Where has all the help gone?

April 21, 2008

Remember when customer service meant service provided for you? By someone else?

More and more, customer service means you get to serve yourself.

Technically, that makes it self-service. But in marketing parlance, self-service is actually a form of customer service, wherein the store—or the airline or the hotel—installs a cool gadget that lets you do the work once entrusted to others.

“What better customer service is there than self-service?” ask the marketers. “It’s fast!” “It’s accurate!” “It’s convenient!” “It’s confidential!” (No more bystanders overhearing that triple-cheese, extra-mayo order.)

Already, kiosks allow you to mail packages, order food, pick up dry cleaning or prescription medication (including some in California for marijuana), check out library books, rent DVDs, check into hotels, pay water bills or parking tickets, do some banking or, if you’re incarcerated, see how many good-behavior points you’ve racked up.

It’s now possible to begin a trip, feed and entertain yourself, and even mail gifts home without interacting with a single person save airport security (and there a simple nod will do).

All this and no fear of rejection

U.S. consumers scanned $137 billion of merchandise at self-checkout lanes in 2006, a 24% jump over the previous year, according to research from IHL Group. Consumers spent an additional $300 billion at self-service kiosks, with the combined dollar volume expected to surpass $1 trillion by 2011.The industry is growing at such a clip that it’s almost impossible to track the numbers, said Patrick Avery, the editor of SelfServiceWorld, launched in 2005 to meet the demand for information.

“The price is coming down,” he said. “And nine times out of 10 those (self-service) units are going to pay for themselves in six months.”

In Pennsylvania, Giant Food Stores designed a new supermarket around the concept of self-service, with mobile scanners that let shoppers tally and bag groceries as they go, and kiosks that print directions to canned yams, search for recipes, put in deli orders and display photos of the managers. (“Shopping is a very personal experience,” spokeswoman Tracy Pawelski said, “so we get to know our customers.”)

“It’s just one of those exponential type occurrences,” said Bruce Steinhardt, the founder of OTech Group. “It’s just going to continue to grow at an increasing rate for quite some time.”

He should know. Several years ago, Steinhardt, a medical administrator, was using a self-service checkout at Home Depot when an idea hit. He had just used a kiosk for a flight, too, and thought, “Why not do the same at doctors’ offices?”

In 2004, Steinhardt founded OTech, which now has kiosks in 40 clinics for patient check-in, with clinics paying $5,000 per year per kiosk. The kiosks verify insurance, take payments and direct patients to the appropriate waiting areas, all without a person asking questions.

“You would rather do it yourself than stand in line and—I hate to say this—talk to people,” Steinhardt said.

But I never asked to do all this

We’ve been adding jobs to our daily repertoire ever since self-serve gas pumps took the service out of the service station.Almost all of us check ourselves in for flights, either online or at a kiosk (86% of leisure travelers in 2006, according to Forrester Research). About 40% of us do our banking online, Online Banking Report says. We don’t even flinch before rolling up our sleeves to make copies, print photos, book travel or research that new stereo.

But did we really ask to do all this work?

It turns out most of us would rather not, according to researchers. But we value our time and money more, and companies know this.

Though it may be difficult to believe now, people were hesitant to use ATMs when the units debuted in the mid-1970s. But how irresistible is a cash dispenser freed from bankers’ hours? All those minutes used to rush downtown before 4 p.m. were gloriously restored.

Gas stations, meanwhile, persuaded us to drive away with our hands reeking of gasoline in exchange for a discount of a few pennies per gallon.

Now we think of it as paying extra for service at the pump. And banks are starting to charge for in-person teller services that were previously free.

“It used to be, ‘We’ll give you something extra for doing self-service.’ Now it’s, ‘If you don’t do self-service, we’ll charge you something extra for having a person help you,’” said Linda Musthaler, an analyst at Essential Solutions.

