acquisitions that led to the modern Digex, absorbed into Verizon Business). We were a classic ISP of the mid-90s — we offered dial-up, business frame relay and leased lines, and managed hosting. Back then, DIGEX had a very simple statement of differentiation: “We pick up the phone.” Our CEO used to road-show dialing our customer service number, promising a human being would pick up in two rings or less. (To my knowledge, that demo never went wrong.) We wanted to be the premium service company in the space, and a culture of service really did permeate the company — the idea that, as individuals and as an organization, we were going to do whatever it took to make the customer happy.

For those of you who have never worked in a culture like that: It’s awesome. Most of us, I think, take pleasure in making our customers happy; it gives meaning to our work, and creates the feeling that we are not merely chasing the almighty dime. Cultures genuinely built around service idolize doing right by the customer, and they focus on customer satisfaction as the key metric. (That, by the way, means that you’ve got to be careful in picking your customers, so that you only take business that you know that you can service well and still make a profit on.)

You cannot fake great customer service. You have to really believe in it, from the highest levels of executive management down to the grunt who answers the phones. You’ve got to build your company around a set of principles that govern what great service means to you. You have to evaluate and compensate employees accordingly, and you’ve got to offer everyone the latitude to do what’s right for your customers — people have to know that the management chain will back them up and reward them for it.

Importantly, great customer service is not equivalent to heroics. Some companies have cultures, especially in places like IT operations, where certain individuals ride in like knights to save the day. But heroics almost always implies that something has gone wrong — that service hasn’t been what it needed to be. Great service companies, on the other hand, ensure that the little things are right — that routine interactions are pleasant and seamless, that processes and systems help employees to deliver better service, and that everyone is incentivized to cooperate across functions and feel ownership of the customer outcome.

When I talk to hosting companies, I find that many of them claim to value customer service, but their culture and the way they operate clash directly with their ability to deliver great service. They haven’t built service-centric cultures, they haven’t hired people who value service (admittedly tricky: hire smart competent geeks who also like and are good at talking to people), and they aren’t organized and incentivized to deliver great service.

Similarly, CDN vendors have a kind of tragedy of growth. Lots of people love new CDNs because at the outset, there’s an extremely high-touch support model — if you’ve got a problem, you’re probably going to get an engineer on the phone with you right away, a guy who may have written the CDN software or architected the network, who knows everything inside and out and can fix things promptly. As the company grows, the support model has to scale — so the engineers return to the back room and entry-level lightly-technical support folks take their place. It’s a necessity, but that doesn’t mean that customers don’t miss having that kind of front-line expertise.

So ask yourself: What are the features of your corporate culture that create the delivery of great customer service, beyond a generic statement like “customers matter to us”? What do you do to inspire your front-line employees to be insanely awesome?

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Scaling limits and friendly failure

I’m on vacation, and I’ve been playing World of Goo (possibly the single-best construction puzzle game since 1991’s Lemmings by Psygnosis). I was reading the company’s blog (2D Boy), when I came across an entry about BlueHost’s no-notice termination of 2D Boy’s hosting.

And that got me thinking about “unlimited” hosting plans, throttling, limits, and the other challenges of running mass-market hosting — all issues also directly applicable to cloud computing.

BlueHost is a large and reputable provider of mass-market shared hosting. Their accounts are “unlimited”, and their terms of service essentially says that you can consume resources until you negatively impact other customers.

Now, in practice there are limits, and customers are sort of expected to know whether or not their needs fit shared hosting. Most people plan accordingly — although there have been some spectacular failures to do so, such as Sk*rt, a female-focused Digg competitor launched using BlueHost, prompting vast wonder at what kind of utter lack of thought results in trying to launch a high-traffic social networking site on a $7 hosting plan. Unlike Sk*rt, though, it was reasonable for 2D Boy to expect that shared hosting would cover their needs — hosting a small corporate site and blog. They were two guys who were making an indie garage game getting a gradual traffic ramp thanks to word-of-mouth, not an Internet company doing a big launch.

Limits are necessary, but no-notice termination of a legitimate company is bad customer service, however you slice it. Moreover, it’s avoidable bad customer service. Whatever mechanism is used to throttle, suspend service, etc. ought to be adaptable to sending out a warning alert: the “hey, if you keep doing this, you will be in violation of our policies and we’ll have to terminate you” note. Maybe even a, “hey, we will continue to serve your traffic for $X extra, and you have Y time to find a new host or reduce your traffic to normal volumes”. BlueHost does not sell anything beyond its $7 plan, so it has no upsell path; a provider with an upgrade path would hopefully have tried to encourage a migration, rather than executing a cold-turkey cut-off. (By the way, I have been on the service provider side of this equation, so I have ample sympathy for the vendor’s position against a customer whose usage is excessive, but I also firmly believe that no-notice termination of legitimate businesses is not the way to go.)

Automated elastic scaling is the key feature of a cloud, and consequently, limits and the way that they’re enforced technically and managed from a customer service standpoint, will be one of the ways that cloud infrastructure providers differentiate their services.

A vendor’s approach to limits has to be tied to their business goals. Similarly, what a customer desires out of limits must also be tied to their business goals. The customer wants reliable service within a budget. The vendor wants to be fairly compensated and ensure that his infrastructure remains stable.

Ideally, on cloud infrastructure, a customer scales seamlessly and automatically until the point where he is in danger of exceeding his budget. At that point, the system should alert him automatically, allowing him to increase his budget. If he doesn’t want to pay more, he will experience degraded service; degradation should mean slower or lower-priority service, or an automatic switch to a “lite” site, rather than outright failure.

Perhaps when you get right down to it, it’s really about what the failure mode is. Fail friendly. A vendor has a lot more flexibility in imposing limits if it can manage that.

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How badly do you need to keep that revenue?

If a customer really wants to leave, you are probably best off letting them leave. Certainly, if they’ve reached the end of their contract, and you are actively engaged in dialogue with one another, you should note little things like, “Your contract auto-renews”.

What not to do: Not tell the customer about the auto-renewal, then essentially point and laugh when they complain that they’re stuck with you for the next several years. Yes, absolutely, it’s the customer’s fault when this happens, and they have only themselves to blame, but it is still a terrible way to do business. (For those of you wondering how this kind of thing happens: Many organizations don’t do a great job of contract management, and it’s the kind of thing that is often lost in the shuffle of a merger, acquisition, re-org, shift from distributed to centralized IT, etc.)

There are all kinds of variants on this — lengthy multi-year auto-renewals, auto-renewals where the price can reset to essentially arbitrary levels, and other forms of “if you auto-renew we get to screw you” clauses, sometimes coupled with massive termination penalties. We’re not talking about month-to-month extensions here, which are generally to the mutual benefit of provider and customer in instances where a new contract simply hasn’t been negotiated yet. We’re really talking about traps for the unwary.

Unhappy customers are no good, but they often sort of gloom along until the end of their contracts and quietly leave. Customers who were unhappy and that you’ve forced into a renewal now hate you. They’ll tell everyone that they can how you screwed them. (And if they tell an analyst, that analyst will probably tell anyone they ever talk to about you, how you screwed another client of theirs. We like objectivity, but we also love a good yarn.) It has a subtle long-term effect on your business that is probably not worth whatever revenue coup you feel you got to pull off. An angry customer can torpedo you to potential prospects as easily as a happy customer can bring you referrals.

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