PDF File: 

CRM3_wp_feinberg.pdf

Purdue University, Center for Customer-Driven Insight

The confluence of consumer, technological, and market forces has created an incredible opportunity for businesses - customer access.

We have seen glimpses of this future and would like to share with you these innovative trends. These are not simply business trends but emerging customer demands of businesses. We propose 13 critical components to the future of customer access.

Critical Component 1

Economic Segmentation of Customers

If I could guarantee that you can increase customer satisfaction, sales, and profits by doing one thing, only one thing, would you do it without arguing? You would think that the answer is always a resounding "yes." It turns out that when the "one thing" is economic segmentation, most businesspeople put up a fight. Economic segmentation means that the company knows the value of each customer (sales, profits, revenue) and uses that information to strategically enhance probability of purchase, repurchase/loyalty, and/or wallet share. For the call/contact center this means that when the call or email or Web contact is made (even before you activate the contact, if possible) the customer service representative has an understanding of the importance of this individual customer.

My car dealer made me come back three times, stand in line three times, tell the same story five times (twice on the phone prior to the three repair visits). He did not have a part as promised two times, didn't call me back as promised four times, then put in a part I didn't need because the repair guy hadn't spoken to the repair manager and then refused to deduct the cost of the part not needed. This was two weeks before my wife and I were going to buy $80,000 worth of cars. Was the $7.89 worth risking all this?

The dealership, like many businesses, had no idea that each customer who walks in the door has a value that can be calculated based on what he has purchased up to this point and each customer has a future value based on a formulation of what he spends after one year, five years, 10 years, and 20 years. The economic value of a customer is one of the most important pieces of information that you have, and most businesses today have absolutely no clue.

Carl Sewell of Sewell Cadillac has determined that each customer who walks in the store is worth more than $400,000 over his lifetime (the value of service, repurchase of cars, and positive word of mouth). If I am on the phone and angry over a $100 charge, wouldn't it be nice to know if I am worth $5 of profit per year or $150,000 in profit per year? You simply cannot treat a customer who makes you no money the same as a customer who represents your single biggest client. It starts with their identification; because without the initial identification of differences, differences in treatment cannot be offered. But the importance of this goes beyond the treatment at the moment of time. Your company must fence off the most valuable customers from the competition. When you know the value of your customers you can send special promotions and strategically give rewards. You cannot fence off that which you cannot identify. You may have lost your third most important customer and have no idea it has occurred. Without identification you do not know that your third best customer had not made a contact or purchase in three months (they had been purchasing each week). If you knew right away you could have attempted an intervention to correct a problem and recapture this important customer.

The economic value of the customer is the fundamental principle for CRM and one-to-one marketing. Businesses, however, resist this one. There is an inherent belief that by treating your most valuable customers differently than your least valuable customers you are breaking the prime directive that the customer is always right and the U.S. Constitution, which states that all people are created equal. The economic segmentation of customers is not saying to mistreat

customers, nor is it saying that some customers are not equal. It is saying that some customers are more equal than others. In a world of intense competition and limited resources, your energy and resources cannot be spread equally across all customers — you must put more energy into your better and best customers. Economic segmentation is a fundamental determinant of your future.

Questions to Ask

1. Can our customers be identified by their value?
2. Do we know the lifetime value of our customers?
3. Do we know our top 10, 20, 30, or 50 customers?
4. If a top 50 customer left would we know it?
5. Have we asked our best customers what they want?

Critical Component 2

Closed Loop Process

Every customer contact has a predetermined sequence of steps leading to closure of the customer contact and exploitation of all other sales, marketing, and business change opportunities.

For instance, let's say I contact a company to get information on its newest cell phones. I inquire about price and availability of the new phones. I discover that the prices vary based on whether I am establishing a new service contract (lower price) or whether I am an existing customer that just wants the newest model (higher price). I balk at paying the higher price since I have been a customer for more than three years. I hang up and call again when I receive an email offering the new model phones. This time the rep decides to work with me and create an exception so that I can buy the new phone at the lower price.

Later I find out that the rep cancelled my old service and created a new contract to adhere to the existing process. As this was done my history with the company disappears, eliminating the fact that I have been a customer for more than three years. Was I satisfied with the results? No! Will I continue to be loyal customer, only until I find a better deal? Does this company know what its processes are doing to the longevity of its customer base? Knowing your processes and using the interactions to help define what is working and what needs to be fixed is key.

Over and over, we see opportunities to improve, to add value to some other part of the business, and to "sell," but the process is blocked at a process point. No one is told, and no one takes responsibility for making this information strategic and useful.

