Monday Jun 22, 2009

Customer Service - It Matters...

The random nature of life events can be summarized by the phrases "right place at the right time" or "wrong place at the wrong time."  There is a scene in the movie "The Curious Case of Benjamin Button."  that portrays the randomness of an accident.  How appropriate given the events last month for my household.  The good news is that nobody was injured and that is the most important outcome.  It doesn't stop one from wondering that if one random event was different then the whole situation might have not occurred.

One Friday rainy morning my wife was driving my son to high school.  As she was coming back home at ~7:25 am there was an electrical short circuit on a power line that had shut down the road to one lane.  A junior at the same high school was running a little late and came around the corner of the road only to see traffic stopped in front of him.  He panicked and locked up his brakes and skidded across the road and hit my wife's vehicle.  Not the car in front or behind my wife... but my wife's car as you can see in this picture above.  When I arrived at the scene the high school student was looking glum.  It may have been the surcharge on his insurance he was thinking along with the warning he received for speeding under the road conditions.  I was glad that everyone was physically fine.  Both vehicles had to be towed and the tow trucks were on site quickly.

The next set of events came as a big surprise to my wife as well as me.  Prior to this accident she had never had an accident or even a parking ticket.  She called Liberty Mutual our insurance provider to file a claim.  The woman on the other end of the phone took information from my wife for about 15 minutes.  While still on the phone with the insurance agent my wife received a call from a car rental company notifying her that her substitute transportation (a 2009 minivan with 6000 miles/9656 km) was ready.  The towing company called as well asking if my wife decided on the repair facility and was requesting authorization to deliver the vehicle.  My wife then said to the Liberty Mutual claim representative:

"This is going too easy!..." and the Liberty Mutual claim representative responded: "It's supposed to go this way..."

Needless to say my wife was speechless only having to make 1 phone call.  She was also told that your deductible is being waived and since your vehicle has less than 12000 miles/19312 kilometers; only new original manufactured parts can be used for the repair.  In less than a week the repair shop had the replacement parts and she picked up her repaired vehicle 3 weeks to the day later.  The vehicle had over $5500 in damages!  Looking behind the scenes of the insurance company they have a sophisticated IT infrastructure that automates and consolidates B2B transactions in real time.  As a result all vendors in the value chain have the incentive to respond.  Repeat business and customer satisfaction are main drivers here for everyone.

When you are a customer you know how you would like to be treated.  A good thought to keep in mind with your own customers.

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Wednesday Oct 15, 2008

Have you ever heard of Credit Default Swaps?

Have you had enough yet of all the discussions, opinions, suggestions, agendas and lunacy regarding the stock market?  I've been watching for a while what is the ultimate effect of credit default swaps (CDS).  It is rumored that there are approximately trillions (U.S. dollars) worth of these puppies lurking out there.  That is no typo, yes trillions not billions worth of these unregulated contracts between a buyer and seller.  Some estimates put CDS liability up to $60 trillion U.S. dollars.  Basically CDS are insurance contracts if a credit instrument (e.g. bonds) defaults.  They cannot technically be called insurance because they are unregulated.  Since they are unregulated there is no requirement to report or track these instruments.  That's sounds a little broken you would think.

A good example is Lehman Brothers.  Lehman's bonds recently have traded for less than $.20 (U.S. dollars).  That means the seller of CDS on these bonds are liable to payoff the other $.80 (U.S. dollars).  These payoffs are going to absolutely impact negatively the institutions that issued the CDS. Instruments such as the CDS have complex probability mathematics behind them.  Created by intellects who went to work on Wall Street. Definitely something I'd personally stay away.  The derivative market is clearly not for the faint of heart. Trouble has been brewing for a while as reporting has disclosed.  The cascading effect across the world was obvious.  I don't know how some could say that this was a U.S. economy only problem.  Markets and investors worldwide are ultimately linked as a result of technology.  Investment options are available to almost anyone, anywhere via the access of a computer.  In my opinion the complex automated trading algorithms of buy .vs sell in the market do not take into account the variable of human fear.  How does a computer program stop a run on the bank without human intervention? That is intervention coordinated with complaint on a global level.   Would love to know where money is flowing to and where it is flowing from...  I'd guess it is flowing to banks where governments are insuring deposits and from banks where there is none.    Have we thought through the long term effects yet?  Truly fascinating.


The blog of Bob Porras - Vice President, Data, Availability, Scalability & HPC for Sun Microsystems, Inc.


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