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37signals & Freshbooks Disagree On Customer Service 2.0

There is a fascinating "smackdown" of sorts going between two leading Web2.0 companies which raises some very interesting questions about the future of customer service and what customers really want. Ok, maybe not so much a smackdown as a philosophical difference of opinion, but its one worth watching if you are a marketer or have anything to do with customer service. On one side, you have Sarah Hatter from 37signals, the maker of hugely popular web based applications for business such as Basecamp (which are used by over 1 million people). They are one of the few Web2.0 companies that have found a way to scale and make money, so their experience is not to be taken lightly. (Full Disclaimer – Ogilvy and several of our clients are currently customers and I LOVE Basecamp).  Here’s what Sarah had to say in her post last week on the topic of why 37signals doesn’t offer phone support:

"In a perfect world, calling a business for help would be quick, painless, productive, and human. But it’s not and it’s not going to be. That old time ideal of calling the local retailer or company and talking with someone after two rings was demolished by the call centers and overseas help desks that sprung up in the information age. It’s time to stop thinking that phone support is so essential. We’re lucky that we have an email support system that works and is incredibly efficient considering the volume of customers we interact with daily. It works because we’re committed to making it work, and if we can do it every company with a mailserver can do it too."

Instead of phone support, 37signals has focused on offering superior email-based customer service. They do it rapidly and thoroughly, without the distraction of having those same staff that respond to emails also trying to answer the phone. Based on the great reviews for customer service they typically get, their model works. On the other side of the debate is a younger and smaller (but equally hot) Web2.0 company called Freshbooks which offers an online invoicing and timesheet management tool. The application gets equally positive rave reviews from users and has been on a huge growth curve. (Another Disclaimer – I know a few of the team members behind Freshbooks very well and like them. I DREAM of being able to use Freshbooks to record my time instead of the antiquated software from the 1990s I have been forced to use at my last few jobs).

In a response to Sarah’s post about choosing email over the phone, Sunir Shah from Freshbooks rises to its defense, noting:

"I’ll tell you the secret of why we answer the phone. Sarah is completely right: people don’t expect it. When we answer the phone right away, we have proved we’re a different kind of company. We demonstrate we put a priority on customer service. Our motto here is Execute on Extraordinary Experiences Everyday. As Sarah points out, good customer service is in fact extraordinary in the sense that it’s abnormal. That’s sad because everybody wants it. Therefore, if you want to truly brighten the day of a customer that wants to phone, answer the phone. It’s good for business! When a customer hits a wall, we can free their minds immediately by being a real human being that takes ownership of the problem and fights on their behalf. Those customers become your most loyal advocates."

The most powerful thing about Freshbooks is the way that their customers rave about their experiences with them and the personal connection they feel to them. The phone is just a part of their strategy to create those extraordinary experiences, but for Freshbooks it helps them to stand out. Of course, the easy thing to point out is that they are doing it on a smaller scale than 37signals. So here’s an open question – which side of the debate do you fall on? In order to grow and be successful, can you really afford to take calls and have a human on the other side of the phone as Freshbooks does, or do you need to be hyper focused on efficiency like 37signals?

34 thoughts on “37signals & Freshbooks Disagree On Customer Service 2.0”

  1. I’m not particularly familiar with the businesses of these companies, so maybe this idea doesn’t work, but how about a hybrid offering with a twist. Instead of offering live human customer phone support for clients who simply pay more, offer that to clients based on length of patronage. The longer you use our product, the more (better) service we will provide you with. Doesn’t matter how much you spend with us, we value you as a loyal customer.

    Your entry-level offering still has to be really, really good, but this rewards your best customers and gives you an opportunity to get to know them better. Maybe even add an elite level for x+ years where the customer gets a direct hotline number to the ceo.

    Reply
  2. I’m not particularly familiar with the businesses of these companies, so maybe this idea doesn’t work, but how about a hybrid offering with a twist. Instead of offering live human customer phone support for clients who simply pay more, offer that to clients based on length of patronage. The longer you use our product, the more (better) service we will provide you with. Doesn’t matter how much you spend with us, we value you as a loyal customer.

    Your entry-level offering still has to be really, really good, but this rewards your best customers and gives you an opportunity to get to know them better. Maybe even add an elite level for x+ years where the customer gets a direct hotline number to the ceo.

    Reply
  3. The real smackdown would have to be Freshbooks’ Saul Colt vs. 37Signals’ Jason Fried (each armed with 32 tasty varieties of sauce), at the Mongolian BBQ in Austin, at SXSW 2009. I can’t wait.

    Reply
  4. The real smackdown would have to be Freshbooks’ Saul Colt vs. 37Signals’ Jason Fried (each armed with 32 tasty varieties of sauce), at the Mongolian BBQ in Austin, at SXSW 2009. I can’t wait.

