By Peter Lyle DeHaan, PhD
A few years ago I bought a new car. Although it wasn’t my practice to take my cars to their respective dealers for maintenance, a new car changed that habit. After all, there was warranty work to be considered and their coupons for low cost oil changes were enticing. It was about the time that my auto servicing behavior was firmly altered that the warranty ran out and the discount oil change incentives stopped. Still, I continued returning to the dealer for service. It was smart marketing on the part of the dealer. Too bad their efforts were thwarted.
It was time for my regular oil change and I had a list of other things that needed attention. Since I am not a mechanic, I try not to tell them what needs to be done, but rather inform them of symptoms. I want to make sure that I don’t ask for, and pay for, a tune-up when the problem may be a loose vacuum hose. It only took one passive-aggressive mechanic to do exactly what I said, while ignoring the real problem, to drive this point home.
When I dropped off my car, I said, “It is time for an oil change. Also, the car pulls to the right and it starts hard and runs rough.” I left anticipating that they would change the oil, do a front-end alignment, and give the car a tune-up. I estimated the cost would be about $100.
Later, I was somewhat taken aback when I was presented with a $175 bill. As I read the paperwork, my mild surprise changed to anger. Here is what it said:
1) Change oil: Oil, lube, filter, labor: $24.95
2) Car pulls to right: Test drove car; recommend front end alignment: $19.95
3) Hard to start: Instruct driver not to press gas pedal while starting vehicle: $56.00
4) Runs rough: Perform engine analysis; checks okay; do tune-up in 3,000 miles: $75.00
So, for $175 I had my oil changed and was given some costly advice. Advice to start my car differently, get a front-end alignment, and have a tune-up in a few months. My complaints weren’t getting me anywhere, so I left – and never returned. Once again, my local mechanic, who I trust to do good work and to be fair, is servicing my cars.
Like call centers, car dealers measure the work their employees do. Mechanics are checked to make sure they are productive throughout the day, that they document and bill for all of their time, and that they complete their work within the “standard” allotment. Mechanics who meet expectations are given raises and promotions; mechanics who don’t, even when it’s in the customer’s best interest, are given poor reviews and lower raises or let go. I have read that some operations pay their mechanics based on billable work. Therefore, the more they bill, the more they make. I think I have been to those places, too. At one shop, specializing in unusual foreign cars, it seemed that every bill was always around $500. They weren’t in business long.
Other people also bill by time. Lawyers and accountants come to mind. I have been advised to never use an attorney trying to make partner. In order to get the attention of the other partners he or she will need to log over 2,000 billable hours a year, and their clients will pay the price. I once saw my attorney across a crowded restaurant. I briefly considered going over to say hello, but quickly decided not to. Our only connection was the work he did for me. What would we talk about, if not about our commonality? It would be all too easy for him to give some advice in passing, which I feared might result in a bill the next day.
I once called my CPA’s office to discuss converting my IRA to a Roth IRA. I talked with the junior accountant to whom I had been assigned. I told her what I was considering and asked if there were any other tax ramifications that I should know about. She said there weren’t and suggested she do an analysis for me. “No, that is not necessary.” I replied, “You confirmed what I needed.” “But we just got this new program that I want to try out,” she begged. “Will you let me do an analysis for you?” Thinking that we were friends and that I was doing her a favor, I consented. The call took less than a minute. A few days later, I received a bill for $100 and a one page spreadsheet telling me that I should switch to a Roth IRA. The managing partner agreed that the charge was unwarranted – but insisted that I pay it anyway! He promised to “make it up to me later.” As soon as that tax year was over, I found a different tax advisor.
Many years ago, a friend landed a summer job repairing TVs. He was paid 20% of whatever he billed. Needing money and being enterprising, he analyzed the rate chart and quickly determined how he could add $35 to each bill for only a minute and a half of additional work. He would take the back off of the unit and hit it with a burst of compressed air, charging $8.00 to “clean chassis.” Next, he would squirt the tuner with cleaning spray, charging 10.50 to “lubricate tuner.” Then he would turn on the set. If the filaments glowed, he would bill $16.50 to “check all vacuum tubes.” With these rudimentarily tasks completed, he would then repair the problem and add to the bill accordingly. He earned a lot of money that summer.
It has been said, “What gets measured, gets done and what gets paid for gets done more.” Consider what you are measuring in your call center and what you are paying for. The intent, no doubt, is to improve the bottom line. But carefully consider the consequences. In an effort to please you or to maximize their take home pay, are your employees directly or indirectly encouraged to do things that ultimately drive away clients?
If you bill by time and measure agent productivity, do agents intentionally, or at least subconsciously, prolong calls? If you bill by the call and track units of work per hour, do agents assume they need to work faster, setting aside quality?
If your customer service staff invoices clients for the amount of time spent programming accounts, are unnecessary features added? Are the bills padded? Do they think they need 2,000 hours of billable time a year to get a raise? Alternately, are they passively-aggressive, giving the client exactly what has been requested, even when it won’t work?
Do your commissioned sales reps sell services that aren’t needed or even wanted so that they can meet their quota or earn a bonus? Do you have a “no credits” policy, either stated or implied, that leaves the only recourse to “make it up to them later?”
Lastly, consider billing. One only needs to look at phone company bills for examples of how to do it wrong. First of all, does anyone really understand their phone bill? Can the phone company reps comprehensibly explain it? Often times they can’t. Consider the countless surcharges and fees that are tacked onto each bill. The amounts change frequently, but coherent explanations are rare. These ancillary charges are blamed on the FCC, credited to an esoteric law, or attributed to local or state government when the intention was that these would be rolled into normal rates, not separately itemized (like gasoline prices). On my long distance bill, dividing the total owed by the minutes used, reveals that my 4.5 cents a minute long distance actually costs me 9.7 cents a minute.
It has been said that 85% of all phone bills contain errors. Although we generally accept all of this as a necessary evil, is it any wonder that we mistrust our phone bills and the companies behind them? If there were a real alternative, wouldn’t we all switch?
What message do your bills send? Are your bills easy to understand and read? Can your staff correctly and concisely explain every line item and charge? Are you billing surcharges and blaming it on HIPAA? What about holiday fees, call logging charges, phone number rental, on-call fees, and so forth? Are you making your clients’ 95 cent a minute service, actually cost them $1.50? Are your clients silently accepting these charges, but ready to jump ship when a real alternative arrives?
Yes, there can be sound business reasons for each task that you track and measure, for every activity that receives extra compensation, and for all the charges on your bills. Arguments can be made that these practices leave your company stronger and more profitable, but there is also the risk that they push clients away, giving them an excuse to leave when anyone else comes along promising a better way.
Don’t be “penny wise and pound foolish” when it comes to client retention; being truly astute and pragmatic – from the clients’ perspective – will produce the result you want.
Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine. He’s a passionate wordsmith whose goal is to change the world one word at a time.
[From Connection Magazine – Jul/Aug 2003]