DECEMBER 1988

Few companies these days fail to recognize the importance of offering great customer service, but that doesn't mean you have to give it away. Karmak Software Inc., in Carlinville, Ill., abandoned an old-style ser-vice policy for one that asks customers to pay more if they want more support -- and the switch has worked.

Under the old plan, a fixed customer-service charge was tacked onto every sale. Customers treated the add-on as just another component in the software price, and didn't hesitate to call on Karmak's service department as if its time were free. Service costs, says CEO Richard Schein, began wrecking the company's bottom line. "Instead of using the manuals or actually learning the system, people would call us with every itty-bitty problem. And we were paying for it because we guaranteed unlimited consultation after the sale.'

When Schein studied actual customer-service activity, he found no correlation between number of calls made to Karmak and the size of a customer's system. "We just found that some customers want Karmak to take care of everything, while others have a systems manager and rarely need us.'

Now, customers must sign up in advance for the level of service they want -- a set number of calls per month and a surcharge for calls in excess of the contracted number.

"If a customer wants us to answer a simple question that could have been looked up in the manual, or if he has such high turnover that we have to go in and train people again and again, it's not a problem," says Schein. "They're paying for it, not us anymore.'

Schein won't say how profitable customer service has become, but he claims, "It's so great we doubled the size of the department.'

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