This is a personal story about how I've been screwed by Skype, but I want to place it in a bigger context because it's indicative of a pattern we frequently see as companies grow. It's part of the reason that disruptive innovators often end up failing, or just becoming part of the big company institutional morass that they once set out to defeat. So, I will get to that, but you need to know what happened first.
The Short Story
I have owned a number of phone numbers, acquired via Skype, in different cities around the US and the world for about 5 or 6 years. When I originally acquired these numbers, it was a lot more important to make it easy for people to call me at my office for the price of a local call than it is today, and that was the original reason to buy them in the most important places where I have business dealings.When I first made the decision to invest in these for my business, it also made sense to get easy-to-remember numbers, so I carefully picked a set that were both memorable and had some consistency from city to city.
Today, those numbers still serve that purpose, although it has diminished importance, but after many years they have also become numbers that are identified with me, that people have put in their databases and cell phones to call me. In otherwords, they have become part of my corporate identity.
As you can see in the screen clip to the side, these numbers are advertised on my website (warning: don't try calling them -- they don't ring through to me at the moment). They're great numbers -- so good that I can remember all of them, and I can't remember anything anymore.
The subscriptions for these numbers have always been set to auto-renew, and for the most part I haven't had to do anything except make sure that the credit card attached to my Skype account was kept current.
Last week, I discovered by accident that Skype had not renewed my subscriptions to these numbers, but instead cancelled them (ALL OF THEM), and sold them to other people. Some just within the last week or two.
My first reaction was to check my account settings and payment information to make sure everything was current (it was), except that my all my Skype Numbers had disappeared. Next, I tried calling the numbers to assess the damage (i.e. were they dead, re-assigned, forwarding to voicemail, etc.?).
To my surprise, the very first number I called was answered by a very confused individual who wasn't even sure what the number was. He told me that his daughter had just bought it for him in the previous week, that he understood my concern and would happily return it to Skype if they offered him a good replacement, since he didn't have anything invested in it. As I went through the list, I found that one of the numbers had been reassigned to Verizon mobile, but was out of service. Another seemed to be gearing up to use it for something, but seemed very surprised to be getting calls on it and hung up on me as I was trying to explain why I was calling. And, so it went. Some of them didn't answer, but none of them directed calls to me. All my numbers gone, recently sold to other people or untraceable.
Customer Service, Where Are You?
So, if you don't deal with Skype, one thing you need to know is that they make it extrordinarily hard to reach a person in the event of problems or customer service (note: this link is mostly inserted for Skype's benefit, since they appear to have little understanding of what customer service is) needs.
How hard is it? They don't have published phone numbers. You can't call them via Skype (ironic, isn't it). You can't even send them a Skype message. You can't get them to call you. You can submit data to a form and wait for them to get back to you via email (extraordinarily inefficient for a problem like this requiring explanation and urgent turnaround). Or, if you are a "Premium Customer" (I am -- that too is ironic), you can initiate a Chat session.
Of course, getting to the point where these are even options requires a great deal of determination to navigate their knowledge base through several non-obvious screens, and repeatedly saying "no, that doesn't solve my problem" -- they really genuinely have no desire to ever talk to customers. The only conclusion one can reach about Skype's attitude to service is that customers are just an expense to be avoided. Certainly unhappy ones are -- although as I found out later, Skype will communicate uselessly all day with people who are happy and use their free services. Yeah, that too is ironic.
After finding the screen to initiate a Chat session, and waiting about 10 minutes to be connected, finally there was a person on the other side. Wow! Congratulations! Do I earn bonus points for finding a real human there? Unfortunately, this isn't a game, and I digress.
Start Chat -- 10:30 am
OK, so we make some allowances here. Maybe the person on the other side doesn't really understand English. "Is it a Skype Number?" No, I'm thinking. I always waste 20 minutes trying to get through to Skype to complain about them selling my Verizon phone numbers. Take a deep breath. This is not going to be a fun session.
I'll cut this part short, because it goes on for 30 minutes. Yes, 30 minutes to verify who I am (even though I initiated the session from within my Skype account and it says who I am on the screen), verify what numbers I'm talking about (yup, all of them), and that they're actually gone. At this point, Mizpah realizes he can't do anything, and we need to escalate. So, I get transfered to the next level in the chain, and connected to my second Skype supporter.
First Escalation -- 11:00 am
Brilliant. After 1/2 hour of wasted time, and getting escalated, the conclusion is that I can't "use my Skype Number". Like there's some minor technical glitch. And notice, it's been minimized from all 5 of my numbers getting sold off, to one number that I just can't use anymore.
