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Wednesday, September 22, 2004

The self-service economy via Economist

The self service economy has subsumed traditional human interactions in services like withdrawing cash from Bank and thanks to the proliferation of websites, kiosks and automated phone systems, one can also track packages, manage finances, switch phone tariffs, organise own holiday (juggling offers from different websites),and selectown theatre seats while buying tickets.In theory, companies can save money by replacing human workers with automated self-service systems, while customers gain more choice and control and get quicker service. There is even talk of self-service doing for the service sector what mass production did for manufacturing, by enabling the delivery of services cheaply and on a massive scale. When it is done well, self-service can benefit both companies and customers alike. But when done badly—who has not found themselves trapped in a series of endless touch-tone menus?—it can infuriate and alienate customers. In their desire to cut costs, many companies deliberately make it difficult to get through to a human operator; yet their phone or web-based self-service systems do not always allow for every eventuality.In areas where self-service is only just starting to take hold, this is less of a problem: fuming customers can, after all, always take their business elsewhere. But if every bank were to adopt impenetrable self-service systems, disgruntled customers would no longer be able to express their discontent by voting with their feet. Such a scenario ought to provide an opportunity for some firms to differentiate themselves: some banks, for example, already promise that their telephone-banking services always offer the option of talking to a human operator. But in return for guaranteed access to humans, many firms will simply charge more. Some of the objections to self service could come from people who prefer not to use self-service systems (such as the elderly) will be forced to pay higher prices. This is already happening: many travel firms offer discounts to customers who book online. Buy tickets the old-fashioned way and one must pay more. Firms are, in effect, introducing penalty charges to persuade customers to use self-service systems. Some customers might resent this.Another objection to self-service is that while it saves companies money, it does not always save their customers time.Companies that go too far down the self-service route or do it ineptly are likely to find themselves being punished. Instead, a balance between self-service and conventional forms of service is required. Companies ought to offer customers a choice, and should encourage the use of self-service, for those customers that want it, through service quality, not coercion. Self-service works best when customers decide to use a well designed system of their own volition; it infuriates most when they are forced to use a bad system. Above all, self-service is no substitute for good service.

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