Questions to Ask

1. Do we have scripts for handling the issues we face? (Important for the top 10 problems — see Institutional Memory.)
2. Do we have procedures so that nothing falls into the black institutional hole?
3. Do we have documented processes that we use to serve our customers? (i.e., a step-by-step list that produces a result.)
4. Do we observe how the CSRs serve customers so that we know how they use defined processes?
5. Do we ask front-line employees which processes are working?
6. Do leaders regularly use the systems of the company to stay close to how customers are being treated?

Critical Component 3

Institutional Memory

Institutional memory means that every customer contact is logged, processed, tracked, disseminated, and acted upon. Further, the information is available to anyone who needs it at anytime. In the case of telephone calls, CSRs can see my history with the company as the call arrives in their headset. This allows customer-contact employees to have a basic picture of the customer they are speaking to and may even provide some indication for how to handle certain customers. Information about all customer contacts is a strategic weapon and a corporate asset. This data allows for many differing groups to mine the data in the interest of making sound decisions on future products and customer behavior in the service process. Root-cause analysis of problems is no longer a strange concern that gets little attention but becomes a regular monthly management/leadership activity. Better handling of contacts and analysis of customer contact behavior will ultimately result in elimination or avoidance of contacts as standard practice. The future holds that we can log, process, track, disseminate, and act on customer contacts at all access points, including telephone, email Web interactions, and in the storefronts.

Questions to Ask

1. Does our system remember, and is that memory available?
2. At which contact points are we capturing this information?
3. Do we know the top 10 problems by access channel and customer segment?
4. Do we know the top 10 escalations (problems that are likely to escalate into big problems)?
5. Does leadership in our company have a "contact elimination" mentality?

Critical Component 4

Customer Collaboration

What functions of your operation could customers do for you? This is the reason for FAQs, our original goal for IVR, and for speech recognition, which does it even more quickly. When they work they are a thing of beauty. When they don't work right they are a thing of ultimate customer torture.

Speech recognition improvements are integral to the improvement of customer self-help contact. I am amazed at the number of managers who have no sense of how well speech recognition has improved. For most contact issues, there is no reason why the system cannot simply have customers ask their question and then be correctly queued without any CSR.

People will serve themselves if you make it simple and convenient, our research shows. Allow customers to do as much as they can for themselves before you have to have an expensive contact. As the cost of live customer contact increases and the cost of self-service and Internet contact decreases, self-service strategies will increase. You don't know what the customers will do for themselves if you don't ask.

Questions to Ask

1. What can customers do that we are doing for them?
2. Have we explored IVR coupled with voice/speech recognition technology, or have we dismissed it?
3. If we could get 25 percent of our callers to do it for themselves, what would that mean for the resources we currently employ?
4. How frequently do we have a constructive dialogue with our customers by segment?
5. Before we implement a technology, do we ask customers how they would use it?

Critical Component 5

Strategic Use of Information

Each phone call represents a tremendous amount of actionable and strategic information. Unfortunately, most of you are missing the opportunity. Very few companies capture consumer information. Very few capture it right. Very, very few use the information they have. And even fewer capitalize on the information. Unique information leads to delivering value.

There is a second element to this, and that is determining what customer information is actually useful to you. Our research clearly shows that customers will give you information when it makes a difference to them. What can you collect that is useful to you and delivers greater value in some way for the customer? Amazon.com does it by collecting information about my spending habits and then offering me suggestions about other books or music I might enjoy based on that history. All Amazon has to do is suggest that I might be interested in preordering, for a special price, the latest book by Carl Hiassen. The alternative is for Amazon to wait until I realize that Hiassen has a new book and hope that I order from them. Airlines use information about where I depart from to give me weekly "e-specials" by email. Our research shows that call center personalization (just knowing some useful information about the caller at the time of call) increases satisfaction after the call by at least 25 percent and increases intent to repurchase the product or service by 35 percent. On Web sites, increased personalization increases average order, conversion to buyer, and retention/repeat purchase. Know more … help more … sell more.

Questions to Ask

1. Do we subscribe to 1to1.com and the One-to-One newsletter?
2. Have we read the Peppers and Rogers One-to-One books?
3. Do we produce information or just data reports?
4. Does the information we collect become reports?
5. Who else can use the information we collect?
6. Have we asked department heads from other areas to sit in the center and ask them what we could do to help?

Critical Component 6

Touch Point Alignment

This one is so simple that it staggers our minds that companies don't get this. This means that all customer contact channels (touch points) are integrated such that email, in-store, Web, wireless, and phone are all available to anyone in an organization in real time. There is a great Siebel commercial that you all should see. A woman is standing at the check-in desk of a very fancy grand hotel and it is obvious that they don't have her room.

