Category Archives: Customer Service

Cooking the books?

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Over the many years I have been writing this blog, I have often commented on the publishing industry, from my personal experiences, to industry trends and future outlook. The recent collapse of Australia’s online bookseller, Booktopia, prompted me to revisit the topic.

First, a declaration – I am an unsecured retail creditor of Booktopia. Orders for books I  paid for in advance of their publication dates still have not been fulfilled. Obviously, I am not alone; there are about 170k retail creditors, owed a total of $15m. That is an average of about $90 per creditor, although some retail customers are owed more than $10k.

Second, Booktopia’s total debts of around $60m are nearly one third of annual turnover ($198m in FY2023). In FY2022, annual turnover was $240m. Clearly, this was a business in decline, and in financial trouble.

Third, I should have been alert to the problems when I enquired about my outstanding orders, shortly before the administrators were called in. I knew the books had already been published, so I wanted to know when to expect them. This was part of the reply I received, in mid-June:

“We have been experiencing difficulties procuring new stocks from our supplier lately, we are so sorry for the delay.”

Fourth, it transpires that publishers, wholesalers and distributors were experiencing payment delays from Booktopia. Suppliers were reducing or cutting off their credit lines, and declining to supply more stock unless the existing debts were cleared. The administrators are doing their best to realise any remaining value of the business, including a trade sale of Booktopia (as a whole, or as parts). The assets include warehouse stock (some of which may still be owned by the publishers/wholesalers), customer lists, technology, goodwill and other IP. But it was made pretty clear at the first creditors’ meeting that unsecured trade and retail creditors should not expect to get their money back any time soon, and certainly not in full. (A total of $15m in secured debt will get preference, including employees.) So even if the unfulfilled but paid-for stock can be located, there is no apparent obligation for outstanding orders to be completed. In fact, the administrators were suggesting that retail creditors should contact their banks or credit card providers, to see if they could recover their money via those channels. (Which is why insurance premiums, card fees and bank charges go up, of course.)

I don’t understand why Booktopia’s retail and trade debts were allowed to get to such a high percentage of their turn over. Book publishing and distribution shouldn’t be that hard – either the book is in stock at Booktopia, and can be sent immediately, or it is available to order from suppliers and can be fulfilled within a reasonable time. For books that have not yet been printed, surely the customer’s money should be held in some sort of escrow account, and the cash not accessible by the seller or recognised as revenue until the order has been completed?

Of course, books go out of print, and customers may have to wait for a re-print or a new edition. Or the industry needs to consider print-on-demand solutions. Funnily enough, that is one of the key recommendations of the Ad Rem report on the Australian publishing industry (“The Australian Book Industry: Challenges and Opportunities”) in 2001….

Next week: Notes from the UK

 

 

Banking Blues (pt. 481)

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Last week, I attended a networking evening for Intersekt, Australia’s largest annual fintech conference. Billed as the “flagship event of the Digital Innovation Futures Victoria Festival”, the 2-day event is supposed to take the pulse of Australian fintech – by highlighting current industry trends, showcasing local success stories and identifying areas for future growth and collaboration. I wasn’t able to attend the 2-day conference itself, but based on the networking audience, and the program agenda, it feels like there is very little “innovation” these days, and certainly not among the major banks.

The fintech product focus is still very much on payment solutions and open data – even though we’ve had the NPP and Open Banking for several years – plus SME lending (since the major banks have largely abandoned cashflow lending, just as they have exited wealth management and financial planning). There was barely an hour of the conference given over to crypto currencies and digital assets, and from what I could see, no sessions dedicated to Blockchain technology.

Challenger or neo-banks have not managed to gain traction in Australia, mainly due to the dominance of the incumbent banks, especially the so-called Big 4, which continue to enjoy an entrenched oligopoly protected by regulation. Despite Financial Services (banks, diversified financials and insurance) forming the largest sector (27%) of the ASX 200, it is highly concentrated and appears structurally designed to keep out competition (and hence, stifle innovation).

Indeed, I cannot think of a single new product that my bank has introduced in the 20 years I have been a customer. Over that time, I have held both personal and business accounts with this bank – mortgages, investment loans, credit cards, transaction accounts and savings products. They no longer offer wealth management services under their own name, and the share trading account I hold with them is actually operated by a foreign financial institution. At the same time, the bank has been shuttering branches, and disbanding services, often without any notice or customer communication.

My frustration with this bank goes unheeded – if anything, the customer service has worsened, often under the guise of “the Royal Commission”. The latter has no doubt given rise to staff cuts to pay for greater compliance costs, and is used to justify over-bureaucratic customer processes. Meanwhile, every time I raise a complaint, I’m told it’s the bank’s “systems” that are to blame, or their third-party service providers – it’s never the bank’s own fault, and they never take responsibility or demonstrate accountability.