And, follow that up with the argumentative "We do not sell Skype Numbers ....." -- what are we trying to do here? Prepare for a legal defense, or straighten out a major customer problem? This is what you get when you escalate a support problem with Skype. First minimize, then deny that a problem exists or that Skype was even a party to the problem. Hey, we can't sell your stinkin' number -- we don't have any stinkin' numbers to sell. Nice.
After a lukewarm to bad start, we spend the next half hour going over much of the same ground, except this time I'm spending a lot of time waiting while Victor looks into my account history and consulting with others as he tries to figure out what has happened. Finally, he comes back after about 20 minutes.
Really? After an hour on the Chat line, the best "escalation" you can do is refer me to the email support team? We parry back and forth, and Victor finally senses that there is a big problem brewing, and that I'm not happy. So, rather than make me wait for an email, he goes and stands outside a manager's door. Still, I have to wait almost 1/2 hour before there is further escalation.
Second Escalation -- 12:10 pm
Now, we've been connected to Chat for more than an hour and 40 minutes, escalated twice, and accomplished almost nothing. But, Dante identifies himself as the duty supervisor (I wonder how many layers Skype, the once scrappy startup, has) and seems to have at least rudimentary grasp of the problem. Maybe this will soon be solved?
Now in retrospect, I wonder if I was like the lost wanderer in a desert who spots an oasis, and imagines it to be just a short walk away. Like maybe I was starting to get delusional. Because when Dante returns, this is what he has to say:
Gee, really? 10 minutes away from 2 hours on the Chat line, and the best you can tell me after 2 escalations is exactly what I told you to start the conversation, with a promise that someone will look into it and email me? I wonder what kind of education you need to get one of those jobs at Skype? My teenagers could do significantly better than this.
I'd paste all that ensued here, except that it contains my email address and I'd rather not spread that around too liberally, and a good deal of frustration that I originally chose Chat support specifically because this wasn't a problem that was easily solved by email, and I frankly don't trust them to get back to me. A distrust that has been borne out, as I'll get to in just another minute.
However, after insisting a few times that management really needs to step up and do something about this, and expressing my lack of faith in email support and its timeliness, I finally realize that we aren't going anywhere. This is as high on the totem pole as I'm going today with Skype, and Dante's only option is to refer me to the Billing Department.
Of course, that's ridiculous, since this isn't a billing problem, but a customer service and at this point, a customer retention (another link that is primarily for Skype's benefit) problem. What no one seems to understand is that it's also becoming a bad pr problem.
So, he tries to reassure me:
Actually, the clip above was the last of 6 times that Dante promised that someone would absolutely be in touch via email, within 2 hours. That was last Thursday, and I still haven't heard from anyone. In total, we spent more than 2 1/4 hours on Chat, and achieved precisely nothing. The promised support via email, which I didn't believe would happen, or that if it did, would not solve the problem has further soured me on Skype (and Microsoft). Five days later, I still haven't received an email with even an explanation let along a resolution. They really don't get it.
How much do they not get it?
Four hours later, I had still not received the promised email. So, I started tweeting @Skype and @SkypeSupport. It began like this:
@Skype Was promised email followup of serious problem within 2 hours -- 4 hours ago. Great client support you have. NOT.— Paul Paetz (@paulpaetz) September 26, 2013
There were many more tweets (if interested in the whole stream, check out https://twitter.com/paulpaetz), including retweets of problems other people were having, for a while every 10-15 minutes, then every half an hour, then by the hour, until finally this one got a response almost a day later:
And after finally engaging, we did go back and forth a few times until it pretty much ended with this:
@paulpaetz If your online numbers have expired and been purchased by another user, there isn't anything we can do to take the number back— Support Network (@SkypeSupport) September 27, 2013
And, that was it. One day after I was promised email followup, @SkypeSupport refused to do anything. Not refer it to management. Not go to the billing department (supposedly the folks who were responsible for this mess). Not DM me for more info. And not respond any further. And, 4.5 days later, I still haven't received the email support that was absolutely promised 6 times to happen within 2 hours of the Chat session finishing. The great black hole of Skype customer non-service.
With each passing hour, the likelihood that this will be resolved without legal action seems to get smaller and smaller. So, as of right now, I have lost all my Skype Numbers. Skype has sold them to other people. They are not accepting responsibility for their mistakes or for fixing them. And, their support is abysmal.
How Disruption Happens
When I started this story, I said there was a bigger picture, and that there is a lesson for other companies who were initially disruptive innovators, but somewhere along the line stumble and make themselves vulnerable to the next round of disruptors.
