This Company Outsources Customer Service Back to the Customer

(Bloomberg Businessweek) -- Two years ago, when news broke that a 2012 hack of LinkedIn had compromised 117 million users’ passwords, instead of the 6.5 million previously reported, the site got a few extra questions. Almost overnight, customer service cases rose 1,300 percent. It would have taken 15 weeks, LinkedIn Inc. says, for staffers to address them all. Instead, the company resolved the caseload in about one-third the time by using Directly, software that connects distressed customers with other, more knowledgeable customers.

Using these amateur experts, LinkedIn paid about $2 a pop for answers to easy customer questions about what had happened or protective measures to take, says Andy Yasutake, who oversees LinkedIn’s customer service IT and operations. “It was worth it,” he says. When internal staffers do the same thing, it typically costs $6 to $7. (The staffers, though, get higher ratings from customers.) LinkedIn has since made Directly Software Inc.’s system a permanent feature for many paying customers. “We saw this as an alternative to outsourcing,” Yasutake says.

Samsung and Pinterest are among the other clients using Directly to save money by handing the job of customer care back to the customer. The seven-year-old, 50-person San Francisco startup asks clients to enroll a group ranging from 20 to several hundred users who apply for or are invited to the gig, sometimes after testing their writing skills and product knowledge. Directly’s software then matches them with questions it thinks they’ll be able to answer well, pinging them via an app.

For every query they resolve, answerers get paid in cash or other incentives 70 percent of the $2 to $60 bounty. A game maker might offer in-game power-ups, for example. Successful answerers carry Uber-esque reputation scores, and those with higher scores get more questions sent their way and may be asked to contribute to collections of stock answers to common questions, says Directly Chief Executive Officer Antony Brydon. “There are real financial hits to letting a customer down,” he says.

These kinds of gamification, on top of the flexible workforce and the software’s artificial intelligence components, are helping Directly stand out from rivals such as InSided and IAdvize in the $4.3 billion market for customer self-service software. “It’s a new way of engagement that’s just going to grow,” says Kate Leggett, an analyst at Forrester Research Inc. An average Directly representative makes about $200 a week, and the top 5 percent earn more than $2,000 a week, Brydon says.

Brydon got the idea for Directly while consulting for software companies that specialized in call-center programs. While customers armed with the internet were increasingly knowledgeable, he noticed, “the revolving door and short tenures of call-center agents prevented them from truly becoming experts.” Directly has raised $36 million in funding, including $20 million in April, from investors including Northgate Capital LLC and M12, Microsoft Corp.’s venture arm. The company tripled its revenue last year and is on track to triple it again in 2018, Brydon says, declining to provide more detailed figures.

Duncan Fairley, senior director of marketing for game maker Kixeye Inc., says that while Directly’s costs are comparable to those of overseas contractors, the Directly network has delivered better results. Since replacing an Indian outsourcing firm with Directly experts earlier this year, the average response time for players’ questions has dropped from 12 hours to 10 minutes, and customer satisfaction has risen by about half, he says. Kixeye, which receives some 40,000 customer support tickets a month, now sends 40 percent to its expert players. One of them, Dan Lazaros, says that as a retired trucking terminal manager, he appreciates being able to answer gamers’ questions about Battle Pirates during breaks from his gardening. The company says 3 in 10 experts have advanced degrees.

Gig workers are unlikely to be paid as well as staffers, says Michael Madowitz, an economist at the left-leaning Center for American Progress. “For those who can afford to work electively, contracting gives flexibility, but for most people this looks a lot more like risky income,” he says.

Brydon says he’s convinced the shift away from full-time employment is already happening, and he’s trying to help fill the gap. As Directly expands, he’s targeting clients in historically call-center-centric fields, such as telecommunications, and planning a bigger international push for next year. “There are very few companies who are happy with their outsourcing providers,” he says. “A lot of companies are in the middle of the boulevard of broken dreams.” 

To contact the editor responsible for this story: Jeff Muskus at jmuskus@bloomberg.net

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