"This is ridiculous. First, I emailed to confirm my reservation; then I called your 800 number to say my flight is delayed," she says.

The agent responds, "We’re sorry, we only hold reservations when you call the hotel directly."

"I emailed and called."

"We understand, but you were calling central reservations."

"Aren't they all connected?" the woman asks.

"We’re going to get you a room. Next time call the front desk."

"So I’m the problem … ."

The point is clear — Siebel can help align all aspects of customer contact, and this is a good thing. When touch points are aligned, the company presents a united front to customers — it is one company. Customers don't have to repeat their situations to multiple employees each time they contact the company. In the beginning, businesses really didn't concern themselves with this integration. There was only one access channel; no integration was needed. Now, with multiple access channels, businesses have a need to be integrated. Why shouldn't consumers expect all parts of a company — they have the same name — to be related? Having information from all contacts available to the CSR (and every employee) does the following:

1. The store inventory at any Men's Wearhouse store is available to any employee. Thus, when the "cool" deep-blue shirt was not in my local store in my size, the associate was able to find it, order it, and have it mailed from another store immediately. I said "cool" when I got the shirt in the mail three days later.
2. I can order something at Sams.com, see if it is in inventory, and then choose to have it sent to my local Sams or to me.
3. When I do something simple like provide my account number and then get transferred to "someone that can help me," I don't have to repeat the number again.
4. When we describe the problem we’re having with getting the new DVD player to work (via email), we don't have to repeat the problem when transferred to another CSR on the phone.

Touch point alignment increases the positive perception that a consumer has of your company. Touch point alignment makes employees feel smarter and more confident. And when CSRs feel more confident, they become more competent. When they are more competent, they feel more integrated and involved in the business. When they are more integrated and involved, they are more creative and turnover is reduced. And when all of this happens, productivity increases, effectiveness increases, and efficiency increases. The CSR is happy, the manager is happy, directors are happy, the VP is happy, the president and CEO are happy, bankers and shareholders are happy, and the customer has no reason to go somewhere else. Simply because of touch point alignment.

Questions to Ask

1. Can a customer buy it on the Web and return it to the store?
2. If a customer calls does the customer contact person have access to past complaints, requests, and sales history?
3. Is customer history available at every customer contact point?
4. Have we run the numbers on the cost associated with customers having to repeat their problems?

Critical Component 7

Once-and-Done Contact

The issue in customer contact is relatively simple: answer the question, solve the problem, fix the "thing", send the information, and tell the customer what to do; reassure the customer. The customer is contacting for a reason. Fix it, solve it, answer it. We complicate it — why?

Research clearly shows that the No. 1 driver of customer satisfaction with any contact is solution. "Once and done" is the key. Measure it, make it a goal, track it, raise the bar, figure out how to solve the most frequent calls the first time, every time. Once you have achieved the 90 percent range (best practice), try to eliminate the reasons for most of those calls.

Questions to Ask

1. Are we tracking "once and done"?
2. Do we understand what "once and done" is to our customer?
3. Are we setting goals and rewarding for "once and done"?
4. Is our "once and done" approaching 90 percent or more?
5. Do we have a strategy to eliminate calls by fixing the problems?

Critical Component 8

Real-Time Information Management

To what extent is the information in a call/contact translated into strategic business decisions? To what extent is the information in the center relayed to marketing, sales, legal, wherever? The information you get might be useful and needed elsewhere. The reports that are used usually employ only a very small fraction of what is collected and is usually not very important information. It is extremely rare for call centers to have a means of collecting information and sharing it with the other areas in a company in real time.

Information should be useful — why collect it if it is not? Sit down with marketing and figure out what they can learn from a call with what is collected now. Then ask them how your 1 million contacts could be used in getting information for marketing. At the end of a call, what can be asked to help the engineers, the marketing group, and the sales group? One of the side-effects of sharing information is the creation of strategic alliances.

The lack of strategic alliances leads to alienation, isolation, and marginalization of your contact center. Creation of alliances leads to centrality, which leads to power, which leads to career tracks both within and outside of the center.

Questions to Ask

1. Do we share real-time information across the company?
2. Are we collecting information in all areas, not just customer contact?
3. Is the information collected distributed in a way that allows for people to read, analyze, and use it to improve the company?
4. Do the executives in the organization realize what types of information the customer contact points are collecting?

