• August 1, 2002
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

Slim Down Call Center Costs

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Paul Horstmeier knows firsthand that there is a delicate balancing act between cutting costs and investing in customer support. Horstmeier, e-marketing manager for the business customer organization at Hewlett-Packard, and his team were faced with the issue of how to contain costs at HP's call center about two years ago. At that time customers could obtain much of their information through an automated phone response system. The support team however, realized it would be more cost effective to drive customers to the Web site for product information. Conventional wisdom says that to keep customers, it is essential to keep customer-satisfaction levels high. This requires significant investments in customer support, especially at companies where contact center call volume is high. The reality of the slumping economy, however, can put the kibosh on conventional wisdom, as many organizations are forced to decrease customer support investments. Yet, tipping the scales too heavily on the side of frugality may yield worse results. "Organizations that are not measuring the effect on customer satisfaction have no business cutting costs, because they might be turning customers off and losing money on the back end," says Amit Shankardass, solution planning and enterprise solutions officer at ClientLogic, a contact center services company based in Nashville. ClientLogic, a subsidiary of Canadian diversified company Onex Corp., has 32 contact centers in 46 facilities worldwide. Thankfully, companies do not have to invest a lot to gain a lot. "Although the investment seems daunting, companies need to focus on the return. The reporting and efficiencies of representatives helping customers and customers helping themselves is greater," says Michelle Curless, director of The Customer Group LLC, a Chicago-based consulting firm specializing in customer interaction. Curless and other industry experts agree that there are low-cost alternatives to providing support without tarnishing the customer experience. Proactive Support For starters, eliminate customers' need to call by empowering them with information, Shankardass says. A common way to empower a significant portion of your customer-base with information is to post it on your company Web site. However, there are trade-offs to simply posting content online. "The disadvantage is that people may not know how to get the information," Shankardass says. HP's Horstmeier knows this firsthand as well. With 260 different printing devices listed on HP's Web site, finding the correct information can be daunting. So Horstmeier and his team decided to take a unique approach to customer support by becoming proactive, instead of reactive, with support. That is when they elected to start a CRM email newsletter. "There's information available on the Web that people don't know about," Horstmeier says. "If we proactively send them both support and marketing information, would that increase customer loyalty, decrease support costs, and increase their likelihood to buy? If a customer buys printer X, can we identify common things that would occur that is associated with that purchase?" There are several ways to reach out to customers with both marketing and support email campaigns that can reduce traffic into the contact center. At HP, for example, the first month after a purchase HP can send a thank you note and a link to a product support site, Horstmeier says. The fourth month customers can receive a link to a place on HP's site that explains how to buy or change their toner cartridge. During the sixth month HP can send a helpful tip on how to print memos and calendars. After the ninth month the company can send a notice stating a customer's one-year product warranty is about to expire, and offer the customer the chance to purchase an extended warranty. With help from Digital Impact Inc., an online direct marketing company based in San Mateo, Calif., HP piloted its proactive email marketing and support program two years ago with approximately 100,000 customers. HP immediately benefited from a 30 percent click-through rate. "That was absolutely unheard of," Horstmeier says. Based on those results HP and Digital Impact built a customer loyalty and marketing engine to deliver tailored messages based on customer click-through rates. "Now with every new product customers receive between twelve and twenty-four different product lifecycle messaging emails from HP if they register with us," Horstmeier says. The email marketing and support program currently has 1.5 million subscribers, growing by 100,000 customers each month, he says. "Total cost of managing the program and the content is eight cents per email and the support cost savings is $173,000 per month from all customers," Horstmeier says. "If our only objective was to save money, we did that." Proactive email support is only one way to cut costs in the call center. Offering Web self-help is another effective cost-saving strategy. Web Self-Help
