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Bucking the Offshore Trend

I hope this article in The New York Times describes a sign of things to come -- a new call center opened by Netflix in Hillsboro, OR, with 200 customer service representatives, in an attempt to stay ahead of Blockbuster:

Netflix set up shop here a year ago, shunning other lower-cost places in the United States and overseas, because it thought that Oregonians would present a friendlier voice to its customers. Then in July, Netflix took an unusual step for a Web-based company: it eliminated e-mail-based customer service inquiries. Now all questions, complaints and suggestions go to the Hillsboro call center, which is open 24 hours a day. The company's toll-free number, previously buried on the Web site, is now prominently displayed.

Netflix is bucking several trends in customer service. Booz Allen Hamilton, a management consulting firm, and Duke University studied 600 companies last year and found a continued increase not just in outsourcing, but also offshoring, in which call centers are moved overseas...

Netflix's decision to greet anxious consumers with a human voice, not an e-mail, is also unusual in corporate customer service. "It's very interesting and counter to everything anybody else is doing," said Tom Adams, the president of Adams Media Research, a market research firm in Carmel, Calif. "Everyone else is making it almost impossible to find a human."

In contrast, Blockbuster outsources a portion of its customer service, and when people do call, they are encouraged to use the Web site instead. Its call center is open only during business hours, said Shane Evangelist, senior vice president and general manager for Blockbuster Online, because the majority of customers prefer e-mail support, which is available 24 hours a day. "Our online customers are comfortable using e-mail to communicate," he said.

Over the past decade or so, Corporate America has been relentlessly improving its efficiency. In general, this is a great thing, because it means we get better goods for less money. But it's easy for firms to take these steps too far. Netflix is making a bet that by spending more in order to treat their customers better, their profits will ultimately rise. I sincerely hope they're right.


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