Customers are not your top priority

TrainsThere is this myth that IT (or any service provider) should be utterly focused on customers; that a customer obsession is the secret sauce to IT success; and that unhappy customers mean we in service have failed.

Railroads don’t bear this out.

Railroads in the USA have fought tooth and nail with their customer base for decades.  After the Second World War, freight customers decided the railroads were screwing them. Government legislation progressively regulated and price-controlled the railroads into the ground, until the whole system was on the verge of collapse.  Only de-regulation with the Staggers Act in 1980 freed the railroads to operate economically again and put them back on track (sorry) to their currently-thriving state.

And now the customers are complaining about freight rates again…

Meeting the needs of the business

If railroads were customer-obsessed – as the modern fad would have it – then they would provide all sorts of specialised rolling stock tailored to their customers needs / wants.

It certainly didn’t start out that way.

Originally a customer could hire a boxcar, reefer (refrigerated boxcar), flatcar, gondola, hopper, or tankcar.  That was pretty much the choice: not tailored to the customer, just a choice of a few basic shapes. Was a hopper car or boxcar shaped that way because the customers wanted it?  No, they were that way because they worked best internally for the functioning of the railroad. All sorts of loads fit uncomfortably in gondolas or boxcars, but that is what the customer got regardless of any complaints. Automobiles were chained on flatcars and car parts struggled in and out of boxcars for decades before the specialised rolling stock came along.

As the 20th Century progressed, railroads built special rolling stock to meet customer needs: automobile carriers, the aircraft body-parts carriers, trailer trains.  But you still couldn’t really say they were customer-focused.

The trailer train is a case in point: the Santa Fe railroad worked closely with the Hunt trucking empire to develop “intermodal” rolling stock to meet a customer need: to transport truck-trailers cross-country on special flatcars.  But the trailer train design was about moving truck-shaped loads on a railroad, not making trucking easy.  They still needed to drive the trailers carefully onto the flatcars and chain them down (and eventually they craned the whole thing on!).

When railroads introduced covers for coal hoppers, it wasn’t about looking after the customer’s coal – it was because coal dust was destroying the rail ballast.  Until then the railroads were perfectly happy to have a percentage of the load blow away and the rest get wet and icy.

In recent years, railroads have realised the best profits are in large volumes of single loads in dedicated unit trains, instead of mixed freight, and as our societies have become bigger and more industrialised warranting those unit trains, specialised rolling stock has become more common: for coal, ethanol, automobiles, logs, and of course containers.

But in general, railroads have always built general-purpose rolling stock that best suited their purposes not the customers.  Customers had to make do, with some highly profitable exceptions.

Finally, the container took the customers challenge away by introducing a standardised unit of shipping and now both parties are (generally) happy, but that didn’t stem from any railroad initiative to please the customer.

Customers are the source of revenue not the masters of the business

Railroads spend billions on infrastructure development every year (most of which is not driven by customer).  A railroad will occasionally run a rail line up to a big customer, but most of the time lines are laid for geography first and being close to economic density second.  Individual customers need to (re)locate close to the railroad or arrange local freight.  If a customer wants a branch built up to their coal mine, power plant, or factory, they usually have to build it at their own expense.

Railways are as quick to cut services as to provide them, depending on their own interests.  Governments have to legislate to force railways to run passenger services, and have done so for half a century in most countries.

The fact is, railroads are focused on moving stuff as efficiently, economically and reliably as they can, with enough surplus to keep up the massive infrastructure investments, for maximum profit.  The customer is only there to pay for it all.

Airlines are the same.  While a few airlines like Emirates differentiate themselves by chasing the customer who wants to be cared for, most airlines today clearly regard economy passengers as “self-loading freight”.  Emirates has long been accused of all sorts of unfair government support; they burn petro-dollars as a PR flagship for a “progressive” Dubai.  Most airlines (and their governments) can’t afford those levels of service anymore and instead simply stay competitive.

Telcos are a third example, with telco customer support being legendarily bad (although New Zealand Telecom have made leaps and bounds to improve).

Customer service level is a business decision

What do all these industries have in common?  They are commodities, in a race to zero on price.

You can rave all you want about Apple or Zappos.  These are companies who have chosen to differentiate themselves on service quality.  That is a conscious decision on their part, and certainly in Apple’s case they charge like a wounded bull to pay for it (and scam on paying taxes in your country too, unless you live in Luxembourg, but that is another article).  I don’t see Google, Amazon, Samsung, Microsoft, or HTC going broke, despite the fact their support sucks.

The level of love and attention you give your customers is a business decision.  It is a dial an organisation sets from “scum” to “master” depending on the strategy and current state of the business.

The governors of your organisation make the decision as to how important customers are, hopefully for good business reasons. The executive managers decide how that translates into levels of customer care, and that translates into service policy.  It is not for any of us to decide otherwise.  If you over-service the customer you are wasting money and putting the future viability of the organisation at risk.  This is true whether you work for a commercial business, a not-for-profit, or public service.

New Zealand Telecom lifted its game because its service had become so utterly awful as a monopoly that the government decided to deregulate and break Telecom up.  They had nowhere else to go: they were universally hated and they were too bloated to compete on price or agility.  Their competitors continue with the staggeringly bad support because they know it doesn’t cost them much business (see my case study about bad customer service).

Railroads are the same.  They know they need to deliver reliably and they know they need to listen to customer’s needs.  Some of the small railroads even specialise in customer service.  But in the main it is all about cutting a hard-nosed deal on price.

Don’t get confused…

Don’t confuse listening to needs with customer love. Any canny organisation follows its market: that is pure self-interest.  Railroads built specialised automotive rolling stock only after decades of complaints about dents and dust.

Don’t confuse good service availability with customer love. The only thing customers want from railroads, airlines, and telcos is that they work reliably.  We bitch about their rudeness and uncaring attitudes but we don’t switch because in the end it all comes down to price (or lack of options).

So don’t be led astray by vendors, analysts, pundits or consultants who tell you to spend more on customer care; and don’t let anyone tell you that you are failing in your job if your customers aren’t inviting you to barbeques at home.

Our job is to meet the goals of our organisation and to protect its ongoing viability.  We do as much for our customers as we need to, as we are instructed to, in order to achieve those goals.

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