One-to-one service like that of a call center is not the best way to service a large customer-base. "The primary channel for support is no longer the phone," says Brian Sterling, chief executive of SafeHarborTechnology Corp., a Satsop, Wash., provider of Web-based customer support services. "Primary is the Web and secondary is one-to-one [over the phone]." SafeHarbor provides a customized Web self-service support environment, including a customized knowledge base and problem-determination tools including troubleshooting guides to help users quickly find needed information. Troubleshooting guides use question-and-answer technology to filter a user's question and deliver graphical answers. "Organizations can save $20 to $25 per call by using Web self-help," says Brian Jones, an analyst of CRM strategy at Yankee Group, in Boston. When people turn to customer service, generally about 80 percent of them are asking a question that has been asked before, Sterling says. Solutions like SafeHarbor's Web self-service anticipates these common questions, lowering support costs compared to traditional telephone support. The Customer Group's Curless warns, however, to be mindful of Web self-help companies that claim their solution is the magic bullet to contact center problems. If a Web self-help solution does not enable organizations to understand and provide a quick resolution to why customers are calling, then a Web self-help solution is no help at all. "If you build it, they may not necessarily come. If the service on the Web is no different or no better than the service over the phone customers will not use it," Curless says. "If your organization's first-call resolution is less than one minute, that same expectation level needs to be fulfilled via the Web site or email." Web self-help capabilities are expanding to include natural language technology. This allows users to ask questions in a conversational way and the search engine will offer appropriate search results, even if the query is misspelled or does not contain the exact phrasing of the desired information. For example, on Charles Schwab & Co. Inc.'s Web site, which runs a natural language search engine from iPhrase Technologies Inc., clients can run a search on "IRA" and receive documents that may not have the acronym but have the words "individual retirement account" spelled out. Another example might be a query on "chip stocks," which could mean either "semiconductor" or "blue-chip" stocks, but "we recognize that 'chip stocks' meant 'semiconductors,'" says Tony Frazier, vice president of product management at iPhrase. "Since launching iPhrase in May 2001 we have been saving $125,000 a month, because the search engine can answer questions that would have gone to the service team in the call center," says Leigh Hood, director of technical product development at Schwab. While the proactive emails and Web self-help enable call avoidance, "the phone is still a very important channel," Yankee Group's Jones says. Fortunately there are ways to reduce the costs associated with a telephone call. Offshore Hosting If your organization is willing to outsource call center functions, then offshore hosting may be a viable option. Companies that offer call center outsourcing in India, Europe, and the U.K. often can provide a highly educated workforce at a lower rate than is available in the United States. In fact, Daksh, a CRM cosourcing firm for Fortune 1000 companies, maintains it can provide similar or better customer support than U.S. call centers for a fraction of the cost. "Employee productivity [in India] is at least 25 percent better than in the U.S.," says Venkat Tadanki, founder and vice president of sales and marketing at Daksh. "And we are able to pay people much lower than what people make in the U.S. A $10,000 salary in India equals a $60,000 salary in the U.S." Employee productivity in call centers in India is superior to that of U.S. call centers, Tadanki explains, because the caliber of the employees who apply for call center jobs in India is better than those in the U.S. In the U.S. a call center job is viewed as a job to hold you over, whereas in India it is considered a career. He adds that 100 percent of Daksh employees have college degrees and 29 percent have masters degrees. Even with the benefit of lower salaries and a highly educated workforce, some companies may be concerned about differences in time zones, culture, and dialect. Call centers operate around the clock, so customers need not worry about time zone changes. Language is a larger issue. However, all 1,700 of Daksh's employees speak English. "India has the second-largest number of English speaking graduates next to the United States. They've had fourteen years of English-speaking practice. For us, the main language is English. The accent, however, is a bigger issue," Tadanki says. Therefore, agents receive 80 hours of accent neutralization training to help them neutralize their accent to something that can be clearly understood globally. Proactive support. Web self-service. Offshore hosting. With these lower-cost alternatives to providing customer support, organizations can identify areas to improve and can maintain high customer satisfaction levels or increase profitability without disturbing the delicate balance between keeping costs down and customer satisfaction levels up.
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