Nothing makes me despair for the state of technology as much as the silicon-slick voice on the automated customer service phone line. You know, the one that commands you to press or say your account number, then leaves you hanging until a live agent comes on the line--and proceeds to ask for your account number. It's no better online, where after you've filled in screen after screen of personal data, the computer inevitably freezes before you're anywhere near completing your task. Technology, which has done so much to make nearly all aspects of business easier and more efficient, has made a complete mess of customer service.

According to a recent survey by the technology consultancy Gartner, two-thirds of customers who try to get service online give up and use the phone instead. Those voice menus, alas, don't do much better. A study taken earlier this year by Forrester Research concluded that 14 out of 15 automated voice-response systems deserved a flunking grade. Indeed, only 16% of callers felt "completely satisfied" after calling with a problem; 73% felt "customer rage," according to a survey by Customer Care Alliance.

My guess is that business historians will remember these days as a low point in the annals of how companies treat people. Yet despite the risk of alienating customers, businesses have little choice but to automate. It all comes down to the bottom line: A call involving a live agent is at least five times as expensive on average as one handled by a voice-response system, according to Gartner. So don't expect a new golden age of attentive, handholding service to emerge anytime soon.

What you can expect is (no surprise) a host of brand-new technologies that promise to save the day. I know it's easy to be skeptical, given the havoc that old technologies have wrought. But this time, the geeks may be on to something. Not only will these new approaches actually get many customers to like phone-based self-service, but, paradoxically, they'll also help customers get better access to human service. And growing businesses, which have historically been leaders in superior service, are at the heart of this nascent upswing.

Voice menus become weapons of mass aggravation when customers feel their needs don't fit neatly into any of the options. What if, say, you order a new silverware set that arrives with too many spoons and not enough forks? That problem will never appear in a voice-response menu. It's too specific, and so are countless other customer service requests--which leads to the dreaded "bailout," or the request to speak to a live agent. Studies show that once customers with complaints are transferred to an operator, there's a 50% chance they'll be transferred a second time--at which point there's a 30% likelihood that they'll opt never to do business with you again.

Enter ClickFox, an Atlanta-based start-up that is dedicated to bringing bailout numbers down by helping companies fine-tune their voice-response systems to meet their customers' needs. The company installs software that captures customers' movements through customer service systems, even tracking customers as they slip from a website interaction to a voice-response system to a live agent. Then the software analyzes the information to uncover trouble spots. "We reverse-engineer the data and create a map to identify where the system is not giving users the choices that are useful for them," says CEO Marco Pacelli. For example, ClickFox discovered that about 20% of one client's customers were bailing out of a voice-response system when the system asked for a Zip code to verify identity. As it turned out, some of the callers were business customers baffled as to whether they should enter their home or office Zip codes. Specifying a home Zip code solved the problem and reduced the bailout rate by about 20%.

According to one study, 37% of callers who reach an automated voice system press zero immediately, figuring they'll end up needing to speak to an agent anyway.

New technology will also enable companies to treat customers as individuals--even in highly mechanized environments. And not a moment too soon: According to a 2004 study by the market research firm Harris Interactive, 37% of people who reach an automated voice-response system press zero immediately. The reason, according to Mike Zirngibl, CEO of, a voice-response system provider in McLean, Va., is that most callers have come to expect a generic menu that will force them to slog through multiple levels of choices only to end up needing to speak to an agent anyway. Angel's solution: Give different kinds of customers different menus that are suited to their likely needs. "If every caller hears the same menu, then the menu has to cover every reason that anyone would call; that makes things complicated," says Zirngibl. "Next-generation systems allow you to tap into customer information and personalize the call flow."

An Angel client that installs networks found, for example, that a significant percentage of its bailouts were on the part of customers checking to see when their installations were scheduled to be completed. Angel reconfigured the system to check the incoming phone numbers to identify customers waiting for installation, so that those customers could be given options for hearing automated updates. Calls from new business prospects, meanwhile, are sent to a menu offering information about the company's services.

New software also will stem customer frustration by sending customers to live operators before they have to ask. Some clients, after all, require special treatment from the outset. One study found, for example, that high-value credit card customers are 30% more likely than rank-and-file cardholders to ditch their card company over being kept on hold. The same is true for your company. I bet that your marketing department would covet a shot at cross-selling customers who are poised to buy; that your collection department wants a word with customers who owe money; that your account managers want to speak to customers who are thinking of defecting to a competitor. Why let one of these high-value or high-risk customers get away with only a routine, and potentially unsatisfactory, interaction with an automated system?

To that end, Austin Logistics offers software that identifies customers when they call and pores over the company's databases to make a prediction almost instantly about the likely benefit of routing them directly to the appropriate live agent for a little chat. It even takes into account how busy the agents are at that moment to avoid putting a blue-ribbon customer on hold. "When you put a customer into a voice-response system, you've effectively passed control to the customer," says Bob Tate, who heads up marketing for Austin-based Austin Logistics. "Getting selected customers to an agent might result in a small increase in call center traffic, but the economic value can be huge."

This new generation of customer service tools also has the benefit of tilting the playing field back in favor of smaller companies. For the most part, only large companies have been able to afford the best automated customer service systems, which can cost millions of dollars to create and maintain. Growing businesses have been left with a painful choice--super-expensive all-human service or second-rate automated ones. The new customer service tools, however, are not only better; in some cases they're much cheaper., for example, has pioneered a Web-based subscription model for phone-based automated customer service that starts at $39 a month, no experts required. What's more, Angel's system enables a company to route a call selectively, based on a customer's responses, to anyone in the company who is qualified to solve that caller's problem, even if that employee is at home or on the road. That means even a small company can essentially turn itself into a high-powered virtual call center without investing a dime. And if the CEO feels he or she wants to take all calls from customers with complaints, that's easy to set up, too. In other words, small customer-focused firms can let automated-response technology leverage their customer service advantage rather than obliterate it.

And that's only the beginning. ClickFox's Pacelli notes that his company's approach to enabling customers to self-serve can also be applied to retail stores and even restaurants. Customers, he says, will increasingly get help from automated kiosks rather than live salespeople. Or they might be able to pay for their purchases at automated cashier stations, or even serve themselves customized meals at restaurants. Personally, I can't wait to work the Frialator at McDonald's.

David H. Freedman, a Boston-based writer and Inc. contributing editor, is the author of several books about business and technology.

Published on: Oct 1, 2005