Customer contact effectiveness · customers to use self-service channels can rapidly lead to...

Customer contact effectiveness

Serving your customers © BT plc 2004


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About Datamonitor

Datamonitor plc is a premium business information company specializing in industry analysis. We help our clients, 5000 of the world’s leading companies, to address complex strategic issues. Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for six industry sectors: Automotive, Consumer Markets, Energy, Financial Services, Healthcare, Technology. Datamonitor has its headquarters in London, with regional offices in New York, Frankfurt and Hong Kong.

Introduction

This white paper has been produced by Datamonitor on behalf of BT. It will enable readers to:

1. Understand the key drivers and inhibitors for firms attempting to rationalise and optimise their customer contact effectiveness Too many companies provide poor and inefficient customer service, which costs money and reduces revenues. This white paper will describe what companies can do to improve this situation.

2. Consider the key benefits of a multi-channel approach The typical company currently offers its customers a range of contact channels, but has yet to integrate them. In a typical scenario, a customer may send an email to an organisation that is never replied to. He or she will then phone the call centre, only to find that the agent has no record of the email. This white paper will explain how companies can exploit every interaction, across every channel, to increase customer satisfaction, reduce costs and increase revenues.

3. Developing a self-service strategy Providing customer service is necessary, but it costs money. This white paper will explain how encouraging customers to use self-service channels can rapidly lead to significant cost reduction without any negative effect on customer satisfaction.

4. Intelligent routingEvery customer contact is different, but too many companies treat them all the same. Using intelligent routing technology, companies can route contact based on customer value, agent skills and channel type, allowing them to drive efficiencies, increase customer satisfaction and boost revenues.

5. From cost centre to profit centre Many customer service and call centres are still considered cost centres, but this needn’t be the case. By improving customer contact effectiveness, companies can turn them into revenue and profit centres.

Customer contact

effectiveness


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Multi-channel-key trends

What do we mean by multi-channel and how is it related to contact effectiveness? The number of contact channels available to customers has grown significantly over the last decade. Where previously a customer would pick up the telephone, send a letter or walk into a branch or shop, they can now also send an email, click on a website, send an SMS, or communicate through their digital TV. With the usage of these ‘new channels’ expected to further increase over the next decade, many companies are facing a deluge of contacts that they cannot deal with effectively. The result of this contact chaos is millions of unhappy customers and billions of pounds in missed sales opportunities.

Figure 1 illustrates the number of communication channels that a typical large enterprise may offer its customers and introduces the concept of a multimedia contact centre.

Datamonitor defines a multimedia contact centre as a call centre in which at least two channels of communication – including voice – are routed to the agent using the same set of business rules. The contacts do not need to be routed to a blended agent; it is not uncommon for agents in call centres to be given roles based on media type, as long as the routing of contacts is centrally based on the same set of business rules.

Central to the multimedia contact centre is the concept of the ‘universal queue’, sometimes referred to as integrated channel management (ICM). The concept behind the universal queue is that all contacts are routed to agents using a single set of business rules, regardless of whether they are inbound/outbound or voice/data. The criteria for the routing could include customer value (eg, platinum card holder), agent skills (eg, languages spoken or sales/service agent) and media type (eg, phone call, web chat).

Figure 1: Multimedia contact centre

MultimediaAgent:

• Sales

• Service

• Support

Telephone

Fax

Branch/ATM

Letter

t id arTi

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Text Chat

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VoIP

Web Collaboration

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WAP

eN

wC

ennahsl

iTV

Multimedia ContactCenter:

Universal

Queue

MultimediaAgent:

• Sales

• Service

• Support

Telephone

Fax

Branch/ATM

Letter

Text Chat

Email

VoIP

Web Collaboration

SMS

WAP

iTV

Multimedia ContactCentre:

Universal

Queue

Source: Datamonitor D A T A M O N I T O R



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Multi-channel – a dramatic expansion

Figure 2 and Table 1 illustrate the dramatic increase in uptake in multimedia contact centres in the UK over the next five years.

The UK currently has both the highest penetration of and greatest number of multimedia contact centres in Europe: at the end of 2002 there were over 500 multimedia contact centres, accounting for over 9 percent of all British call centres. Datamonitor expects strong growth in multimedia centres in the UK over the next five years. By 2007, 25 percent of British call centres will be multimedia, the highest penetration rate in the EMEA.

