finem respice

Creating Taxpayer Agency

Submitted by ep on Fri, 04/17/2009 - 07:00
has a bit to learn yet

A long time ago on a buyout far, far away I had occasion to learn far more than I wanted to know about customer service operations and their nature as an exception processing problem. The stand out for me from that time was the fact that a super majority of disgruntled customers later rate themselves "most satisfied" with their customer service experience if a few key rules are adhered to. This statistic extended out even to customers who wanted, but did not receive, refunds or credits for future services. This was something of a surprise to me, as was the simplicity of the key rules that bound the experience. They were codified as "information and agency." In my notes from that time, which I recently found when moving boxes, I wrote down a few key remarks from the Senior Vice President for Customer Service, one of the smartest executives who was ever fired immediately after a buyout. (We lost the auction to a more famous named buyout firm who paid nearly 35% more than our offer- the next highest bid. The winner hacked up the executive ranks immediately. The company is presently in tatters and I would be entirely unsurprised to see it file before long).

We found that if our Tier II and Tier III customer service professionals followed a pattern of methodically listening to the customer, asking smart questions about their experience, then taking responsibility for the issue and following up religiously and immediately with the customer we quadrupled our post incident satisfaction figures. For a while we fired almost on the spot anyone who we caught uttering words to the effect that the problem was "not my department, Sir." We did away with canned lines like "I'm sorry you are having difficulty," that sometimes were repeated four or five times in a customer interaction because some former manager had written it down on a "customer interaction guide-sheet." We threw that sheet away and that immediately changed the dynamic. Our agents had to listen more carefully. Also, we fired a lot of agents who couldn't work without the guide-sheet. That worked wonderfully, actually. We made our agents ask the customer how they best would like to have things resolved. What could we do to fix matters? On reviewing some of the tapes early on after that change, there were long pauses, five, even ten seconds, I thought were recording errors. I even had our vendor check the equipment. Those were, in fact, shocked customers trying to absorb what the trick was to what they had just been asked. No one had ever done that before. We also found that we gave out far fewer refunds and almost no refunds for 'irredeemable' incidents this way.1

That I copied down her remarks so carefully is a measure of how seriously I took them. I was not particularly prone to quoting verbatim expositions I encountered during due diligence. On reflection, this approach makes sense as most customers who are bothering to take the time to complain really want to keep using the product or service, they just want it to work as they expected. These customers should be easy to salvage while, to put it crudely, not putting any extra effort into customers who will not be a future source of revenue anyhow. Customers who want a refund, rather than credit for future service, are less likely to be salvageable. While she did not state it outright, I was given to understand that asking for an outright refund and refusing to accept instead credits for future services got you a much more abrupt and final response from customer service. She did say some other things that would be entirely un-PC in most organizations:

The two elements here, information flow to and from the customer and giving the customer some agency in the process, defuse the vast majority of incidents quickly and with high satisfaction scores. When we biased the response more to the information side for female customers and to the agency side for male customers we boosted our scores in both groups another 10-15%. You're not writing this down are you?

"Oh, no. I'm taking very coarse notes."

Any way you cut it, this is smart stuff. People should pay attention.

Given that it is the day after the day after Tax Day, and on absorbing the recent Teaparty craze, it occurred to me that rather than the tired and manipulative prattle that currently issues from the present administration on taxes "but we cut your taxes!" (which both insults the intelligence even of the right wing wingnuts and misses the point- future tax and spend plans- of the current anger) some very clever hot-gas venting could be constructed from these two elements: information and agency.

I won't for a minute suggest that the above is practical for the IRS (it clearly isn't) but why not set aside some portion of federal receipts for direction by the individual taxpayer? Say, 10%-25% of the total. Or, perhaps an amount equal to the highest ever level of earmarks (which should then be eliminated completely). Provide the taxpayer who wishes to express a preference the option to direct that portion of their taxes to specific programs. Granularity of detail here is probably an academic exercise. Assigning a number to various programs and allowing taxpayers to fill out an optional sheet with percentages for each program should be trivial.2

It can easily be seen that this provides the taxpayer with a great deal of perceived agency, though over a small portion of the total budget. It also provides a great deal of information flow. Both from the taxpayer to government and, as the more marginal programs compete to show off their efficacy and worthiness to a consumer base (the taxpayers), from government to taxpayers. Most importantly, this provides a pressure valve, something that is going to be important if the present administration wants to increase the effective tax burden on Americans to over 50% of income after their proposed increases and tax on all energy consumption (the "carbon revenue" sleight of hand). It also prevents the sort of cheap demagoguery of the "most Americans support my programs" sort. I am willing to bet that the number of times this has been uttered truthfully is vanishingly small. The politician who claims such and then receives not a cent of discretionary taxpayer allocations come April 15th will look pretty out of touch. This last, in my view, is well worth the effort.

Alternatively, you could just not tax the stuffing out of the country to pay for a bunch of doomed-to-collapse entitlement spending until you literally have tax riots in the streets. Just sayin' is all.

  1. 1. "Irredeemable incidents" in this context refer to situations where the customer refuses to patronize the business again no matter what effort the customer service apparatus attempts.
  2. 2. This is not exactly a unique idea. One erudite finem respice reader points out that Lithuania permits taxpayers to assign 2% of their taxes to a non-profit. Lithuania also has a 15% flat tax on income, which makes the combination quite interesting.
[Art Credit: Adam Fagan "IRS Building," Photograph (July 3, 2007), From the Artist's Collection. The Internal Revenue Service headquarters, Washington, D.C. ]

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