The consistently poor levels of customer service in the U.S. have astounded me for 10+ years. The ingredients seem fairly consistent: Start with long hold times, a painful phone tree, the requirement to key in dozens of digits, or a painfully inaccurate voice recognition system. Introduce a underpaid and undereducated customer service representative who’s thinking ability has been compromised by a set of scripts and screen pops, without any creative problem solving skills and without the autonomy to go off script.

It doesn’t seem to matter if its a bank, airline, phone company, or cable company. The service always seems extraordinary poor. The last bastion of good customer service – American Express – abandoned their high standards several years ago when the entered the mass market for credit cards and moved considerably down market.

You might thing that good customer service might pay for itself in the form of loyalty and reduced churn, but I got an inside glimpse at the economics that proved otherwise.

In 1998, while working as a consultant for a major telecom company that was launching its consumer dial-up ISP business, I was charged with setting the ideal target hold times for customers. This was a relatively simply problem, although collecting the information required to solve it was complex. Essentially, we were modeling the impact of different hold times on (a) the costs of staffing the call center and (b) customer satisfaction, loyalty, churn.

The surprising result is that we determined that the ideal target hold time from a economic perspective was…forever. It was economically better to close the call center and leave customers perpetually on hold, since an incredibly low number of customers indicated that they would cancel the service as a result. This translated to incredible cost savings with virtually no lost revenue.

In the end, the vague and qualitative variable of corporate reputation trumped simple economics in the mix, and the company ended up setting target hold times at six minutes, which allowed relatively low staffing levels and guaranteed a low but not embarrassing level of customer service.

Since that time, I’ve been looking for companies that can positively impact customer service in general, despite the fact that – in purely economic terms – it is often not in a company’s best interest to do so. Here are a few companies

Worth watching, potentially major influencers

• GetSatisfaction is a community customer service site organized around companies and products. Users can cite a complaint, suggest an idea, etc, and other users organize around those ideas. Companies are encouraged to participate in the conversation about their company and products.
• Vanno calculates a company’s reputation by measuring community involvement, customer satisfaction, employee satisfaction, environmentalism, patriotism and social responsibility. The reputation rating is the result of user submitted stories, news articles and reviews, and the reactions of the broader Vanno community to these stories. At first glimpse, the ratings seem credibly consistent with third-party ratings companies like JD Power and Fortune.
• GetHuman helps users skip phone trees and reach a live operator quickly and directly
• Fonolo goes beyond simply helping you skip phone trees and records your calls and call notes, essentially becoming a user dashboard for dealing with customer service across companies
• The Consumerist is a blog on the Gawker Media network that arms consumers with tips and tricks to fight back against large companies with often-less-than-admirable approaches to dealing with there customers (via Shai Berger of Fonolo)
• ThePoint (23K uniques) allows consumers to mount collaborative campaigns against companies, pledging action if a threshold of people join the campaign
• CrowdSound (14K uniques) and UserVoice (127K uniques) help companies build and deliver collaborative customer communities where customers can solve each other’s problems, suggest features, and vent
• SalesForce IdeaExchange allows companies to tap the collective wisdom of their customers for product suggestions, etc.

Please let me know in the comments if you know of any companies worth mentioning.