Critical Component 9

Strategic/Multiple Customer Listening Points

The simple definition for this concept is to listen to customers (measure customer satisfaction) at all contact points and be proactive and ask customers who don't usually contact you to get a true picture of customer satisfaction. The Purdue Benchmark Survey shows that 85 percent of all contact centers have a formal process to measure quality of call and customer satisfaction. But the survey shows the measurement to be more perfunctory than strategic. There is a difference between the quality of the contact and the satisfaction of the customer with the contact.

One of the misdirecting forces we see all the time is companies using criteria based on contact measurement. Supervisors listen and monitor the quality of the contact. First, the quality of the contact is not related to customer satisfaction. There is no evidence that any of the criteria that are measured and purported to be indicative of contact quality is related to customer satisfaction.

So why do you measure quality? Because you have been duped. Those companies selling quality-monitoring systems have convinced you that measurement of quality is important. If you want to measure quality, find out which parts of the quality measure are related to customer satisfaction. Knowing that something is related to customer satisfaction gives you a fighting chance of making a difference.

Remember that customer satisfaction with a call center contact is very different than customer satisfaction with purchase. No one really knows the strength of the relationship between customer satisfaction with a call contact and repurchase, loyalty, and wallet share. The existence of that relationship will tell you the degree to which you have to pay attention to the contact center.

Questions to Ask

1. Do we have a quality monitoring system, and do we know if any of the things we measure are related to customer satisfaction?
2. Do we measure customer satisfaction and track it?
3. Do we measure customer satisfaction across all access channels?
4. Is satisfaction with contact related to repurchase or loyalty?

Critical Component 10

Balanced Customer Scorecard

The concept of a balanced scorecard dates back to a Harvard Business Review article in the 1990s. We have taken the concept a bit further in defining it as looking at your customer contact functions in a way that balances the effectiveness (quality in the eyes of the customer) with efficiency (productivity in the eyes of the company).

For contact centers this means a change in what we measure. Since the proliferation of the ACD in the 1970s, we have been able to gather more data than a person can read in a day. We have learned to develop reports that can take bright people days to understand, but a group of employees can figure out a way to work the numbers to their benefit in a matter of hours. If it is in a call/contact center we have figured out how to measure it. All the while, customers have been patient in accepting our 80 percent of the calls answered in 20 seconds, but are not understanding why they get a person that can't help them. Our measures like ASA, abandonment rate, service level, average talk time, average post-call work time, queue time, and calls handled per hour have created a group of employees that do what gets measured. For every ounce of efficiency gained, what level of effectiveness is gained or lost? If our focus is on customer satisfaction and increasing customer loyalty, then we need measures that encourage employees to reflect this focus in their behavior. The newest are occupancy, schedule adherence, customer satisfaction scores by employee, and availability. In many ways outcomes are quite important. Is talk time (a measure of efficiency) worth decreases in effectiveness? Can we realistically move customer satisfaction scores up two more points in a cost-effective way? You see the balance is very important; however, we won't get there without sacrifices in both categories.

If you measure just efficiency, then you may be missing an opportunity to increase wallet share (effectiveness). If you measure only effectiveness, you may miss an opportunity to decrease expenses and help the bottom line (good business).

Questions to Ask

1. Do we have an accurate measure of customer satisfaction that reflects real customers?
2. Can we trace impact on efficiency in making changes to effectiveness and vice versa?

Critical Component 11

Total Experience Management

There are hundreds of customer contacts occurring every moment of every day. Each one can be a moment of truth that determines the outcome of the customer experience. Who is responsible? Who will be the person who always asks, "What does this mean for the customer?" Who owns the customer experience? It is clear from our adventures that although it is always better for everyone in the organization to own the customer experience it starts somewhere. There has got to be a locus of responsibility. There has got to be a senior executive or committee whose only function is the total customer experience. To make the customer experience subservient to marketing, sales, engineering, or store operations means that more often than not the customer experience will get lost. The customer experience is just too important to marginalize or sacrifice.

Questions to Ask

1. When was the last time we sat down with a group of our customers and asked how we are doing?
2. When was the last time we spent a day with our employees — selling, servicing your company's products and services?
3. When was the last time we disguised ourself and walked into a store or called on the phone or sent an email just like a regular customer — just to see what it felt like?
4. Who is responsible for the customer experience?
5. Do all employees, both customer contact and those that serve behind the scenes, understand the importance of the total customer experience and their role in it?
6. Do we have a consumer affairs professional who regularly attends training and development for this issue? Do we track all customer contacts or just worry about the current issue?

