Proactive Customer Care Product and Market Report Reprint...Proactive customer care is an activity...

Proactive Customer Care Product and Market Report

Reprint

Reprinted for:

- i - © DMG Consulting LLC

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Table of Contents

1. Introduction ................................................................................................ 1 2. Proactive Customer Care ........................................................................... 2 2.1 Proactive Customer Care Defined .............................................................. 3 2.2 Proactive Customer Care Benefits ............................................................. 4 3. PCC Use Cases ......................................................................................... 5 3.1 PCC Return on Investment ........................................................................ 9 4. Proactive Customer Care Trends ............................................................... 9 4.1 Proactive Customer Care Challenges ...................................................... 11 About CSG International ..................................................................................... 13 About DMG Consulting LLC ................................................................................ 13

- 1 - © DMG Consulting LLC

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1. Introduction

In 2003, when the Federal Trade Commission (FTC) implemented legislation to prevent companies from “blind dialing,” many pundits thought it marked the end of the outbound dialing market. The new regulations served a valuable purpose in preventing companies from annoying customers and prospects with uninvited phone calls for products and services that were of little interest or value to them. At the same time, it created new opportunities for companies by forcing them to figure out how to communicate more effectively with customers who wanted to hear from them. It took a couple of years, but a few resourceful companies realized that they could enhance relationships with their customers by issuing automated communications that their customers would be willing to sign up for. These communications were intended either to decrease operating costs by reducing the volume of inbound calls and emails, or to increase revenue by issuing targeted notifications via outbound self-service applications. All of these solutions started out as outbound interactive voice response (IVR) applications, but in the last two years innovative vendors have expanded their applications to utilize additional communications channels such as email, short message service (SMS), fax, mobile and, most recently, social media. The Outbound Market Matures Outbound solutions and vendors have matured rapidly in the last three years, driven by strong demand from public and private institutions that keep coming up with new uses for these applications. As the uses expand, so do the functional capabilities and target market for these solutions. This IT sector has evolved from outbound notification applications (or blasters) to proactive customer care solutions that engage customers. Proactive customer care is increasingly being used to enhance the customer experience, and is moving from a one-off activity to become an integrated component of the enterprise customer experience strategy. Vendors are now building PCC solutions that span the entire customer lifecycle, broadening the impact to multiple functional areas of the business. The PCC Competitive Landscape As a result of the early success of this sector, many vendors have entered the PCC market. This IT sector is now highly competitive, with over 50 vendors. The vendors fall into six main categories: stand-alone hosted PCC vendors, premise-based


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dialing vendors, hosted contact center infrastructure vendors, premise-based IVR vendors, hosted IVR vendors, and carriers/network service providers. DMG expects to see significant consolidation in this IT sector in the next two years as vendors make acquisitions to expand their functionality, vertical specialization and geographical reach. Innovation Drives Value and Benefits While PCC solutions, by definition, serve a limited but critically important function – engaging customers – we expect to see continued innovation in this IT sector during the next two years. The innovation will come in the form of enhanced and more functionally rich packaged and vertical applications, improvements in ease of implementation and use, better self-service environments for users, improved reporting, and the addition of new channels. These practical enhancements will increase the value of PCC to consumers and the companies they do business with. It’s Time to Invest in PCC Proactive customer care is an activity that can benefit organizations of all sizes, from the smallest to the largest, in almost every known vertical. It is a highly cost-effective method for engaging customers and prospects. These solutions, which are available on a hosted, managed service or on-premise basis, are easy to acquire and have a rapid return on investment. While the value of PCC solutions is high, it’s essential to find the right solution and partner.

2. Proactive Customer Care

Proactive customer care is an exciting concept that, when done properly, delivers benefits to both enterprises and their customers. Customers want to hear from preferred retailers, healthcare providers, airlines, delivery companies, etc., as long as they consider the communicated information beneficial. The challenge for businesses and other organizations is to create useful communications that their customers welcome, and to deliver these messages in each customer’s channel of choice – phone, email, SMS, fax, social media (including Facebook and Twitter) and, in the future, video.