    Reply
  5. Recently we added phone support to our apps. We felt it gave them that warm fuzzy feeling to see a 1800 number on the help screen. We love 37signals, but I think have lost touch with their market. They’re a products company that works 4 days a week, do they really remember how it was to grind out 70 hour weeks with client work like their user base does?

    Reply
  6. Recently we added phone support to our apps. We felt it gave them that warm fuzzy feeling to see a 1800 number on the help screen. We love 37signals, but I think have lost touch with their market. They’re a products company that works 4 days a week, do they really remember how it was to grind out 70 hour weeks with client work like their user base does?

    Reply
  7. The reason 37signals does not provide phone support is that Jason Fried is an egomaniac who thinks his team knows what customers want and need more then his customers do. Sending a message to support and getting a canned email response 3 days later is not great support…even if the email comes from a great system.

    I like and use 37s products, but only because I can not find a good alternative. If I could I would leave JF and his ego behind for good.

    Reply
  8. The reason 37signals does not provide phone support is that Jason Fried is an egomaniac who thinks his team knows what customers want and need more then his customers do. Sending a message to support and getting a canned email response 3 days later is not great support…even if the email comes from a great system.

    I like and use 37s products, but only because I can not find a good alternative. If I could I would leave JF and his ego behind for good.

    Reply
  9. I think both Sarah and Sunir have a good point though Sarah’s view of the support world is a little extreme and currently not really scalable to all product lines and geo’s in what I’ve seen.
    There has to be a balance between email support and phone support, now that does not mean it has to be 50% each, but there are definitely situations where emails just wont do what a live person on the phone can. I think the challenge that companies face is how do you discourage customers from picking up the phone and calling when its something that can be resolved through a Helpcenter FAQ or email … make other forms of contact and resolution as effective and efficient as the phone … so over a period of time its only a small slice of your support.
    Also its a little naive of Sarah to think that outsourced callcenters only answer phones. When companies grow and have to scale, email response can be outsourced as well … I know a number of pure play SaaS/Web2.0 vendors who do that.

    Reply
  10. I think both Sarah and Sunir have a good point though Sarah’s view of the support world is a little extreme and currently not really scalable to all product lines and geo’s in what I’ve seen.
    There has to be a balance between email support and phone support, now that does not mean it has to be 50% each, but there are definitely situations where emails just wont do what a live person on the phone can. I think the challenge that companies face is how do you discourage customers from picking up the phone and calling when its something that can be resolved through a Helpcenter FAQ or email … make other forms of contact and resolution as effective and efficient as the phone … so over a period of time its only a small slice of your support.
    Also its a little naive of Sarah to think that outsourced callcenters only answer phones. When companies grow and have to scale, email response can be outsourced as well … I know a number of pure play SaaS/Web2.0 vendors who do that.

    Reply
  11. Thanks Rohit for posting about this! I wouldn’t say it was a smackdown, but more of our different take on how to do small business 2.0.

    Metz, I can see the poster: “Two men, Mongolian sauce, and no holds barred.” I’m not sure who that would attract, but we could probably sell a lot of tickets for charity.

    Reply
  12. Thanks Rohit for posting about this! I wouldn’t say it was a smackdown, but more of our different take on how to do small business 2.0.

    Metz, I can see the poster: “Two men, Mongolian sauce, and no holds barred.” I’m not sure who that would attract, but we could probably sell a lot of tickets for charity.

    Reply
  13. Great post! By the way, I will be looking for your new book. I cannot imagine writing one myself. It is clear that you have a true passion for social media and the quality content is evident in your material.

    Reply
  14. Great post! By the way, I will be looking for your new book. I cannot imagine writing one myself. It is clear that you have a true passion for social media and the quality content is evident in your material.

    Reply
  15. It seems like it all depends on what kind of company you are, and how you work.

    If your picking up the phone stops you from doing any work, you’re going to be providing customer support to clients that won’t be around for long.

    In my days as an account person, I quickly realized that it was in my client’s best interest to have open communication … but not constantly open communication. Sometimes you have to hold people at arm’s length in order to get anything done.

    And when you explain that to them, they get it.

    Reply
  16. It seems like it all depends on what kind of company you are, and how you work.

    If your picking up the phone stops you from doing any work, you’re going to be providing customer support to clients that won’t be around for long.

    In my days as an account person, I quickly realized that it was in my client’s best interest to have open communication … but not constantly open communication. Sometimes you have to hold people at arm’s length in order to get anything done.

    And when you explain that to them, they get it.

    Reply
  17. Great post! I think Sunir has it right though, not on the issue of phone or no phone, but on the issue of being customer centric versus company centric. Sarah’s frames customer preferences as a means to justify her company’s company centric approach. Nice try, but I don’t buy it.

