Customer Service in the Free Business Model

1
163 views

Share on LinkedIn

The Scenario
Over the past few months, I’ve had a few run-ins (or lack thereof) with customer service departments from companies that offer free services. A previous article of mine covered the actual experience I had with LinkedIn, and as a follow up to that post, I felt the need to transition the conversation from complaining about the system to understanding of the business model and customer experience from the inside looking out. There is an underlying dilemma baked into the Free/Freemium support structure based on the premise that little revenue equals little support. I believe that there are growing issues about the Free business model and the impact on the overall customer experience.

The Free Model
In order grasp the support models around Free, it makes sense to first understand Free and the concepts around Free. Chris Anderson said in his Free book that as products and services continue to halve in price, they will ultimately price to $0. He references a number of cases that show how we as consumers once paid money for things that we can now get for free. Many companies that are driven by Free-based offerings operate with revenue generation that includes Freemium and/or indirect income in order to support overall operations. The Web 2.0 movement has created countless cases where the “Winner takes all”. If we look at LinkedIn, Facebook, Flikr, YouTube, Google and Twitter, the second place finisher is a distant 2nd. In fact, there is usually no distant 2nd place finisher; it’s a one person race. This is good news and bad news for consumer. The good news is that, as consumers, we all standardize on a free platform. The bad news is that because it’s free and the revenue model is still being figured out, the customer service operation consists of an answering machine and a few FAQ’s. So, now we have a growing model where Free is becoming the norm and millions of consumers are in need of a support structure.

Customer Support in Free
Now that the picture of Free has been painted, we can peel back the layers to see how it affects the overall customer experience. Inherently, there are conflicts in the model because if these companies gain critical mass, the amount of support required to handle the customer base grows. Who pays for this support and how do these companies balance the rave and positive inertia without being blindsided by negativity through lack of customer service? Most Free-based customer service functions provide very few options or answers from a consumer perspective. And in some cases, company’s business models are based off of customers getting the product/service free, but need to pay for the support.

Of course, there are consumer communities that help answer questions, but for the most part, the customer experience ratings (see Facebook Ratings) for service are at the bottom in comparison to brick and mortar revenue generating entities.

With my LinkedIn experience an email was sent to a general mailbox that triggered a service ticket. From beginning to end, it took nearly 8 weeks to get to an answer that resulting in me taking an apostrophe out of my name to enable additional features on the site. As a complete side note, I received an email from an employee that represents the company whose customer service platform LinkedIn uses (one of the top 2 known CRM/CEM companies in the market). They asked me to help them understand how the process broke down so that they can help LinkedIn fix it! I am still an unsatisfied customer and am not interested in spending more time helping them fix the matter. I’ve already spent enough energy on the topic.

In a second example, a company that offers a free social media monitoring product also fails to make the grade, resulting in losing a customer. In this example, RiverStar considered integrating the Free product into our CE Suite, but chose not to proceed with this product due to poor response times and service processes. Even though there was nothing to be gained from this company by way of immediate revenue, the long term effect of losing a customer hurts the downstream opportunity for higher company valuation. These two examples offer a different Free to a different customer base, but have similar issues with customer service./

In the end, companies need to figure out the best way to provide a great experience, regardless of the cost (or lack of) to the consumer. It becomes a “chicken or egg” scenario for Free/Freemium businesses when looking to pony up the money for customer service ahead of the revenue stream. In cases like LinkedIn, there are no alternatives for the consumer, so the priority to fund the customer service operation may be low. As I spoke about the poor response with LinkedIn, I thought of Sienfeld and the Soup Nazi. I was actually scared that they would kick me off the site for tearing them up on the social web. Is there really a need to support non-paying customers at such a high level when you have a monopoly? I do know that paying customers get immediate responses from LinkedIn, and maybe that’s the right model. However, it’s the free customers, and the majority of users, that sites like LinkedIn leverage to gain paying customers. Think of Premium search features, extended profile views, and ability to send messages to members outside your network. Without the free user base, it’s difficult to make the case to paying customers. Obviously, this has yet to be figured out.

My Prediction
Because Free business model monetization is yet to be completely figured out, operational costs are limited to investments and the minimal revenue that companies generate. In order to keep operational costs down, customer service operations for Free companies are typically slim (try getting in contact with a customer service rep from any company that offers mostly Free products or services). If more Free companies continue to emerge, consumer expectations regarding customer service will need to fall, ultimately changing the face of the customer service landscape. Following this path, I predict a customer service dead zone era will exist where customers will accept poor service response/feedback and will be required to self diagnose their issues on a more frequent basis. The use of web self service will rise exponentially and the community engagement tools will continue to evolve. If the adoption rate of Free products and services across the entire population continues to expand, it is likely that new artificial intelligence tools and self service innovation will lead the pack in the customer service space. Either way, it’s clear to me that the Free/Freemium movement will change the way consumers view customer service.

1 COMMENT

  1. Every Information shared by the Author is absolutely true.
    There is no Direct Phone support from Facebook, but there are few organizations providing support to facebook users.
    Which may be a help or at least an option for some users to get you to any resolution.
    Many people have trouble with their accounts such as account theft which can also be a Facebook hack issue and they should know what to do in such cases.

LEAVE A REPLY

Please enter your comment!
Please enter your name here