The Gong Show

At Union Square Ventures, we spend substantial time thinking about customer service. I know it sounds like a rather narrow subject in the larger picture of aiding portfolio companies and making investments. However, as customers cross the barrier from being consumer to being prosumers (producer + consumer), customer service is more important than ever. Inspiring customers to make the prosumer leap requires giving customers a sense of ownership in the company, a desire to want aid the company in content creation, moderation, and even customer service.

Good customer service can drive your customers to evangelize for your product. Once customers have figured out a solution to their problem, if you foster your customers to feel a sense of ownership, then they will go out and act as customer service agents for other users having the same problem. Etsy is a champion in this respect. However, all these good feelings and customer cooperation is contingent upon good customer service experiences. Bad customer service can blow up in unanticipated ways.

Why is this relevant right now? Well, I was previously employed at Homestead, a value-added hosting company in Menlo Park. Justin Kitch, the CEO of Homestead, began blogging earlier this year, and he posted a rather controversial story about cutting relations with deviant and extraordinarily difficult customers. It’s a common practice in service businesses, but it is also tacit.

A disgruntled Homestead customer picked up on the story and blogged about it. He recounts specific difficulties he had with Homestead and details his dissatisfaction with Homestead customer service’s response to his requests. Then, his post made the front page of Digg, which gave his dissatisfaction a megaphone.

Justin responded in a personal email and phone conversation to the blogger which can be found in the comments. Justin also posted a more public response on his blog.

Justin’s response is well-thought out and takes the middle ground, stating that Homestead serves the greatest number of customers as best as possible with the limited resources that all businesses have to work with:

Let’s return to the general topic of putting employees ahead of customers, and rejecting the hackneyed philosophy of “the customer is always right.” The topic seems to have struck a chord with… business owners who feel customers have been falsely empowered to act like jerks, sapping their resources and energy, and hurting their ability to serve their non-jerk customers (most people) and build great businesses. This response is entirely predictable, because in my experience almost all businesses feel this way–they are just afraid to say it. I’m not.

It’s a brazen position, and before you react strongly to the comment, it would be best to read the quote in the context of the rest of the article.

The story of Homestead’s now-very-public practice of “firing customers” is an important lesson in the development of great customer service. However, one has to wonder if the bad publicity generated by the digged blogpost can be avoided while still being reasonable with the resources accessible to customer service departments. It’s a tough line to walk, and all the articles above help guide the boundaries.