These are just the latest incidents in a litany of poor customer experience:

1. A simple title transfer involved me visiting three different branches (thanks to branch closures and rotating staff), plus e-mailing and phoning an interstate office (at least the settlement was probably executed on Pexa’s blockchain-enabled platform…)

2. A glitch in setting up a replacement bank-issued credit card in my digital wallet was blamed on the card provider’s technology (even though I had just successfully linked this same card to my smart watch). I hope the bank has robust SLAs with this third party…

3. Some unsolicited (and highly misleading) e-mail marketing sent out under the bank’s name was blamed on another third-party provider (surely the bank must authorise what communications are issued in its name?)

4. I spent over 2 hours in a branch to open some basic term deposits in the name of existing businesses that already have client profiles and accounts with this same bank – a combination of bureaucracy, slow technology and cumbersome processes which still involve wet signatures on hard copy documents.

5. In the process of setting up one of these business accounts, it turns out the bank had the wrong company details on their core records, even though the statements are sent to the correct address. I advised the bank of the change of address several years ago, but despite the findings of the Royal Commission, the bank has not bothered to run a check on the ABN register, which is free to use, to check the company details.

The really depressing thought is that even if I switch banks, I will probably run into similar problems elsewhere!

Next week: Non-binary Politics?

The Social License to Operate

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The “social license to operate” is best described as follows: companies only get to do business so long as they retain the trust of their customers, employees and other community stakeholders.

The current debate about de-banking reminds us that financial institutions are among the largest beneficiaries of that social license, especially in Australia where the so-called 4 Pillar banks operate under a protected oligopoly. If you want to be cushioned against external and internal competition, then you need to demonstrate why you deserve to retain that privilege.

Apart from arbitrarily shutting customer accounts, banks are also closing local branches and/or reducing their opening hours. They are scaling back on the services available at some branches, even though their archaic processes still require existing customers to attend in person for things like ID verification and to apply wet signatures on hard copy documents. Seriously, you can’t have it both ways – reducing customer access while at the same time forcing customers to get to a branch to sign papers. (In a recent case, I ended up dealing with three separate branches, as well as an inter-state department, just to process some standard forms.)

The Banking Royal Commission dealt our major financial institutions several reputational blows – but rather than forcing them to improve their ways, foster innovation, increase efficiency, embrace technology and lift the overall customer experience, it seems that the banks have hunkered down in defence. They use the findings of that very same Royal Commission to justify why they now need to employ more and more layers of bureaucracy, form-filling and pen-pushing, in an attempt to cover their backsides and to mitigate against the public backlash.

And it’s not just the banks that are under increased community scrutiny – supermarkets, utilities, professional service firms, property developers, telcos, builders, insurers, landlords and tech companies are all facing various criticisms, for things like price gouging, squeezing suppliers, corruption, monopolistic and anti-competitive behaviours, poor quality products and service, financial irregularities, atrocious consumer data protection, environmental damage, unconscionable contractual terms and unreasonable policies. Unfortunately, our regulators don’t seem capable of holding these parties to account, so it will largely depend on consumers and the community to stand up for their own interests.

Next week: More on Music Streaming

 

 

 

Customer Experience vs Process Design

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Why is customer experience so poor when it comes to process design? Regardless of the product or service, it can be so frustrating when having to deal with on-boarding, product upgrades, billing, payment, account updates and customer service. Banks, telcos, utilities and government services are particularly bad, but I am seeing more and more examples in on-line market places and payment solutions.

Often, it feels like the process design is built entirely according to the providers’ internal operating structures, and not around the customer. The classic example is when customers have to talk to separate sales, product, technical support and finance teams – and none of them talk to each other, and none of them know the full customer or product journey end to end.

Even when you do manage to talk to human beings on the phone, rather than a chat bot, as a customer you have to repeat yourself at every stage in the conversation, and you can end up having to train front line staff on how their products actually work or what the process should be to upgrade a service, pay a bill or trouble-shoot a technical problem.

You get the impression that many customer-facing team members never use their own services, or haven’t been given sufficient training or information to handle customer enquiries, and don’t have adequate authority to resolve customer problems.

On many occasions, I get the customer experience equivalent of “computer says ‘no’…” when it appears impossible to navigate a particular problem. The usual refrain is the “system” means things can only be done a certain way, regardless of the inconvenience to the customer, or the lack of thought that has gone into the “process”.

As I always remind these companies, a “process” is only as good as the people who design, build and operate it – and in blaming the “system” for a particular failing or inadequacy they are in effect criticising their own organisations and their own colleagues.

Next week: App Overload