Fred Wilson blogged yesterday about his recent problems with American Express.
Last I checked there were 133 comments on his post. Fred is apparently not alone in his experiences with AmEx’s declining customer service standards. Things have fallen a long way since the days of Karl Malden.
The issues at American Express can be attributed to many well discussed macro-economic factors, none of which, as entrepreneurs, we can do much about.
But one particular comment on Fred’s post stood out to me as indicative of a deeper issue at AmEx. It’s an issue that I see most business owners fail to address until the problems are so deep rooted that there’s no viable solution.
Their information management systems.
Most entrepreneurs are in a hurry to put some foundations in place and get into business. If they hire great lawyers and accountants they get great operating agreements and financial reporting. If they don’t, they don’t. The rest they learn as they go.
But when it comes to managing the information around which their company operates, they often focus only on their current business needs. And almost not at all on what they might need five years later. As though thinking about it will jinx it. This happens all the time. Even among people paid to think ahead.
Remember the Millennium bug when the world's computers were supposed to come to a halt because most of their operating code had been written with two digit calendar years? After all, who could envision the world reaching the year 2000 all the way back in the uh, 1950s.
A version of this has affected American Express. In their case the issue is the account number structure they used in the 1970s. I’ve reprinted the comment added to Fred’s post this morning:
“I'd had an AmEx Platinum card for nearly 30 years, never missed a payment. Last year I wanted to arrange for the card account to be paid automatically from a bank account. AmEx said sorry, the auto-payment feature wasn't available for my card, even though the feature was offered on their website. I escalated through SEVEN layers of managers, being stone-walled at every level, until the highest VP finally told me that AmEx cards with older numbers were handled on a different computer system which couldn't be upgraded. My only option was to cancel my Platinum AmEx and open a new account, which would have a new number and be hosted on a newer computer system where auto-payment was available. This was so incredibly incompetent that he convinced me that it must be true.”
The issue, of course, is not that American Express physically can’t transfer the data. It’s that they feel that the cost of translating and transferring it to the new systems is cost prohibitive to them.
Even if we forgive them the limitations of their early account numbering system as a result of unforeseeable technological evolution, they’ve compounded the mistake at least twice more - each time exponentially.
The first, by deciding not to perform a comprehensive system upgrade of all their customers when the new system was implemented. The second, by deciding to then highlight the inadequacy of their original planning by offering their new customers better service than the original card members.
Offering your oldest customers less service than your newest is a quick way to making sure your newest become your oldest really fast.
Ultimately, the random, volatile behavior of their customer service department is more indicative of the lack of trust they have in their own philosophy, their systems and ultimately themselves.
If you want your business to last you have to build it to last. If you design a spectacular house and then run the plumbing through cardboard tubes, eventually the Fed Ex guy is going to find water coming through the front door.
Companies work the same way. The outward face of a company is always a reflection of its inner workings. And no amount of customer service training can hide a badly built business.
So take a look at your information systems and think hard about whether they’re built to support your company’s best case scenario ten years from now.
If they’re not, you’re just planning for failure.