Disruption happens when a new market entrant creates an alternative to incumbent services that is inferior in performance to one or more of the principle features valued (or thought to be valued) by the existing market. Because it is missing important dimensions of performance for the existing market, disruptions usually take hold in market segments that are poorly served by incumbents where the new product can "compete against non-consumption". So long as the entrant is "good enough" for the needs of this under-served segment and reasonably priced (sometimes being low-priced is what makes it good enough), it will win in this segment of users that are undesirable to or unreachable by incumbents. Subsequent sustaining innovations make the disruptor "good enough" to satisfy the needs of larger swaths of the low-end markets served by incumbents until the new product improves sufficiently that it can satisfy the needs of mainstream customers. At this point, if the new entrant better serves market requirements, or is substantially and sustainably lower in price, it unseats incumbents and becomes the new dominant company/product.
The dynamics of disruption are illustrated in the graph below. Importantly, this short version of the disruption story necessarily leaves out several critical details and glosses over the complete story of how disruption unfolds in the market. However, it's good enough for our purposes in discussing Skype.
Skype initially did something very special in enabling voice conversations to travel over the internet as IP packets (hence voice over IP, or the acronym VoIP) for free. It didn't matter much for local calling, particularly in countries with well-established landline and cellular services where local calls already had a zero marginal cost (after the montly subscription cost), and was inconvenient because you had to place the call pc to pc (before you could call POTS lines with regular telephone numbers). But, for long distance, particularly country to country and especially overseas to India during the big outsourcing boom, being able to place free calls from a PC that could go on for hours at a time was a big deal.
So, in the beginning, despite call quality issues, Skype was "good enough" for international calls that might have otherwise cost hundreds of dollars per call, but were instead free if conducted from a pc. Over time, call quality became better, Skype was able to call real telephone numbers, they added video calling (great for all the troops overseas), and various other services were added that basically reduced the cost of long distance calls from anywhere to anywhere to near zero. And, it became a great tool for a small business like me, with things like phone numbers in other cities that I was happy to pay for. And, between Skype and my cell phone, I stopped paying for traditional long distance services a long time ago.
The one area where Skype was marginally good enough in the early days, but increasingly not good enough when compared with virtually any alternative (including the much maligned traditional telco carriers) is customer service. In the beginning, getting email support, or "look it up yourself" support was OK for most things, but problematic when there were payment issues (one issue I encountered a few years ago was refusal of payment because of overly strict anti-fraud systems -- that took more than a week and several emails to sort out) or a few other serious potentially show-stopping problems. Ironically, free users would have a virtually problem-free experience, but it was mostly the paying business customers upon whom Skype's business model depends, who would have issues requiring support -- support that when offered by email or Chat, and without the ability to find a real person, is simply not good enough.
Referring to the graph above, the point when market disruption begins in earnest is when the rate of improvement of the upstart (the lower line) intersects the line representing the pace of innovation that mainstream customers can absorb and becomes "good enough" for most of the market, though usually at a lower price or with other performance attributes that exceed the incumbents. Skype did that for the overseas long-distance market early on -- probably within the first couple of years of its existence.
But the important thing that the DI model tells us is that even though the rate at which consumers can absorb innovation is slower than the rate that companies can pump it out, they still demand and are able to use more over time. The level of what's "good enough" continues to go up. Further, this graph has become well enough known that it is often misread, such that new market entrants believe they need to stay inferior to incumbents to keep on disrupting. Of course, that makes no sense. All things being equal, when two companies employ the same core technology, no advantage accrues to choosing to stay "inferior" to the other company's products.
Moreover, once a potential disruptor has succeeded in capturing a niche, the real prize (market disruption) is upsetting the whole market. In Skype's case, that might have meant expansion into mobile and further into owning wireless broadband "pipes", and once and for all killing off traditional landlines. And, it most certainly entails consolidating market position with further sustaining innovations and service enhancements to capture the broadest possible share of the niches you pursue. Given that it is the paid subscribers rather than the non-paying ones who drive revenue for Skype and make the whole business model work, creating a working customer service and support system able to deal with the kinds of problems this article describes and having actual human beings to talk to who are empowered to fix things is critical.
Is Skype Now Ripe for Disruption?
Whether or not Skype is ripe for disruption today is certainly an open question. There isn't an obvious challenger on the horizon, although Google Voice might emerge as a real threat. But, I don't think a VoIP platform will be the next disruptive innovator in this market space. My suspicion is that if Google wins with Voice, it will be because Skype/Microsoft fell on their own swords, not because Google was disruptive.
Still, by failing to offer credible service and to expand the Skype footprint and displace the old phone networks completely, Skype has not only left the door wide open, they are practically inviting the fox into the chicken house. Not being able to protect customer numbers, or alert them when they are expiring, or process auto-payments to extend subscriptions, or to properly support paying customers when there are show-stopping issues are all evidence of institutional incompetence and what I call "scarcity-driven behaviors".
