Mar 5 2013
With a proliferation of self service channels such as the web, mobile and kiosks – all of which are often managed by contact centers – it is important that customers must be guided, albeit subtly, to choose the right service channel so as to manage the costs of multichannel interactions. Often, customers have a preferred service channel and migrating a customer to a new channel can be a painful process for both the customer as well as the company. However, it does have long term rewards and is well worth the effort.
Years ago, companies used to have a single direct channel of delivery for their customers. Then the “call center” came into being, initially as a complaint resolution mechanism, and later on as a service delivery channel itself. Today, companies use multiple routes to reach out to demanding customers and studies have shown that revenues from multichannel customers are typically 30 percent higher than single channel methods. Moreover, channels such as the web and call centers offer big cost savings when compared to a direct channel such as a bank branch.
Sometimes though, introducing multiple channels of service delivery can raise costs as customers increase their number of transactions. For example, a customer who would earlier check his account balance once a month when he visits the bank branch may now start doing so every other day through the Internet. Thus, although the average transaction cost may come down, the overall cost of serving each customer goes up. Companies cannot risk cutting down on the number of service channels as customers who are accustomed to the wide range of service options may look at it as a drop in service levels and may even switch to a competitor if a channel is discontinued.
The answer therefore lies in being able to reroute customer interactions in such a way that customers choose different channels for different interactions, enabling the company to match the customer choice with channel economics. This will not only contribute to cost savings and revenue enhancements, but also allow companies to break into previously untapped market segments.
While a company can offer multiple service delivery channels, it is also necessary to proactively intervene to identify the channel of choice for each transaction. This aids in controlling costs and boosting revenue. For example, a company may need to choose between direct face to face interaction with a salesperson, or an outbound telesales call center, for different legs of the sales process. While a telesales channel may be best suited for generating leads, a direct meeting with the customer may help close the sale faster. Similarly, a premium customer may prefer speaking in person to a customer service agent rather than interacting with a cumbersome IVR system. Companies need to strategize their interactions by keeping in mind customer preferences and channel economics. A suitable incentive structure for both customers as well as staff can be designed to influence the behavior in a way that is optimal for the company.
Designing the Channel Architecture
Often companies have only a vague idea of the transaction volumes and revenue from each of the service channels. When it comes to other factors such as cost of service, customer preference or perceived quality of each channel, most companies are mostly in the dark. The first step in designing a robust and profitable channel architecture is to segment your customers based on their preferred channel of service, understand the current transaction mix of each channel and the cost of each activity (such as cost of lead generation and cost of closure rather than just cost of acquiring a new customer) in each channel.
Once a one to one comparison of costs and revenue is made, companies can also analyze the quality of customers that each channel attracts. For example, a telecom company may realize that the cost of acquiring a customer may be same across channels, but customer profiles may differ drastically in terms of average revenue realizations (more commonly known as ARPU or Average Revenue Per User) and loyalty levels.
Data analysis at a granular level is an essential step in creating channel architecture for a multi-channel service organization. However, cost and revenue figures are only one part of the equation. An equally important parameter is the customer preferences. Customer preferences also vary from transaction to transaction. Thus, a customer who might choose a website to verify his account balance may opt to visit the branch for a transaction rather than do an online transfer. Analyzing cross channel customer behavior patterns can provide key insights into customer loyalty as well as cross sales opportunities. In depth statistical analysis can help identify the most preferred channel combination for each class of customers.
Combining insights from the economical analysis and the customer preferences could help companies in enhancing revenue and controlling costs without affecting customer satisfaction levels.
In the next part of this series, we will look at ways in which customers and staff can be encouraged to use the channels that the company has identified as the most suitable for each transaction.