    Reply
  18. Great post! I think Sunir has it right though, not on the issue of phone or no phone, but on the issue of being customer centric versus company centric. Sarah’s frames customer preferences as a means to justify her company’s company centric approach. Nice try, but I don’t buy it.

    Reply
  19. A good article followed by great comments. An enjoyable read.
    I would add that both companies probably get far less support requests per user than most applications. That said, I am one who like email support if for no other reason than the instant documentation. Also, I would guess that most basecamp customers are more prone to reach for their keyboard than their phone when they need help.

    Human contact is a fleeting thing in customer service, this is a bit sad, but I’ll settle for competent support in whatever form it is available.

    Reply
  20. A good article followed by great comments. An enjoyable read.
    I would add that both companies probably get far less support requests per user than most applications. That said, I am one who like email support if for no other reason than the instant documentation. Also, I would guess that most basecamp customers are more prone to reach for their keyboard than their phone when they need help.

    Human contact is a fleeting thing in customer service, this is a bit sad, but I’ll settle for competent support in whatever form it is available.

    Reply
  21. Let’s put the disclaimer up front – my name is Anand Chopra, I work at the Talisma Corporation and we provide software solutions to adddress customer service inquiries whether they come in via email, phone, chat or click to call channels. Wanted to add some perspective from a solution provider’s point of view…

    In a nutshell, it’s quite simple – one size does not fit all. The driving factor and ultimate determinant is how much emphasis the management team puts on Customer Service. If it barely is discussed and is seen as “just a cost center,” well then you can bet on the phones going away. On the other hand, if management sees this as an opportunity to engage with customers and turn them into raving fans, they’ll treat Customer Service as a strategy development center and key differentiator. Why does everyone know (even if you’ve never shopped there) that you’ll get great service at Nordstrom? The benefits are easy to see – how much business does Nordstrom reap from word of mouth referrals? Heck, I just mentioned them here…and in a more technical product environment, customer interactions will provide all of the information you need to develop the next generation of your product. Essentially your product development team is vastly expanded by making the strategic decision to listen to your customers every chance you get.

    There are some great points made in this post and the responses, but I have to say that after eating/living/breathing this space for 5+ years – it all comes down to the direction the management team provides. It’s an easy connection to make – companies that see the the care and feeding of their customers as a strategic initiative consistently rank the highest among their peers in customer satisfaction (think Nordstrom, Zappos, Ritz Carlton Hotels, Singapore Airlines, New Egg, ING Direct, Progressive Insurance,…).

    Anand Chopra

    Reply
  22. Let’s put the disclaimer up front – my name is Anand Chopra, I work at the Talisma Corporation and we provide software solutions to adddress customer service inquiries whether they come in via email, phone, chat or click to call channels. Wanted to add some perspective from a solution provider’s point of view…

    In a nutshell, it’s quite simple – one size does not fit all. The driving factor and ultimate determinant is how much emphasis the management team puts on Customer Service. If it barely is discussed and is seen as “just a cost center,” well then you can bet on the phones going away. On the other hand, if management sees this as an opportunity to engage with customers and turn them into raving fans, they’ll treat Customer Service as a strategy development center and key differentiator. Why does everyone know (even if you’ve never shopped there) that you’ll get great service at Nordstrom? The benefits are easy to see – how much business does Nordstrom reap from word of mouth referrals? Heck, I just mentioned them here…and in a more technical product environment, customer interactions will provide all of the information you need to develop the next generation of your product. Essentially your product development team is vastly expanded by making the strategic decision to listen to your customers every chance you get.

    There are some great points made in this post and the responses, but I have to say that after eating/living/breathing this space for 5+ years – it all comes down to the direction the management team provides. It’s an easy connection to make – companies that see the the care and feeding of their customers as a strategic initiative consistently rank the highest among their peers in customer satisfaction (think Nordstrom, Zappos, Ritz Carlton Hotels, Singapore Airlines, New Egg, ING Direct, Progressive Insurance,…).

    Anand Chopra

    Reply
  23. IMHO, I don’t really care if 37 signals offers phone support or not and I wouldn’t want to pay for it. It might be due to the niche of the market or the simple fact that its intuitive software and I am not sure what I would ask. Maybe I’m lucky and there are some frustrating support related reasons to contact 37 signals others are dealing with, to this point I’ve been blessed with good service. Another thought is I would rather email a question than spend 15 – 30 min on hold to ask the same question.