Critical Component 12

The Future: Trend Spotting

Who is looking out for the BIG trends? Where is KMart now? Where is Sears now? These were great companies for a while, but they didn't see the future. At their prime, a small, unknown retailer from Bentonville, Arkansas, asked, "Do we need to invest in satellite technology?" Sears didn't see the need; nor did KMart see the need. As a result, in 2002 K-Mart has imploded and Sears is looking for answers. And Wal-Mart? Wal-Mart is the No. 1 retailer — the largest sales company in the world. The technology investment, long before anyone else saw the need for it, allowed Wal-Mart to centrally run many aspects of store operations from a small room in Bentonville — making the cost of running stores much lower than the competition. It allowed Wal-Mart to understand inventory and restock shelves faster than anyone, at 35 percent less cost. It allowed Wal-Mart to sell 75 percent of its merchandise before it had to pay for it. It was not customer service that led to Wal-Mart's success but key Wal-Mart people seeing what a particular technology investment could do for their business. It was seeing the future.

What are the big trends that will affect the contact center/call center industry? In fact, the call center may have missed the biggest one. How could call center executives not understand the importance of Web contact? Why haven't 100 percent of the contact/call centers taken the Web contact as part of their responsibility? Why is it that 50 percent of our companies surveyed are not answering their email? What are some of the other big trends? Do you need to speak Spanish? (There's big growth in the Hispanic population.) What are you doing to account for the fact that most of your customers may now be female? (The hardware industry has still not figured this one out.) Wireless is here. What will that mean for contact issues, and how are you addressing it? Who is responsible for considering the future? Do you bring in some big university experts, some futurists, and some outside-the-box thinkers to simply ask some questions about the future?

Right now, you are probably so caught up in the day-to-day problems and pace of things that the future is something to consider only when it is the present. If no central responsibility is being taken, at least you can get your people to think about how it affects your part of the business.

Questions to Ask

1. Do we have a futures committee?
2. What are the top three social/economic issues that we face in the next five years?
3. What are the problems our customers have not identified yet?
4. What will the next competitor look like? (Not like you or your existing competition.

Critical Component 13

Entrepreneurship

Stew Leonard is a successful and influential small food-store chain in the Northeast. He has the "one idea club." Managers take a group of employees (on the clock) to some other business and all they ask of the visit is that each one comes up with an idea. That's it — it is so simple as to be revolutionary. I recently took my secretarial staff to the Cheesecake Factory and all they had to do was come up with one cost-saving idea each. If I add up the potential annual costs savings to my department, it is in the $10,000 range — well worth the $200 lunch. Unleash the forces within and start a one idea club. Do something that encourages entrepreneurship.

Questions to Ask

1. Do we immediately say no to new ideas?
2. Is there an organized and institutional way to solicit new ideas?
3. Do we reward or celebrate new ways?
4. Do we have a one idea club?
5. Do we communicate business results that give employees a sense of what is happening in the business, not just customer contact?

Bonus Critical Component

Taking responsibility

I hear many contact/call center executives say there is nothing they can do about these things. I then speak to the senior VP-types about it, and they say:

1. This is the first time they are hearing this.
2. What can a senior executive do — they don't run the call center.
3. It is not up to them.

Call center managers and executives have simply been marginalized to the point where they cannot try without a certain amount of career pain. If the call center manager cannot make the business case for these changes in an organization, then how can we expect a senior-level VP to be able to make the business case? We must learn to better fight the internal battles that lead to organizational change and improvement. It is easy for us — and we are pretty good at it — to do the status quo. We have not taken time to develop people that are skilled in making a business case for the customer contact center organization.

Questions to Ask

1. Do we point the finger or lend a hand?
2. Are we developing all of our employees to understand what it takes to make a business successful?
3. Who is responsible for the development of leadership within our organization?

Technology Is Not the Answer

Technology may be the driver of change and success, but it is not the determinant of success. All too often companies believe that technology will save them. A piece of CRM technology will make us a better company. A computer system will increase productivity. An e-commerce site will fix our slowdown in sales and help us become profitable. In all these cases and more, technology may set the stage for success and change, but it cannot cause it. It always comes down to the application of the technology. Technology must be weaved with people and process to provide better outcomes.

Questions to Ask

1. What came first, the technology or the objectives/goals?
2. Do we know our processes?
3. Do we understand the total cost of a technology implementation, including the cost of change in the environment?

Conclusion

The 13 habits listed above can be part of a strategy that will propel you at warp speed. You can choose the status quo, but now you have done so deliberately because we have given you an alternative. You need to see beyond the end of the quarter. We cannot promise that if you focus on these 13 ideas that you will be a success; however, we can promise you that if you don't focus on them you will fail your customers, your employees, and eventually yourself. Ten years from now you can look back and wonder why you did not become extraordinary and know the reasons.