Marketing: June 2006 Archives

I just read the current HBR in a bookstore near me - more specifically the interview of GE's Immelt on his new "organic growth" process. One statistic jumped out at me.. In GE's white goods appliances business, the pricing process was less than optimal. Apparently 5 BILLION dollars was simply given away discretionally by the sales force. Immelt himself believes that there's 50 BILLION dollars given away over all the GE businesses due to sub-optimal pricing processes. The question you need to ask yourself is -
If an incredibly well-run company like GE can find opportunities in improving pricing after 10+ years of Six Sigma, How much of an opportunity is there in your company??

Apple has decided to shut its call centre in India as seen in this Yahoo! News article. I have mixed reactions: I'm Indian and an Apple customer. But I think there are a few issues in play here.

Branding
Any process must support the brand of the company. What's Apple's brand all about? It sells products that have the most basic set of features, which are incredibly easy to use, thanks to great design. They charge a premium for their products. A huge number of fans buy this stuff, and enjoy the Apple experience - buying, fixing (to a very limited extent) and recycling.

Now there are a lot of products out there, that also have minimum feature sets, work incredibly well, and are well designed. Apple's brand thrives because of the experience they provide to their fans. Experience is a very fickle beast. Miss out on a couple of expectations, and your fans will dig your grave (maybe not as dire, but you get the point)

An outsourced call centre is a recipe for mismanaging expectations. Without casting aspersions on the excellence of many call centre employees all over the world, someone who's paying a premium will expect personal customised attention and help. Call centres are geared more for standardising existing processes and providing consistent service. It's very tough to customise something for someone at a call centre, although some folks do a hell of a good job!

Employee Attrition
It takes between 6 and 9 months to train a call centre employee in all the tangible and intangible aspects of handling customers of that specific company. Sadly, the employee attrition in Indian call centres is sky high. I've heard figures of up to 70% per year. It's very tough to keep employees and build up on existing knowledge when you have to handle such levels of attrition.

This complicates the problem of providing an incredible level of support and service as expected by an Apple customer.

Substitutes
There are a lot of substitutes for the proposed Apple call centre in India.
Buying Apple stuff
There are call centres all over the world where you can buy Apple products. There are also a lot of retailers who carry Apple products and there are the hugely successful Apple Stores. You could also buy Apple products directly from the Apple website.
Tech support
The Apple website is very good with support available for free. There are Genius bars in all Apple Stores. There is definitely at least one tech support person in any independent retailer carrying Apple equipment. There are also multiple websites that give free advice and content to aid almost any problem that a Mac User may face.

Conclusion
Perhaps Apple figured that it was better to use the same things that have worked well for them in the past, and improve their current channels for providing support to their customers rather than create yet another channel, whose risk of failing and harming the Apple brand were high.

Tags: Apple, branding, processes, customer service, employee attrition, substitutes, outsourcing

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