Figure 2: Multimedia contact centres in the UK, 2002 – 2007

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Table 1: Multimedia contact centres in the UK, 2002 – 2007

2002 2003 2004 2005 2006 2007 CAGR

Multimedia call centres 522 801 1,076 1,334 1,571 1,711 26.8%

Multimedia call centres as a percentage of total 9% 13% 17% 20% 23% 25%


% o

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Multimedia call centres

Multimedia call centres as a percentage of total


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Many different types of organisation will install multimedia contact centres, but Datamonitor believes that certain types of organisations will be early adopters:

Large call centresLarger call centres are more likely to deal with high levels of multimedia traffic, to mix inbound and outbound calls and to have the infrastructure in place to support a multimedia solution. In addition, economies of scale mean that the per agent price of a multimedia solution falls dramatically as the size of the call centre increases, thus creating a much stronger RoI (return on investment) case.

Revenue generating call centresIn many cases, the most immediate benefits of installing a multimedia contact centre are gains in efficiency and therefore cost savings. However, if cost savings can be coupled with increased revenue generating opportunities, the ROI case is significantly stronger. Therefore, a call centre that considers itself to be a profit or revenue centre, rather than simply a cost centre, is more likely to benefit from a multimedia solution.

Smaller IP call centresNot all multimedia call centres are large, however. IP technology makes multimedia functionality affordable for smaller, greenfield and internal call centres. This is discussed in more detail in the next chapter.

Particular vertical marketsA multimedia contact centre will show a rapid RoI for any company that relies heavily on its contact centre and deals with a significant volume of multimedia traffic, particularly if it fulfils the criteria described above. Although this means companies from every sector can benefit, some sectors have more definite requirements for multimedia call centres than others. Vertical markets that require larger multimedia contact centres include: financial services, communications, technology, utilities, travel, retail, outsourcing and national government. Smaller multimedia contact centres are required in manufacturing, local government, entertainment and media, or in smaller internal helpdesks and call centres.



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IP call centres and multi-channel

An IP call centre is one in which all forms of communication, including voice, are treated as data within a single enterprise network using IP, as illustrated below.

Figure 3: IP call centres and the link to multi-channel

Voice/email/collaborativecustomer

Remote agentsanywhere

Internet

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Voice customer

Virtual call centre environment

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Application which has the functionalityof the corresponding hardware

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Virtual call ce ironment


agents

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agents

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IP connection


IP connection



InternetInternet




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Datamonitor believes that IP telephony will become commonplace in the long-term and that it is a key enabler of multimedia contact centres. However, companies should approach the technology differently, depending on their existing call centre infrastructure:

Small and green-field call centresCompanies looking to invest in new call centre technology and build smaller call centres should seriously consider investing in IP for multimedia functionality and a quick RoI.

Large and established call centresIt makes little sense for companies that have already invested significantly in traditional call centre technology to rip it all out and replace it with new IP technology. However, it is possible to migrate gradually from TDM to IP technology and hybrid solutions are ideally suited to this type of environment.

Multi-site call centresTechnology replacement is also an issue for multi-site call centres and migration or hybrid solutions are the right path for companies to follow in this case. However, IP is very much an enabling technology in multi-site environments and allows companies to more effectively add remote locations and extra sites to a call centre network, including home workers, branch workers and those in offshore locations such as India.

IP telephony and network convergence are important topics that affect the whole of the enterprise, not just the call centre. Datamonitor recognises that in many cases the decision to invest in IP telephony is a broader enterprise decision and these issues are covered in another of the white papers in this series – ‘Network Effectiveness: IP is the Key to Unlocking Enterprise Communications.’



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What are investment levels in multi-channel?

The growth in multi-channel and multimedia contact centres over the next five years will drive growth in call centre investment. As Figure 4 and Table 2 illustrate, in 2002 British companies invested just over £800m in multimedia contact centres; by 2007 this will have increased to well over £1bn.

Figure 4: UK investment in multimedia contact centres, 2002 - 2007

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Table 2: UK investment in multimedia contact centres, 2002 - 2007

£m 2002 2003 2004 2005 2006 2007 CAGR

Investment 803 883 957 1,000 1,032 1,044 5.4%




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Datamonitor expects the main growth areas of investment over the next five years in the UK to be those described above, namely:

• Small, greenfield and internal call centres investing in IP technology in order to build a multimedia call centre ‘out of the box’ as quickly and cheaply as possible. The majority of investment will come from small and medium-sized enterprise (SMEs), internal IT departments, local government and the manufacturing sector

• Mature call centres investing in technology to integrate channels and enable multimedia routing. Most of this investment will be focused around the financial services, communications, retail, technology, outsourcing and travel sectors

• Multi-site call centres looking to ‘virtualise’ their network of call centres in order to exploit multiple channels and increase cross- and up-sell rates across multiple product lines. The majority of investment will come from the retail banking, retail, communications and utilities sectors and from any companies wishing to move offshore, expand globally or extend their call centre into the back-office and branch networks

Self-service

Providing customer service is necessary, but it costs money. There a number of ways in which companies can provide customer service and a range of different costs associated with this. For example, providing customer service in the traditional manner within a call centre costs on average £6.50 per call, but answering the call with an IVR or providing the answer on a website would cost less than £1. Therefore, encouraging customers to use self-service channels can rapidly lead to significant cost reductions.

