Paypal was one of the first online payment services and had a great start but over time lost the edge. The company seems to struggle with their internal administration and adjusting their business processes to meet customer needs.

Company Background
Paypal has 160 million customers
Their support centers work shifts and deal with approximately 60,000 support cases every day.
Over 1,000 support people handle on average 60 calls per day.
You cannot email or use other ways of communication than phone, fax or post.

Support team
To deal all day long with frustrated customers is not a very pleasant job, so fluctuation is rather high and the level of competency very low. It takes on average three calls to find a competent person. Some customers suggest you don’t use a case number as you don’t want to get back to the same person.
Most of the support calls are very low level issues with routine answers, nothing special, simply based on lack of user help and a pretty confusing system administration (a user voice nails it: “This is done by a bunch of engineers and never reviewed by business people”). Many functions are even unclear to the internal teams. Support staff admits it is not very intuitive if it is anything other than pushing the pay now button. Everybody can read that in great detail in thousands on public complains.

Customer Experience
People still really like the product. Some even donated a website like This Link Lots of discussions with thousands of valuable inputs that – as it appears- non of the paypal people ever read. Paypal instituted a feedback form that customers are asked to fill out after each and every support case. Even so many people probably are too angry to even bother, some do, I did. But that source of customer feedback evaporates in the dysfunctional organization.

More Market Research?
Now the latest hit was that I received an invitation to participate in a survey – yet I have to be “elected” to join. However I get $200 if I participate after I am elected. But it looks like I have to drive to Mountain View to do the in person interview. A “market research institute” actually is doing the gigg. I don’t want to know what that cost in total.

So here is a company that has free feedback from millions of users and thousands of cases but just doesn’t bother to care – instead pays a research institute to create yet another source of feedback?

Paypals Social Web Presence
There is a paypal account on twitter, mainly tweeting “please follow us so we can DM you” – 63 updates, following 123 people
There are hundreds of paypal groups on Facebook from paypal fans to paypal frustrated customers
There are 18 groups focusing on paypal on LinkedIn with over 3,000 members
There are paypal customers on MySpace and many other sites, the feedback is priceless.
Yet paypal seem just not to care.

Even internally people know what the issues are: A support person inside paypal (very nice and very professional) “…I know, we asked numerous times to fix those issues but nobody seem to listen”.

How to actually fix the problem
Social Media for Paypal could become a life saver. Not as a marketing gigg but to improve and fix a dysfunctional operation.
1) At first a company team would aggregate and distill the customer feedback using established assessment methods and available reporting tools.
2) Then develop a customer supported advisory board and rigorously execute – fixing the top issues.
3) Tackle more problems and just grind through the list from top to bottom.
4) Ask the folks from “paypal sucks” groups and sites to HELP.
5) Using the, by then established, processes to figure out how new features need to be developed (co-creation)
6) Get feedback in a structured way through groups and networks rather than through useless questionnaires
7) Create forums where customers help customers, supported by maybe even less but better educated paypal support people

Non of the above has anything to do with sales or marketing – just building a better company.

Who Is Responsible?
Is this the responsibility of Dickson Chu Vice President of Global Product and Experience? Or is it Ryan D. Downs Senior Vice President, Worldwide Operations? Or is it Scott Guilfoyle Senior Vice President, Platform Services? Or Barry Herstein Chief Marketing Officer? Philipp Justus Senior Vice President, Global Markets, responsible for growing the company? Everybody has his/her fair share.

But No, Scott Thompson, the President is the one who need to engage his executive team in a cross functional initiative to fix the dysfunctional organization.

Social media is not a cool marketing gigg – it is a strategic engagement to react to the major changes in our society reflected by changing customer behavior and an ever more demanding market.

Axel Schultze Axel Schultze MyXeeSM
Social Media Academy

7 replies
  1. smartselling
    smartselling says:

    Good post – I'm not suprised by it as my own experiences have been very mixed. Paypal were the reason I recommended a customer close their eBay store and go it alone. I'm sure you saw the storm that brewed last year in Australia over their strong arm tactics over payment methods on eBay.

    Whilst I think your suggestions are spot on in terms of how social media could help transform their business there is one issue that is going to stop this – the culture within the senior executive ranks (I can't bring myself to refer to them as leaders).

    As we know, a fish rots from the head – and as harsh as it sounds the culture at the senior levels is rotten and will prevent any meaningful change sweeping into the business



  2. Axel Schultze
    Axel Schultze says:

    You are right – It may actually be even deeper. Look at Skype also bought by ebay – what a potential and how dormant is that company.

    Maybe ebay ties their acquisition down to inoerability instead of letting them flourish?

  3. Evelyn So
    Evelyn So says:

    Great story, Axel.

    I shared a similar experience with LinkedIn (note: the post is intended to illustrate the importance of customer experience and user complaints in the social web…not a personal rant).

    I especially agree with 3 points here:

    1. Market Research – the default go-to method

    Even before the social web, most companies had a constant flow of user feedback via their frontline people. Call centre, in particular. I had consulted with a blue chip corporation and the major missing piece of info is "why do people return the products?". One would have thought that is the easiest thing to track. But the problem is, the organization operational structure just does not support this flow of info. There is no database in place to capture, categorize then stream back collective complaints to the stakeholders (for product improvements and cost reduction, in this case). Also, as I have learned after posting a related blog and consulting with those in the call centre business, many companies outsource this function and the partnership arrangement has nothing to do with info collection – the focus is on resolution and sales.

