The Tech Founder’s Guide to Cracking China: The Customer Service Meltdown

Our first customer service (CS) person in Asia shocked me with a resignation just one week after I landed in Hong Kong. He said it was health related. Damn. We had about 9 clients in China at the time, and he was the only customer service person in the company who could actually speak their language. I promised him that I’ll work on a new recruit the next morning. I tried to paint him a less hectic future, and I truly believed in it. In a short-sighted whim I even offered him a title and a much, much higher pay. He said no thanks. He was so burned out I could smell the smoke. I ended up hiring 2 people to replace him, taking into account our near term growth.

The second CS person quit 5 months later. She said it was family related. Tough luck, I thought- and set out to find the next person. At least I was encouraged by a strong delivery on sales. Hell, Sales Cure All.

When the third CS person quit, I hardly bothered to ask why. I knew it couldn’t be a coincidence- something was wrong with how we built the team. But also I knew that the guy would give me a million Hong Kong Dollars before he tells me why he hated his job. It’s common for people in HK and China to avoid confrontation and try to save their boss from “losing face”. They didn’t seem to notice that I was much closer to losing my mind. All I wanted was for someone to gimme some truth, but I knew I had to search for the reasons elsewhere.

OK, I wasn’t that clueless. I’d been running both Hong Kong and Shanghai for over a year year at that point. Things are always harder away from the HQ, and customer service is a thankless job almost by definition. But I couldn’t explain what was causing such a strong and continuous implosion, while sales and marketing kept growing and delivering.

crying bar

Nearly desperate, I switched to recruiting mode again. And then I finally started noticing a pattern: many of the people I interviewed in HK & China left other foreign companies under the same circumstances: the company was new to Asia, and the person struggled for a year or less before quitting. When speaking to candidates, they told me everything that our staff who resigned wouldn’t tell me. I listened carefully as they described The China Customer Service Meltdown happening in their previous company and leading them to quit. And I realized that as much as these people seem driven and talented, I run a risk of losing them for the exact same reasons again. I also learned from other friends who run businesses in HK, and especially China, that constant bleeding on customer service is very, very common (in local and foreign companies).

Here’s the dynamic that leads to the China CS Meltdown:

  • You (regional CEO) focus most of your time and energy on recruiting and managing the first salespeople, because you’re eager to meet the market and show the HQ results
  • Meanwhile, the customer service team is still small- way too small for the first cohort of clients in the region, who discover problems, raise exotic requirements and demand high standards from your company. After all, you’re a foreign company, and in China people tend to associate foreign products with superior quality
  • In addition, customer work that four people in the HQ share (such as training, onboarding, support and collection) might fall on one account manager in Asia- because they’re the only person who speaks the client’s language. The customer service team doesn’t complain, because they think it would make them appear demanding
  • The small customer service team, who is more dependant on the HQ than any other team in the region, wakes up every day to an ocean-size gap between the HQ’s delivery and clients’ expectations. The time zone difference takes its toll. The CS people often don’t ask for help as to not look incapable. They often don’t escalate and don’t challege the processes on the HQ, because they don’t want to appear demanding. They just compensate by working hard
  • They get frustrated and slowly burn out
  • Within service economies like the one of HK or Shanghai, they can find plenty of other less frustrating customer facing roles. Some of them much better paying
  • They resign and leave behind an even smaller CS team that deals with higher pressure and causes the team to burn out even faster. Even though you hire a replacement, the cycle will continue as existing team members will quit next.

The China Customer Service Meltdown has implications on clients, of course. They don’t only feel the impact on the quality of service, but also try to draw conclusions on how the company is doing overall when their account manager leaves (in Chinese culture people often see everything as a signal). The meltdown also has implications on team morale in your small satellite office. And it’s really hard to escape.

Here are my tips on avoiding (and escaping) the China Customer Service Meltdown:

  1. Get dead serious about feedback from your first 5-10 customers in Asia– the growth maniac in me almost refuses to deliberately slow down sales. But it can be a really good idea if product gaps are serious. Disappointed first customers can be deadly for your business in Asian markets. Furthermore, your first customer service people will observe just how seriously you take the first gaps, and will judge your ability to succeed in the market by how quickly you fix them. Low attention to first gaps can send very bad signals to your team and clients.
  2. Hire a local head of customer service immediately– if you think you can do with 1-2 account managers and before hiring a regional head of CS, you’re dead wrong. Having a dominant, smart, brave regional head of customer service will save your ass from The Meltdown. Make it your first recruit, and define the job well. The regional head of CS will be an effective escalation point for local clients and local CS people alike. They will establish and fuel the relationship between the HQ and your team. And most importantly, they will hire, train and manage the distressed CS team professionally and emotionally.
  3. Get picky when hiring CS people– entering China is going to get you back to startup mode again. Gaps are abundant. Product gaps, process gaps, culture gaps and timezone gaps are inevitable, but they can be very discouraging if people are not used to them. Candidates who have lived or have been educated abroad will have an easier time managing them. Same for people who worked at foreign companies. So get picky and look for these. Don’t oversell the job, because people might get disappointed when they join. Instead, let people know that the company works in a land of both opportunity and challenges, and that you invite them to join the journey and contribute to fast progress.
  4. Hire+1– I’ve explained why CS people in Asia tend to be busier than their HQ counterparts. I suggest to over-hire in the beginning, and generally discount your “clients per CS person” ratio when planning your Asia presence (for example, we changed it from 18 in HQ to 12 in Asia). This buffer allows the team to be a little less busy and make long term investments in team quality. It also allows you to avoid panic when a CS person leaves.
  5. Pay more– I usually don’t buy into straight correlations between pay and motivation. But in service economies such as HK or China, people care more- and they’re much more likely to receive tempting offers while working for a foreign company. People jump between jobs, sometimes for a small increase in pay and a slight hope for a better day-to-day. If you see it in the CV’s you get, your company might be the next victim.

Like startups, satellite offices risk implosions in almost all departments. But I tried to be CS specific when describing the challenges and solutions above, because that’s where most companies run the biggest risk. I hope being aware of the hazard can help you plan your CS better as you enter China and other markets in Asia. We escaped it and are now focusing on closing much smaller gaps.

The Tech Founder’s Guide to Cracking China: The Customer Service Meltdown

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