What do we mean by self-service? The most expensive part of any customer service request, whether it is taking a call in a call centre, replying to a customer email or serving someone in a branch, is the cost of the person providing the service. Datamonitor estimates, for example, that 70 percent of all call centre costs in the UK are labour costs. Therefore, ‘self-service channels’ refer to any customer service channels that do not involve any agent interaction and provide significant savings for the enterprise.

Self-service – not just the InternetWhen most people think of self-service they think of the Internet, but there are in fact three types of self-service applications available:

Web self-serviceThere are a number of ways in which a company can enable its customers to serve themselves on the web, from simply offering a list of frequently asked questions (FAQs) to allowing access to real-time product and delivery tracking information. However, in order for a web-based self-service strategy to really work, the service provided on the Web must be good enough for the customer get the answer they need without having to pick up the phone, walk into a branch or send an email. This means making the answers dynamic, most commonly by linking them to an intelligent knowledge base of company information or linking them to back-office systems containing information about customer accounts information, distribution and stock levels.



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IVR and voice automationInteractive voice response (IVR) systems can be operated either by using traditional touch-tone (eg, ‘Press 1 for sales, 2 for service, etc…’) or through a natural language speech recognition engine. Traditional IVR is only capable of fully automating relatively simple queries, such as checking account balances and is primarily used as a way of collecting information before the call is answered. However, adding a speech recognition front-end not only leads to a much richer user experience, but also means that more queries can be answered without expensive agent interaction. On average, a call centre with traditional IVR can answer 14 percent of calls without agent interaction, whereas a call centre that uses speech recognition technology can increase this to 25 percent

Automated email responseIn general, answering emails is cheaper than answering telephone calls, but only marginally, and employing agents to answer emails is still expensive. The more sophisticated email management systems can use natural language recognition to answer email effectively, but as with speech recognition this technology is still relatively unreliable

Choosing the right self-service channels for your customersIn order to compete effectively, companies must realise that they have a range of customers, and that these customers need to be offered a range of channels through which to communicate. However, companies also need to minimise costs and consequently wish to direct customers to the channels that can effectively service them at the lowest cost.

In the past, some companies have chosen to force customers to use the cheapest channel (for example, by charging exorbitant rates to answer the phone, or sometimes by simply not offering a telephone number at all). However, more often than not, this strategy backfires and the end result is a set of angry customers and a damaged reputation. Conversely, companies that have managed to successfully reduce their customer service costs while retaining or increasing customer satisfaction levels have done so by encouraging customers to use self-service channels. They have achieved this by striving for customer excellence across all channels – if a customer receives the level of service they require through self-service channels, they will return and use them again and again.



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Table 3 lists the benefits, drawbacks and most appropriate uses of the various self-service channels that are available.

Excellence in the self-service environment can only be achieved if the self-service applications are powered by a suitable knowledge base. A knowledge base is a centralised store of customer support information that can be accessed by people or applications providing customer service, from call centre agents to IVRs. Companies must ensure that all customer service channels have access to the knowledge base and that it is kept up-to-date. In addition, service requests that cannot be answered by self-service applications must be able to be escalated to an agent via a CTI application.

What does this mean for companies? Simply put, it means that they must provide the self-service channels their customers require, which differ by company. So, for a company selling books on the Internet, web-based self-service is clearly the best place to focus investment. However, for the majority of companies the phone is their dominant channel for customer service, so automating these calls must be the priority.