    Granted, if I could call and they did answer quickly and resolved an issue, then I would be impressed…so if Freshbooks provides this, than that is quite an offering. One caveat, when you go to the freshbooks site, they state over 400,000 customers vs the 1,000,000 37 Signals (and Basecamp) site claims. Tipping point? 🙂 Probably not, but still an additional 150% of potential phone calls to field. :p

    Reply
  24. IMHO, I don’t really care if 37 signals offers phone support or not and I wouldn’t want to pay for it. It might be due to the niche of the market or the simple fact that its intuitive software and I am not sure what I would ask. Maybe I’m lucky and there are some frustrating support related reasons to contact 37 signals others are dealing with, to this point I’ve been blessed with good service. Another thought is I would rather email a question than spend 15 – 30 min on hold to ask the same question.

    Granted, if I could call and they did answer quickly and resolved an issue, then I would be impressed…so if Freshbooks provides this, than that is quite an offering. One caveat, when you go to the freshbooks site, they state over 400,000 customers vs the 1,000,000 37 Signals (and Basecamp) site claims. Tipping point? 🙂 Probably not, but still an additional 150% of potential phone calls to field. :p

    Reply
  25. A lot of the things 37s does are a result of their dominant position in the market, and this is one example. I commend them to the extent that it shows a focus on doing what they’re good at really well and not being distracted by something they’re not good at.

    That said, most businesses live in a much more competitive environment — like Freshbooks. In those cases, they need to do more to operate in a way that customers want them to, even if that means the business needs to figure out how do something (like phone support) that is difficult, expensive, or time consuming.

    I think it’s possible to provide quality, efficient phone support in a way that scales with any business. It’s not easy, but can be done — in fact, I’d love to see 37s tackle it with some kind of no-frills solutions consistent with their products. All the features Sarah mentions in her post as being the great things about email can be accomplished with voice files with the right solution. Then, you can please both customers who prefer email support and those who want to talk.

    Reply
  26. A lot of the things 37s does are a result of their dominant position in the market, and this is one example. I commend them to the extent that it shows a focus on doing what they’re good at really well and not being distracted by something they’re not good at.

    That said, most businesses live in a much more competitive environment — like Freshbooks. In those cases, they need to do more to operate in a way that customers want them to, even if that means the business needs to figure out how do something (like phone support) that is difficult, expensive, or time consuming.

    I think it’s possible to provide quality, efficient phone support in a way that scales with any business. It’s not easy, but can be done — in fact, I’d love to see 37s tackle it with some kind of no-frills solutions consistent with their products. All the features Sarah mentions in her post as being the great things about email can be accomplished with voice files with the right solution. Then, you can please both customers who prefer email support and those who want to talk.

    Reply
  27. A lot of companies view customer service as a cost. Others view it as a central point of connection to their customers. Call center metrics usually reflect this (one measures how many calls can be closed, the other measures how well customer problems are addressed).

    The issue here is not really one of to phone or not to phone. The real question is how do customers want to get in touch with you? If customers are comfortable with only email, then great! However, if they want to be able to pick up the phone and call, then providing that service will strengthen the trust and relationships that are important to build in this tough economy.

    Reply
  28. A lot of companies view customer service as a cost. Others view it as a central point of connection to their customers. Call center metrics usually reflect this (one measures how many calls can be closed, the other measures how well customer problems are addressed).

    The issue here is not really one of to phone or not to phone. The real question is how do customers want to get in touch with you? If customers are comfortable with only email, then great! However, if they want to be able to pick up the phone and call, then providing that service will strengthen the trust and relationships that are important to build in this tough economy.

    Reply
  29. Good analysis of the different models of customer service. I am surprised that no one has mentioned the cultural aspects of customer support between these two companies. While the support methods are different, I don’t think that the methods are the main differentiators between these two companies.

    Basecamp has come to be known as the company with a culture of “soup nazi” customer support. Bottom line is that they know best and the customer is but a distraction along the way. Regardless of the elegance of their support model, unless you are a techie that kind of likes being treated that way (you know who you are), I don’t think that the customer will be as happy.

    In my view, whether it is email based or more personal in nature, the method of customer support is a secondary consideration to the culture of support that a company emanates.

    Reply
  30. Good analysis of the different models of customer service. I am surprised that no one has mentioned the cultural aspects of customer support between these two companies. While the support methods are different, I don’t think that the methods are the main differentiators between these two companies.

    Basecamp has come to be known as the company with a culture of “soup nazi” customer support. Bottom line is that they know best and the customer is but a distraction along the way. Regardless of the elegance of their support model, unless you are a techie that kind of likes being treated that way (you know who you are), I don’t think that the customer will be as happy.

    In my view, whether it is email based or more personal in nature, the method of customer support is a secondary consideration to the culture of support that a company emanates.

    Reply

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Rohit Bhargava is on a mission to inspire more non-obvious thinking in the world. He is the #1 Wall Street Journal and USA Today bestselling author of eight books and is widely considered one of the most entertaining and original speakers on disruption, trends and marketing in the world.

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