    Because of this and many other (historical) reasons, market research is the default method. We don't know something? Let's call the MR agency and do a survey or focus group. It does not matter if the info already exists in the organization (for free). It may be in a report in the next department, collecting dust for all we know. This primary info is often what I ask my clients first – why spend money if you do not have to?

    In my post about LinkedIn, one can find fellow victims in at least 3 public blogs/forums, most noticeably

    For the record, I resolved this by
    – connecting via a few followers on Twitter (not @linkedin)
    – found someone from within the organization
    – escalated to a higher level

    I got a VOICE call promptly, and months-long problem solved overnight.

    2. Social Media as a corporate operational backbone

    I don't like the term Social Media Marketing because, though marketing CAN be done through SM, it gives many the impression that SM is Marketing. I actually just started a series on Social Communication Ecosystem which identify "customer-centric culture" and "operation" as key elements in cultivating the right mindset(which lays the foundation for social media). (

    3. Top down evangelization
    In the same post mentioned above, I also talked about the need of evangelization and how it needs to be established from the top then mobilized (using evangelists especially) across the board. Having done customer experience evangelization for years, I can tell you it is blood and sweat even with leader support – imagine without.

    Searching for user feedback on the social web requires good tools, expertise and skills. It yields far better results than traditional market research for many reasons, most noticeably accuracy (bad survey/facilitation -> unreliable MR results, not to mention people don't really tell all), breadth (you are listening to free flow complaints, not just the topic you had in mind) and depth (actual stories, uncensored comments).

    There is still a place for traditional market research but before calling the MR agency, companies urgently need to develop the habit to ask "What do I want to know here? What info is already out there? What can I do avoid the next problem and to improve my products/services? Where should I spend my customer-research budget?"


  4. Catherine Sherwood
    Catherine Sherwood says:


    Your prescription for Paypal is right on the mark. I believe that people's knowledge of the basics of human relationships often stops at the door when they go to work.

    I think that companies like Paypal are very concerned about profit margins since they are in a low-margin business. They don't pay much for customer support, think that -since they know how to work the product – that everyone else does, and are too busy in their narrow world to think about their customers. Well, their customers are their world, and their technology is not so special that someone with a better attitude couldn't enter the market.

    The sad thing is – with the social media – it is VERY cost-effective to provide excellent service and to have a product that people feel a genuine alligiance to. I know that – in the first year – there will be some extra costs, but over a three-year period the incremental costs will be small. And they would even be in a position to build their relationship with their customers by offering some new products and services!

    I hope they listen. I never use them because my first experience was like going into a black hole – not the feeling you want when you banking and credit card information is at risk.

    There are many companies like Paypal out there – many of them in the online technology space – where they can be certain that all of their users are plugged into social media.

  5. Elsom Eldridge
    Elsom Eldridge says:

    Axel –

    Great article, and a true testimony to what happens with many 900 pound gorilla monopolies. Remember what the old AT&T was like?

    As THE player in online payment systems, with many online websites only using PayPal so they can avoid the outrageous merchant fees from banks (another blog topic), one has to wonder if PayPal even cares about their customer service level or how they are perceived.

    I agree with you comments on how social media could be an incredible tool for them to listen to their customers, engage and make some great improvements. However, you need to first REALLY care about your customers to make a difference.

  6. LaureenEarnest
    LaureenEarnest says:

    Hi Axel:

    You got it right! In this emerging customer centric social world, companies without a model or strategy to satisfy their customer base will lose at the end of the day or by the end of the decade — yep maybe as soon as next year.

    How easily you laid out a plan based on applying social media to their customer support model that would drive their overhead down and provide a much improved process and customer experience. It is so logical for any company to put the customers first; for isn't that why the entity exists in the first place – to provide a service with true value? With so much of the world running strictly on capitolism and the almighty dollar leaving little concern for the customer, sadly these types of quasi-support departments are a-typical.

    So what stops a company from truely honing their listening skills and making decisions based on what they learn except from lack of real leadership? What purpose does it serve to gather data that is obviously funneling straight into a black hole & generating more restlessness amoung their users? I wouldn't think stock holders would appreciate the black hole for wasting valuable funds!

    These old ways are just plain stupid and truth has a way of becoming known! Either their leaders wise up or run the risk of losing the entire enterprise given a savvy competitor swooping in with a customer centric Web 2.0 model. There is obviously a huge demand for this service & major holes in the current #1 service provider.

    Those 160 million customers have more power than any single company could withstand should they ban together…. just like the workers in the Industrial Age rallied against tyranny and injustice for the worker. … well look out leaders — here comes the power of the customer collective!

    With a solid / social strategy for the customer service department that you outlined — they would satisfy one customer at a time 100%, have one customer helping another, build a better mouse trap so to speak & gain new customers simply because they are a company that listens. The fact remains — if they chose to not listen or to value their 160 million customers someone will. Time will tell & it will be interesting to watch when those 160 million migrate.

  7. Anonymous
    Anonymous says:

    Great article; I agree with you about Paypal. However, I would suggest spellcheck and a second set of eyes before posting a professional opinion editorial. The spelling errors and grammatical errors detract from a great piece.

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