Table 3: Self-service channels: their benefits, drawbacks and uses

Channel IVR and voiceautomation Web self-service Automated email

response

Benefits

12% of the cost of using an agent to answer the telephone call

Mass-market – everyone has a telephone so can use IVR

Already widely deployed – there is lots of experience in the market

Low cost

Allows users who are browsing the Internet to quicklyaccess the relevant information

The lowest costself-service channel

Many customers prefer the ease of sending an email to picking up the telephone and email volumes to companies are continuing to increase

Drawbacks

Customers can become frustrated with menus and pressing buttons

Not everyone has access to theInternet

Not everyone has access to email

The quality of the automaticallygeneratedresponses can vary greatly

Most appropriate uses

Any call centre that wishes to reduce costs and improve customer service

Companies that conduct a significant proportion of their business on the Internet

Companies that conduct a significant proportion of their business on the Internet




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Voice self-service – the telephone is still the only true mass-market technology and consequently IVR and voice self-service are the only true mass-market self-service technologies. Datamonitor recommends that all companies should focus on automating at least some of their voice call centre traffic if they wish to save costs through deploying self-service technology. Due to this focus on automating call centre traffic, Datamonitor believes that investment in speech recognition technologies in the UK will increase rapidly over the next five years, as illustrated in Figure 5 and Table .

Figure 5: UK investment in speech recognition technologies, 2002 - 2007

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Table 4: UK investment in speech recognition technologies, 2002 - 2007

£m 2002 2003 2004 2005 2006 2007 CAGR

Investment 35 47 67 99 148 219 44.5%




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Trends in voice self-service

Adoption of speech recognition technology is still very low, but there are already examples of successful implementations in the UK and many more companies either have projects in the pipeline or are assessing the opportunities for speech recognition. As the market matures, Datamonitor has identified a number of trends in the market:

IVR enhancementIVR is a technology that is popular with enterprises, but not universally popular with customers. A large proportion of the investment in speech technologies is currently focused on upgrading IVR with richer and more user-friendly interfaces. Touch-tone IVRs are useful for collecting numbers, for example, but are not so good for inputting flight destinations.

Hosted solutionsSpeech recognition technology is very suited to hosting in the network and many companies are working with telecom providers to access speech-enabled technology, from basic call routing services to fully functioning voice portals.

Verticalised applicationsSpeech recognition technology is by no means perfect and therefore the most useful applications on the market are those that are designed for a specific purpose, and most of these are designed for specific vertical industries. The most popular of these include:

• Financial services – applications include customer service automation, stock quotes, security and lllauthentication, outbound notification alerts and transaction automation • Communications and utilities – applications include customer service automation, meter reading, directory lllassistance, bill payment and field service• Travel and tourism – availability information, bookings, check-in and outbound notification alerts; • Healthcare – appointment scheduling, supply management, clinical trial recruitment, sales force automation llland prescriptions

Limiting factors

Datamonitor has strong opinions on the benefits and drawbacks of voice-based self-service.

Opinion 1 – Speech recognition must be deployed well or not at allBadly deployed speech recognition technology can cause irreversible harm, not just in relationships with customers, but also in the acceptance of speech recognition elsewhere in the organisation. Companies deploying speech recognition must work with partners that can help them to develop and test applications that will prove popular with customers and deliver the required RoI.

Opinion 2 – Speech recognition technology is most suited to specific tasksNatural language recognition technology is still a long way from perfect, but if used in the right circumstances can provide real benefits. Therefore, Datamonitor recommends that companies focus on areas where solutions are being developed, such as those listed above.



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Opinion 3 – Companies must deploy speech recognition gradually and offer alternatives Speaking to a machine is alien to many people and shouting ‘Heathrow’ or ‘Transfer £500’ into a mobile phone on the train even more so. Many people are still not comfortable about using speech recognition technology and Datamonitor advises companies to introduce it slowly and offer customers alternatives, at least in the early days.

Intelligent routing

As has already been stated, the concept of the universal queue is central to the multimedia contact centre. In a universal queue all contacts are routed to agents using a single set of business rules based on a number of criteria, including information about the customer and the availability and type of agents. This section will describe the intelligent routing technology that enables the universal queue and how it can be used to increase customer satisfaction, increase revenues and reduce costs.

What do we mean by intelligent routing? In order to intelligently route contacts, a contact centre also needs to have CTI capability. Telephone calls and other media cannot be intelligently routed to the agent if they cannot be identified and categorised first. On the most basic level, this could be identifying the customer’s telephone number or email address and routing the contact based on their location.

More sophisticated routing takes place when the contact is identified, either using pure CTI middleware or with the assistance of an IVR or speech recognition front-end, then cross-referenced with the customer database. Once the customer has been identified, the call can be routed using a number of criteria, for example, based on the customer’s value to the company, or more simply an agent with whom the customer has spoken before.

