Tag Archives: Operations

Customer service

We were speaking about the departmental structure of one our e-commerce startups recently.

Currently, the customer service team is housed within the operations department. The reasoning for this is that most customer service requests are from customers inquiring about their order. This includes requests like checking up on the status of the order, inquiring about delivery delays, and performing order returns. In order to respond to these requests, the customer service team needs to interface with the warehouse logistics team which sits in the operations department. The thinking was that placing them in the same department would facilitate this interaction.

The problem with this approach can be seen by examining the incentives of the warehouse logistics team. Specifically, the warehouse logistics team’s natural position is to defend its performance. This includes defending metrics like the rate at which it performs order mix-ups and the time that it takes for it to ship orders and process refunds. If the customer service team is housed in the same department, it too risks adopting the same attitude. In other words, the customer service team is also likely to become a defendant of the company’s logistical performance.

An alternative approach is for the customer service team to be a separate department. This approach ensures the independence of the customer service department which gives it the opportunity to be a customer advocate rather than a company defendant. It will be able to serve as the voice of the customer within the company, thereby placing much more pressure on the warehouse logistics team, as well as other units, to improve their performance.

If a separate customer service department places too much burden on the CEO because of the additional direct report that it creates, customer service can also be housed within the marketing department. This approach makes the customer service department able to adopt the same customer advocacy mindset present in the marketing department without creating an additional direct report to the CEO.

While hosting customer service within the marketing department is an improvement over hosting it within the operations department, I believe it remains suboptimal relative to having a separate customer service department. The reason is that the marketing department’s activities reflect not only what the customer wants, but also what the company believes the customer wants. Rather than harboring these dual thoughts, a separate customer service department has the opportunity to serve as a pure reflection of customer demands.

Operationally-focused CFO’s

I recently read a post by Mark Suster from Upfront Ventures about how operationally-focused CFO’s can transform the business of startups.

Basically, Mark states that business-minded CFO’s can take a lot of the process work off of the shoulder’s of a startup CEO. This allows the CEO to focus on their most important responsibilities like setting strategy, hiring, and fundraising. Some examples of the key work which great CFO’s do includes setting metrics, preparing board presentations, and managing cash. Mark then goes on to give examples of great CFO’s at Upfront’s companies.

I fully agree with Mark’s observations and have seen the same dynamic play out at our startups.

Muge Basaran at Dugun is a great operationally-focused CFO who complements Dugun’s CEO Emek Kirbiyik. There has been a step change increase in Dugun’s ability to set, track, hit, and revise its metrics in line with the company’s strategy since Muge joined the company in 2014.