In otherwords, Skype can get away with this in the short term because there isn't as yet a pervasive good enough alternative or a ready contender on deck. There is a scarcity of places to turn to when Skype screws up. However, it is precisely when a company starts behaving like its customers have no alternatives, stops being the best solution to the customer's "job to be done", and is unable to address serious customer service and customer experience problems that it becomes an incumbent unable to defend itself against disruption.
This is precisely what happened to Blockbuster when Netflix showed up with a business model that negated all of Blockbuster's advantages of incumbency. It's what happened when Walmart showed up in small town after small town all across the country with lower prices, superior distribution and massive selection compared to what was available previously. Scarcity-driven behaviors are always a leading indicator of an industry ripe for disruption.
- Recent disruptors and long-time dominant incumbents need to be especially vigilant. In my experience, it is most often the market leaders who are recent disruptors or long-time dominant incumbents who suffer from the hubris of believing they are invulnerable to attack. That their strategies are exactly the right ones. Blockbuster, Blackberry and Kodak are a few very big examples. So too is Microsoft, Skype's current overlord, as well as Skype themselves. If you fit either of these categories, be on guard, be paranoid, and ask yourself "If I was going to attack my own company's weakest spots, where would I target".
- Don't believe your own disruptive hype. Yes, you may have been successful at upsetting a market and changing the playing field, but don't forget that sustaining innovations that better support your customer's key jobs to be done are necessary both to cement your disruptive position, and also to maximize your profits. Ignoring critical pieces of the JTBD makes you an incomplete solution, and vulnerable to the next wave of disruption. (i.e. Sustaining innovation isn't a pejorative term, as many interpret Christensen's theory to state, but a necessary part of completing a market disruption. But distinguish between enhancements that add customer value and improve the experience of using your product, and those that are just bling.)
- Don't treat customer service as a pure cost center to be minimized. I'm not sure I've ever experienced service as bad as Skype's before. The inability to respond, broken promises, no one to talk to, and complete indifference to the customer's problems are truly breathtaking. It would be more productive to find a cement wall with spikes sticking out of it, and start banging your head against it, than to try to get quality, caring service and fast resolutions out of Skype.
Still, it's not uncommon for companies to act as Skype did, with an aversion to supporting customers, rather than as an opportunity to build business, create upgrade and add-on opportunities, and treat users with the kind of respect that generates lifetime loyalty. It is particularly common in a number of industries where supply is constrained, and therefore scarcity-driven behaviors are everywhere. Air travel, banking, utilities, internet access and many others are notorious for poor service. Increasingly, they are reviled by their customers who use them only because they feel they have no choice. These sorts of companies fall hard.
- How do you look from the outside? There are questions that all companies should ask to avoid putting themselves in the line of fire. What does your customer service look like from the outside. What are the worst case scenarios? (And, how ever many you know about, assume there are at least 10x more.) What scarcity-driven behaviors have you allowed to become routine parts of your operational model? Are there ever days or incidents when you perform as poorly as Skype did in this story?
- Disruption can take years and sometimes even decades to play out. Just because you aren't threatened tomorrow doesn't mean you can ignore the signs and allow your organization to become complacent. As soon as you do, you become the target of a disruptor, and it's only a matter of time before one of them comes up with the right business model and successfully eats your lunch.
With no assistance from Skype, I managed to track down 2 of my 5 numbers, and have reacquired them in the past day. The other 3 have all been acquired by other Skype users within the past few weeks. It is now fully 5 days since the initial support Chat session with Skype was initiated, and I have not had any promised email communications from Skype or their billing or support departments. It was only through good luck that I was able to track down 2 of my lost numbers, and it required a lot of effort to find them and get them back. And those 2 numbers could easily have been taken by someone else anytime in the last few days, further exacerbating the problem.
Obviously they haven't taken any responsibility -- despite acknowledging in the Chat session that their records showed my account was in good standing, that all my services were set to auto-renew, that they had a valid email for me (which I used to reacquire the lost numbers, and at which I received emailed receipts from Skype), and that I was never notified the numbers were expiring or that payment was due -- and have done nothing to mitigate the damages to me. The lack of action makes me wonder whether they actually believe this is a closed matter, or whether it's fallen into their black hole and isn't on anyone's to-do list for follow up.
By the way, if you want to help me get Skype's attention, please feel free to use the links below to tweet this article or share it on Facebook. If you have your own service nightmare stories to share (with Skype, or other companies), please add them to the comments below.