Of course the contact needn’t be a telephone call (it could be an email or an SMS, for example) and it needn’t be routed to an agent (it could be routed to a speech recognition system or an automated email response programme). A true universal queue solution allows all customer contacts to be routed in the most appropriate way. Three main criteria are used to intelligently route a contact:

Media typeDifferent media types have a different priority, for example a telephone call usually needs to be answered before an email.

Customer valueCompanies generally want to reward their better customers with a higher level of service, so a gold cardholder may be given priority over a silver cardholder.

Agent skillsIf the customer is to be served effectively, the enquiry needs to be directed to the most appropriate agent (or self-service system).



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Figure 6 illustrates some typical routing scenarios.

What are the benefits of intelligent routing?

Introducing intelligent routing into a contact centre will require significant investment, so naturally there must be an RoI case in place. There are three main areas in which this occurs:

1. Increased customer satisfactionIntelligently routing contacts means that they are routed to the most appropriate place and can be answered more effectively. This could mean routing a call from a French customer to a French-speaking agent, or it could mean routing a call to an agent that the customer has spoken too before. During peak hours it could mean routing a call to an IVR rather making a customer wait in a queue for 15 minutes. The more effectively and quickly the customer’s request is answered, the more satisfied the customer will be.

2. Cost savingsIntelligent routing makes a contact centre and the broader enterprise more efficient. Efficiency saves money. Routing contacts to the most appropriate agent or self-service system means that customers are more likely to have their questions answered the first time, which reduces both the average length of calls and call back rates.

Figure 6: Intelligent routing criteria

Customervalue

Agentskills

Mediatype

“Gold card Frenchcustomer using webchat with a French-speaking agent”

“Outbound telemarketingagent using telephone tocontact prospect”

“Platinum customerusing IVR to checkbank balance”

Possible criteria used in queuing and routing rules

Customervalue

Agentskills

Mediatype

“Gold card Frenchcustomer using webchat with a French-speaking agent”

“Outbound telemarketingagent using telephone tocontact prospect”

“Platinum customerusing IVR to checkbank balance”

Possible criteria used in queuing and routing rules




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3. Increased revenues through cross- and up-sellIntelligent routing increases customer satisfaction, which itself leads to increased revenues. Routing contacts based on customer value ensures that a company’s best customers receive the best possible service. Routing contacts based on the customer’s likelihood to purchase additional products or services also leads to increased cross- and up-sell activity, vital in industries that are focusing on increasing average revenue per user (ARPU).

Data quality and availability are paramount

Effective intelligent routing is only possible if the contact routing technology has access to the data it needs in order to make routing decisions. There are a number of considerations companies should take into account before installing an intelligent routing solution:

Data quality – it is not worth routing calls based on customer data if that data is not of sufficient quality. Companies must ensure and maintain data quality;

Integration with CRM and other systems – intelligent routing relies upon using data from a number of systems, including the ACD, CRM systems and other back-office systems;

Agents must be supplied with the necessary tools – if agents are to effectively answer customer queries, they must have the right tools and data sources at their disposal. For companies wishing to increase cross- and up-sell activity, agents need to be made aware of potential sales opportunities by popping prompts on totheir screens.

Quality monitoring and workforce management are vital – when intelligent routing is introduced into a contact centre, it is important to track the success of the technology, the effectiveness of the agents and customer satisfaction. In addition, this data can also be used to feed into workforce management and agent scheduling systems.

Datamonitor conclusions

This white paper has described how a coherent multi-channel customer contact strategy combined with an effective customer self-service strategy and applied intelligence leads to customer contact effectiveness. If handled correctly, each contact is an opportunity to build customer relationships and increase profits.

Contact effectiveness transforms the contact centreInvesting in technology that improves contact effectiveness generates significant benefits, both ‘hard’ RoI through increased revenues and reduced costs and the less measurable ‘soft’ benefit of increased customer satisfaction. The contact centre can be the central customer contact point, becoming responsible not just for answering telephone calls but for dealing will all types of media and building customer relationships.

Identifying opportunities through customer serviceA multimedia contact centre that uses intelligent routing is well placed to move from a customer service to a sales role. In many industries today, the main challenges are reducing customer churn and increasing ARPU. It is only possible to achieve these goals if a company exploits every interaction to build relationships with its customers and sell its products and services.



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Moving from service to sales Once the sales opportunities have been identified, routing the contact to the most relevant agent and giving this agent the right tools to do their job means cross- and up-sell rates can be increased. Service enquiries can be turned into sales opportunities, which will lead to increased revenues and more satisfied agents.

From cost centre to profit centre The result of investing in contact effectiveness solutions will be to move customer contact centres from cost centres to revenue generating and profit centres, creating a very clear RoI case.


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