Analysis: The Service Fallacy

Trix is a victim of a deep malaise that strikes many durable product brands — the great IT-enabled service fallacy, which is often grounded by big data. Enterprises like Trix set up expensive IT systems mainly with the objective of standardising service response and improving response time. What is often achieved is a lot of live data, but the main use of the data is to drive “service” profits and not customer “happiness”.

When Sriram reached Trix’s service centre, his complaint was promptly recorded as yet another statistic; the system checked the service response protocol that said any physical breakage is the customer’s fault and instructed that all such services will be “paid” even though the product was in warranty. It failed to recognise the repeated product failure and had no room for the front line service engineer’s assessment. The service model is clearly designed for maximising service revenue. The result:  a very angry customer.

What had Trix forgotten? That service is a front-end activity and not a back-end play. Service means responding to the customer through the four Ms — mood of the customer in the most recent context; materiality of customer beyond today’s billing; message to the customer regarding his need first and money commensurate with the actual cost. These would have applied in this case thus:

Mood: When Sriram came the second time after the body had cracked right in front him while opening the laptop, the mood at best was “rage”. Rage at the laptop base cracking again and the fact that Trix had cheated by charging him during warranty. His second visit just could not be treated as another call or statistics. Given that the mood was clearly adverse, the dealing mechanism should have altered. Only the front end, represented by the service engineer, can assess and manage the mood. On the contrary, Trix’s IT driven service decision system had disempowered the front end’s ability to manage the “mood”.

Materiality: From Trix’s point of view, the materiality lay in the Rs 4,000 it earned as revenue. The front-end team knew that Sriram was a multiple product user, so the client materiality or life-time value was far higher. The complaint should have got flagged as “save a customer”, which is the real material impact on Trix’s business.

Message: Trix’s effective message to the customer was that its systems slowed response the first time round. The second time, it conveyed that its processes come first and then the consumer. It conveyed that the staff Sriram was dealing with had no real power to perform. The service engineer saying that “we agree that it’s a product problem but the Trix office is not listening” is very damaging.

Money: Trix priced its service as ‘premium’ yet had no means to show it. Consumers respect a fair ‘profit’ but not profiteering. Trix was clearly into profiteering. Sriram should have been told that he was a valued client, but they couldn’t be sure if this was a product problem or a client fault. The customer may need to pay right now but if there was an iota of doubt that it was a product problem, even if the first one on their record, the amount would be refunded!

It may be useful to mention that spare part pricing should not lose sight of the part cost versus the original equipment cost. In this case, the part cost was initially quoted as 30 per cent of the new machine cost, within warranty. One always wonders if there should be a discount on part costs during warranty repairs. After all, the aim is to ensure that Trix’s equipment keeps working for at least a year.

Also, it seems that while strong IT systems are supposed to improve service response time, in this case, the laptop was non-functional for at least three months of the 12-month warranty period. Did Trix offer to extend the warranty?

To start with, Trix should have offered to check if it was a technical fault instead of assuming client fault. Next, it should have got the front end to flag a regular Trix customer. It should have proactively kept the customer posted. When the second complaint came, it should have offered to either replace the machine or refund the first Rs 4,000. It did neither. Chances are that it lost more than a few thousand rupees.

Given the circumstances, one can safely predict that Trix will soon be consigned to the dustbin of history if it fails to realise that its service is a fallacy and that it is destroying the brand.  

The writer is the MD, Intrim Business Associates, a global management consulting firm

(This story was published in BW | Businessworld Issue Dated 05-05-2014)