Touch-Tone Trouble

Discount brokerage Scottrade also puts you straight through to an actual human. Unfortunately, Southwest and Scottrade are exceptions. More than 90% of large businesses rely on phone trees to field calls. As you might guess, this is supposed to save money. Every time you get a live rep on the phone, it costs roughly $5. In comparison, an automated call costs 50 cents. That's why corporate America spent $565 million in 2005 on new ways to trap you in touch-tone hell.

Problem is, their plan isn't working very well. Consumers hate these systems, and most of us will do anything to bypass the phone tree and get a live rep. Millions visit sites like GetHuman.com, which lists the secret codes for accessing an agent. (Hint: To reach an operator at Discover, press the star key four times.) This is a big problem for business. According to a Datamonitor survey of companies that use phone trees, more than 85% of callers manage to hunt down a live operator. And once that happens, they burn up the line grousing about the !*&@!! system. No cost savings there.

Southwest and Scottrade are clever. So far, they've resisted the phone-tree temptation in favor of a simple business model that reduces call-center demand. Take ever-profitable Southwest. It has coach-only seating, simple fares, a clear-cut rewards program and a Web site so straightforward your cat could book a flight. Sure, folks refer to the no-frills airline as The Flying Bus, but if you find Southwest confusing, you probably have more problems than a reservations agent can solve. As a result, calls to Southwest are typically shorter and easier to resolve than calls fielded by other airlines, says Rick Rappe of VocaLabs, a survey firm that monitors call centers. The simplicity also enables each of Southwest's 3,000 agents to efficiently field questions on any topic, says Ellen Torbert, Southwest's VP of reservations. Compare that with American Airlines, which segments its call-center force into endless divisions: There are more than 20 different numbers to call for everything from refunds to reservations to lost baggage.

You might call fast-growing Scottrade the Southwest of brokerages. It's cheap (trades cost $7) and straightforward. Other discount brokerages offer complicated products like mortgages and retirement plans. Scottrade offers trades, and when you're tired of that, more trades. What's more, customer calls are usually routed to a local Scottrade branch and answered by whoever's free to pick up — typically a peppy fellow who sounds like the town's youngest stockbroker. Scottrade's cost per call isn't cheap; the company says it's above the $5 industry average. But by keeping things simple and decentralized, the company keeps call volume relatively low. Scottrade needs just 65 brokers at its call center — one for every 23,000 accounts. (Fidelity, another brokerage with fine service and a branch system, employs one call-center broker for every 3,500 accounts — and still uses a simple phone tree.)

Perhaps the success of Southwest and Scottrade will convince their phone-tree-hugging competitors to follow suit. Meanwhile, consumers will keep tracking down agents. My new favorite weapon: NoPhoneTrees.com, a site that does the impossible — it navigates the phone tree for you and rings you when it gets an agent on the line. Now that's more like it!