Sit; roll over; goooood customer

Even today, most people don’t like grocery self-checkouts, and only 5% have deigned to try a hotel check-in, Forrester Research reported. “Given the choice, consumers prefer not to use kiosks.”Still, 91% of shoppers surveyed said they’d use the self-checkouts anyway, IHL found. And after six uses they gave the machines a near-unanimous positive review. That’s where incentives—or disincentives—come in, to get customers “past this hump.”

It’s common behavioral training, the same method used to train dogs.

“Shaping a behavior means rewarding one baby step after another baby step until you have achieved the final behavior you want.” Oops, that’s from the pet-training manual “The Dog Whisperer.” But it’s the same idea. Some strategies include:

• Rewards. Southwest Airlines began selling tickets online in 1996. Less than a year later, with online sales at just 5%, it offered double miles. When online sales hit 53% in 2003, Southwest dropped the incentive to 50% more miles. When sales hit 65% in early 2005, Southwest dropped all bonus miles. Online sales continued to rise and are now at 74%. “We did that to establish the booking habit,” said Chris Mainz, a Southwest spokesman. “It worked.”

• Punishments. Some airlines charge fees for tickets not booked online.

• Specials. Airlines offer some low fares available only online.


• Speed. Though two-thirds of Americans now use airline check-in kiosks, Forrester found, 63% do so just to save time; only 12% don’t want to talk to a person. Overall, the kiosks got a low positive response, under 25%, yet were still heavily used to avoid waiting in line.

• The illusion of speed. Shoppers say they use stores’ self-checkouts for the speed and convenience. Actually, cashiers do the job faster, said Lee Holman, the lead retail analyst for IHL. But shoppers are under the illusion of speed because they are busy working, not waiting. And there’s often a shorter line.

• Discounts. In Boston, transit riders were charged $1.70 instead of $2 if they bought a magnetic card from a kiosk. Transit officials saw the number of complaints about the new system drop by half within six months as riders adjusted.

How companies profit

“The best place you can save money is by cutting jobs,” said Mark Damron, the general secretary/treasurer of the Industrial Workers of the World.Retail stores typically use one cashier for four self-serve checkout lanes and say they “redeploy the labor” to other areas. “But I’ve seen one for six lanes,” Damron said. “Soon it will be one for eight.

“Maybe they don’t fire people, but what they don’t do is hire replacements,” he said. “So, through attrition they cut down on jobs.”

This isn’t new ground. Self-service has decimated employment in many industries for decades.

In 1988, 308,000 gas-station attendants worked in this country. By 2000 there were just 140,000 (New Jersey and Oregon require them), said Peter Honebein, a co-author of “Creating Do-It-Yourself Customers.” Travel agents have dropped, too, from 124,000 agents in 2000 to 87,600 in 2006.

When United Airlines adopted automated check-in, the airline reduced its front staff by 36% and saved $35 million, Honebein said. On average, it costs major airlines $3.02 to check you in with an agent and just 14 to 32 cents if you do it yourself at a kiosk, Forrester Research found. Online check-in costs even less.

And consider this: When you resolve an issue yourself online, you save that company $7 to $12 for a simple call or $45 to $90 for complicated one, said Zachary McGeary of JupiterResearch.

“If they can get you to work for free, they’ll do it, and in this case they’re getting you to do the work for them as the customer,” Damron said.

But wait, there’s more. Companies not only save with self-service, they also earn more. Wrap your overworked mind around that one. Here’s how:

• People buy more. Customers spend 39% more per order at fast-food kiosks and are twice as likely to upsize than if a person takes their orders. (Machines are programmed to ask every time, and no one can overhear.) Customers also buy more at deli kiosks in supermarkets.

• More people buy. Good Web self-service allows for far more customers to be adequately served.

• People remain loyal. “You mean I’m going to have to upload all my data into a new bank? And learn a new system? No way.”

• People give the company high marks for customer service. Yes, funny but true. It’s hard to complain about a food order that you placed yourself, a transaction that you scripted or the way you pumped your own gas. When customer service is self-service, you have only yourself to blame.

By Karen Aho, MSN Money Central

Posted in General