To launch The Operations Room, I thought I would discuss one of the more interesting articles I have seen this summer. A few weeks ago, The Economist ran an article on the rise of self-service process during the recession (“Help yourself,” Jul 2nd 2009). The punch line amounts to “never mind outsourcing services overseas, companies are outsourcing to you!” While companies may be cutting back on some spending during the current recession, it is a good time to be selling service automation systems. The article reports:
Self-service is on the rise in industries from retailing and entertainment to travel and telecommunications. According to VDC Research Group, retailing, hospitality and health-care firms spent $2.8 billion on self-service technology in 2008. Between now and 2013 their investment will grow by around 15% a year. Speech-recognition technology, which permits automated responses to telephone calls, is also faring well. Datamonitor Group, a consultancy, expects spending on that to rise by around 8% in 2009.
What makes this interesting to me is the question of whether self-service is good for firms and customers. The Economist article asserts that younger customers who have grown up with the Internet etc prefer the “empowerment” of being able to control the process and do things for themselves. At the same time, gethuman.com is a popular site offering the magic and combination of zeroes and pound signs to reach a human agent at a variety of call centers. (gethuman and other issues in managing customer service are discussed in Emily Yellin’s recent book Your Call Is (Not That) Important to Us.)
At a personal level, I feel torn on this. On the one hand, there are certainly settings in which I generally prefer self-service (e.g., grocery checkout and airline check in). On the other, I too hate automated phone menus. The contrast between airline check in and phone systems suggests that there is a difference between self-service with a physical or visual interface and the aural experience of call centers. I at least find it easier to evaluate choices as a visual list where it is simple to move back and forth between options 2 and 5 as opposed to waiting through a list being read. Self-service kiosks and web sites also have a more standard pacing and sequencing. I may not fly a given airline very often but I can usually navigate its check in kiosk fairly easily since most of these systems have the same logical progression. (For a great article on the economics of self-service kiosks, see here.) Similarly, the checkout procedure for e-tailers are not completely standardized but I know at some point I will have to enter my credit card’s billing address. Phone menus are much less uniform and the logic of which choices follow which actions is much less clear.
Call centers are also to some extent the victim of the success of the web. If I am calling my bank, it is usually because I need to do something I can’t do on its web site. And if I can’t do it on the web, it likely means I can’t do it through the interactive voice response unit. Talking to a human is then the only way to complete the transaction and the automated system is just an annoyance.
A final point, a basic lesson from our core Kellogg OM class is that there is no one best way. Different process designs will have different performance characteristics. The question then is what is the goal of a process redesign that emphasizes self service? The answer often seems to be to cut costs as opposed to empowering customers or offering a wider ranges of services. (Chapter 7 of Yellin’s book has some interesting insights along these lines.) Cutting costs is a fine and wonderful objective, of course, but it begs the question of what the customer gets out of it. How clearly does the firm’s cost cutting translate to savings or greater convenience for customers? After all, I as a customer have a choice of whether play along with your process or to fight it until an employee helps me. At the supermarket, I see the immediate benefit of four self-service machines open late in the evening when I know that the market would at most have two lanes open. The payoff from working through my bank’s phone menu is not so clear. The challenge then is that firms must find a way to demonstrate clearly to customers that they too benefit from self service.