Can a company be too friendly?

After e-mailing Freshbooks support for the 3rd time in two weeks, I find myself wondering: can a company be too friendly? Companies like Freshbooks and Zappos have built their business in large part around inspired, personal service. This is a key part of their strategy and is working by all accounts for them. Zappos is a $1B company and Freshbooks just hit the cover of Entrepreneur Magazine.

From a financial perspective – is there an optimal balance between personal service (which requires bodies and costs money) vs. do it yourself online service? If Freshbooks wasn’t so darned friendly, I’d probably look online for the answers I need. Or if they were on Get Satisfaction, I’d ask the community if I couldn’t find what I needed on their site directly. But since they are so bloody friendly (and quick), I don’t think twice about e-mailing them.

The Startup 101 playbook (especially for web companies that touch *many* users) says: get close to your users. Build a relationship. Engage them. So, personal touch certainly achieves that. Web businesses live and die by their per user economics. Do I earn more per user that it cost me to acquire him? It can certainly be argued that personal touch is a key element in retaining users. They stay with you longer, pay you more and refer more people if you give them lots of love. Also, that direct interaction should feed into your product planning, messaging / positioning, culture – essentially every aspect of your business. So, its definitely the way to go.

My only question is: is there an optimum mix of high cost / high touch vs. low cost / low touch that still allows a business to keep users happy and paying while lowering the bodies needed to serve them?

  • Wallen's

    It's almost impossible for one single small company to have high touch and low touch offerings. Each of those entails a certain company culture in R&D, marketing, sales, finance, etc. that cannot be applied to both models. The only case where I can see this double offering is at big companies by creating a separate entity… but then there are little synergies and it's no recipe for success. Look of the airline industry: the low cost carriers are different companies than the traditional carriers. Some of the latter have separate branding for their low cost offering but they are not as successful (and low cost) as a pure play low cost carrier (at least in Europe).

  • Wallen's

    It's almost impossible for one single small company to have high touch and low touch offerings. Each of those entails a certain company culture in R&D, marketing, sales, finance, etc. that cannot be applied to both models. The only case where I can see this double offering is at big companies by creating a separate entity… but then there are little synergies and it's no recipe for success. Look of the airline industry: the low cost carriers are different companies than the traditional carriers. Some of the latter have separate branding for their low cost offering but they are not as successful (and low cost) as a pure play low cost carrier (at least in Europe).

  • Rayanne Langdon

    Haha, best reply ever!

  • Mark MacLeod
  • Mark MacLeod
  • Mark MacLeod

    Hey Rayanne, The World needs more people like you and fewer grumpy CFOs like me. Definitely look me up when you're in Montreal.

  • Rayanne Langdon

    Hey Mark! Boy, your name DOES look familiar! ; ) I have a question for you: Can a person be too friendly? I'd say the answer depends on the person. And that probably applies to the question you asked. Shrug. We're just being real. My job is to make people happy and that's how I live my life. It's how I make myself happy. That might sound cheesy, but I'm guessing only to those who find friendly people annoying ; ) And BTW, we do have a Get Satisfaction account, but we haven't been making good use of it yet. That's something I hope to change, so thanks for the reminder! Heh. P.S. We should get together next time I'm in Montreal! Rayanne Langdon, FreshBooks.com

  • Ken Kaufman

    Mike, I think your point is right on – great service drives additional sales. I had a pretty smart person tell me once that the market does not compensate adequately for service or product features that are far above the competition. For example, if your service is 50% better than your competition, your customers may still only be willing to pay 10% more for it. My friend's philosophy was that you should purposely only make your service 10% than your competition in order to maximize your return on any additional costs to provide the better experience. I share that example with this one caveat – he was in an industry that had to manage capacity pretty aggressively, and they were fine hitting sub-par service marks if they were at max capacity. But they improved their service when they wanted more volume. So, here is my conclusion…if you want to increase your sales, then outstanding service will help yiou accomplish that.

  • Mark MacLeod

    Have to agree with you Mike. Being a cheap, Scottish CFO, I always wonder if I can have my cake and eat it too: high touch, but not too high. But you're right in your assessment and that it represents an opportunity.

  • Mike_McDerment

    Mark – thanks for the props. Here's my two cents: Service is an opportunity, not a cost centre – therefore, service is sales. You are a tech CFO and I know you can get this, but it going to be a long long haul for other financial types to not look at customer service and support as cost centres. The web is going to change their minds in time as they realize their customers are organizing around them and that the good and bad word travel far – fast. Sadly it's going to take longer than it ought to to change their orientation…which just smells like opportunity to me.

  • Taylor Davidson

    I agree, and that's a good example; I wonder if there is an opportunity for companies that have established a great high-touch model to target business and product opportunities where the high-touch model is less pervasive.

  • Mark MacLeod

    I think you need to deliver one consistent experience as a company and brand. 37 Signals would be an example of a company with multiple products and the experience is uniform across all of them

  • Taylor Davidson

    Is there one optimum mix? No; obviously this type of customer support & engagement & retention & demand generation & product strategy (and yes, it's all part of the same thing) doesn't appeal to all potential customers. But, luckily, the market will tell us how many people want this and how successful this approach will be; and interestingly, "high touch" strategies are getting less expensive as we're thinking less about how to scale "products" and more about how to scale "people". The question in my mind is can a company deliver multiple products with a mix of high touch / low touch strategies, or does it have to be a blanket cultural and strategical decision to use the same strategy for all products? Frankly, with many web companies based on single products it probably doesn't matter, but it's an interesting thing to consider as we think of M&A activity down the line…