Palm responds, Part 2

This is part two of a discussion with John Moses, Vice President of Customer Relations Worldwide at Palm Computing. This discussion was held over email as a result of a recent issue I had with the Palm call center. Part 1 of the discussion looked at Palm’s call centers. In this second part, we look at the Unit Replacement Program offered by Palm.

As was the case for the previous part, I have only edited the content for formatting sake.

Q: Let’s switch gear to the unit replacement program: The Palm website seems to have difficulties recognizing existing accounts. Part of the frustration of my own experience was that, having bought a device from the Palm website in early 2007, I was unable to get to the information online because the site did not recognize the email address I used to register (even though I have some emails sent by palm to that email address). This resulted in my being unable to get the exact date of my purchase. When I talked to the customer service representative, I was told that we could not move forward with any replacement without that information. Considering the device hadn’t been in the marketplace for a year, I thought that it would be considered under warranty no matter what. Why is it that customers still need to provide a purchase date for devices that are less than a year old?

A: They shouldn’t have to, you are right. Unfortunately, since we primarily sell through the carrier channel, determination of an in-warranty vs. out-of-warranty device is not a perfect science. Our practice is to systematically derive the purchase date from the manufacture date, based on the serial number.

We have very reliable data on how long a product takes to move through distribution and sales channels that helps us ensure we offer all of our customers a minimum of 12 month warranty, as stated in our contract with the customer (i.e. the warranty). If an agent believes the product may fall outside of the 12 month period, we request proof-of-purchase (POP), which is not unusual in the consumer electronics industry. That being said, an agent must use their best judgment and always handle these discussions in a professional and courteous manner with the customer.

To better serve our customers, we’re currently exploring instituting a policy that will not require agents to check purchase dates for products that have been newly released (i.e. less than a year old). This should help eliminate unnecessary questioning and allow our agents to proceed directly to getting a customer’s issue resolved.

Q: If customers are not able to supply a date, why is it that there is no way for a call center operator to look up information for devices bought from Palm’s online store?

A: We do aspire to have all of our customers’ transactional information available to our service agents. However, this is not the case for a variety of reasons. First, there is some information that will never be available or kept; carrier sales information and information protected by privacy laws, for instance. But, for the rest, specifically any transactional information Palm is exposed to and legally able to maintain, we are making huge investments in a CRM program that is bringing this information all together in a master customer database. Just this past year, we integrated most of our direct sales transactions (e.g. from our online store) into our service application, loading both customers and assets. As for Tristan’s case, unfortunately the purchase last winter was prior to this integration going into effect, so the purchase record was not there.

Q: Forced to supply a date, I gave a date at random in order to push the call further. I was then told that it was the exact date of my purchase (a dubious claim at best since the date happened to be, after I checked, before the date of the press release announcing the release of the Treo 680). When I contested the possibility of this being the date at a later time, I was told that you are tracking devices dates by serial numbers. If that’s the case, why is that information not being used initially? (It’s generally easier to find a device’s serial number than its purchase date since the serial number (and incidentally, IMEI) is on the device)

A: I suspect that in this case, and what is probably routine behavior by agents, is to request the date of purchase from the customer, and to take their word for it — which is the proper thing to do. Now when a customer is not confident about the purchase date or does not have any recollection, then an agent is going to check out the serial number to get a good idea of the purchase timing — it’s only then that we are going to call into question the warranty, and perhaps seek proof of purchase.

Q: Vendors like Apple and RIM track their device purchase date by IMEI. Why isn’t Palm doing the same? And if it is, why isn’t that information available to call center personnel?

A: IMEI and ESN are two industry relevant codes for mobile devices. The serial number is a Palm-specific number generated at time of manufacture. Because it is consistent across all Palm products — where it is not for IMEI and ESN — we tend to rely on serial numbers as our default tracking method.

Q: The retail price for an unlocked Treo 680 is $379, the street price for an unlocked Treo 680 is around $250. In either of those cases, the device would come with a one year warranty. The replacement price for a Treo 680 is $199. Why is the replacement price so high?

A: The primary drivers of repair and replacement cost are parts and labor, and hence can’t be directly compared to the product. The wireless industry subsidizes phone purchase prices, making the total cost much lower than the actual cost of hardware and labor.

Q: Looking at the prices listed on your site, it appears that all your phones have the same replacement price ($169 by web, $199 by phone) However, prices for the unlocked devices listed in the Palm store range from $379 (for an unlocked Treo 680) to $669 (for an Alltel Treo 700p). Does that mean that the repair cost for all units is the same? Why isn’t there variable pricing on the repair costs?

A: The actual cost of repair may vary across units, but this variance is much less than you’d think. The process steps that all units go through for diagnostics, component replacement, cosmetic refurbishment, and logistics are identical. The only real difference is the value of the parts required for a given repair.

While variable pricing seems like the best thing for the customer, we actually provide fixed pricing to deliver a better customer experience. This is because we want to quote a price upfront and quickly process the replacement without having to come back to the customer and explain that their fix was different or more costly than what was expected at the outset. This would create unnecessary tension and delays when a customer needs their phone back to them in working order as soon as possible. We don’t really know what parts will be required until we open the device, and a call center agent would not be able to accurately estimate the costs.

Q: A year ago, the replacement cost for a Palm 600 was $100 (I unfortunately broke 4 screens on Palm 600s through the years so I’m familiar with that price). Today, such a replacement would cost $169. Why the price increase?

A: As products get older, our cost to service that product normally increases. It reflects the growing cost of acquiring parts, maintaining inventory, expertise and training for repair events that become more and more infrequent.

Q: Apple has made it a practice to sell special contracts (called AppleCare) on their devices that provide extended warranty. This includes selling AppleCare for iPhones (for $69). The program includes replacement of defective units at no extra charge and extends warranty from 1 year to 2 years. Why isn’t Palm offering a similar program?

A: With the first line of smartphone product support at multiple carriers, including warranty processing, an extended warranty program has been a challenge for Palm to offer — mostly because of channel complexities. We are presently working through the challenges that have made this difficult, and hope to offer this service feature to our smartphone consumers in the future.

Apple has a unique relationship with AT&T that may make these programs a bit easier to provide.

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