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2.1 Proactive Customer Care Defined

Proactive customer care is a business strategy that makes consumers’, partners’, constituents’ or employees’ lives better and easier by addressing issues before a problem or a need arises. Organizations that adopt a PCC strategy identify and address customer needs proactively by sending messages or other communications to customers and other interested parties at appropriate times. See Figure 1. Figure 1: Proactive Customer Care Defined

Source: DMG Consulting LLC, July 2011 The concept of PCC is not new. Organizations have been making welcome calls for years. For as long as there have been credit cards, fraud departments have been calling out to customers to notify them of potential problems with their accounts. High-end department stores have been calling their big spenders to notify them of sales. Companies have performed these activities because they have proven highly beneficial in building customer relationships and increasing revenue. But it also turns out that proactive customer care is a highly effective way of reducing operating costs while increasing customer allegiance and loyalty. Customers are grateful to learn when their airplane is delayed or they are due for a prescription refill, particularly if this information is shared in a manner that is convenient and not overly intrusive. Keeping customers informed can greatly reduce servicing costs and unexpected surges in call volume. Assuming that it costs $5 to $25 for a typical


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inbound customer service call or email, and less than $0.05 for a typical outbound interaction, it’s impossible to argue with the math.

2.2 Proactive Customer Care Benefits

Public, private, government and all types of organizations are finding highly beneficial uses for proactive customer care solutions. Enterprises have found PCC to be a useful way to improve the customer experience, build loyalty and reduce operating expenses. At the same time, properly targeted enterprise customers find that PCC is a great way to reduce non-productive time. Private institutions use PCC to notify members of institutional activities in order to increase the effectiveness of fundraising campaigns. Federal, state and local government organizations are using PCC for everything from notifying their constituents about road closures and real-time traffic disruptions to school closings and catastrophic weather alerts. The result is better-informed constituents who see their tax dollars at work. See Figure 2. Figure 2: Uses and Benefits of Proactive Customer Care

Source: DMG Consulting LLC, July 2011


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Proactive customer care provides many benefits to consumers, partners, constituents, etc. It also makes significant contributions to enterprises, contact centers and agents. Benefits to contact center agents are achieved by automating high-volume, low-value interactions, leaving agents free for calls that make greater use of their skills. For example, applications that allow customers to identify credit card transactions as authentic free up time for agents to handle actual fraudulent transactions. This increases agent morale and job satisfaction. Because many routine issues are handled automatically, the volume of complaint calls decreases, also boosting agent morale. The contact center operation benefits from focusing high-value agents on high-value customer interactions. The low cost per automated interaction drives both cost savings and ability to scale. For applications such as the insurance claims process, proactive notifications of updates help set customer expectations and reduce inbound calls. Contact centers can more appropriately staff agents because PCC solutions are able to manage the volume of inbound calls by throttling outbound notifications. Applications that drive increased revenue, such as payments and collections and trading alerts, help turn the contact center from a cost center into a profit center. The enterprise benefits from increased customer retention and loyalty as a result of an enhanced customer experience. Greater customer intimacy results in increased likelihood that customers will recommend, driving customer acquisition. Anticipation of interacting with the enterprise serves to increase brand awareness and invites further engagement with customers. The enterprise benefits from the customer insights derived from observation of customer preferences and responses to outbound communications. Enterprises further benefit from improved financial metrics such as cash flow and reduction in late payments, and increased revenue (e.g., from increased prescription refill rates).

3. PCC Use Cases

Proactive customer care improves customer satisfaction while reducing operating costs. It also helps reduce the volume of low-value calls to contact centers and increases revenue by improving appointment adherence. When businesses deliver automated appointment reminders, for example, it is a great service to customers and dramatically reduces the number of missed appointments. Companies that notify customers about scheduled deliveries and claims status help set realistic expectations and reduce worry. Notification of unusual spending activity is another high-value communication that protects a cardholder’s credit while reducing fraud losses. Customers see these proactive notifications and alerts as outstanding service that builds loyalty. Figure 3 includes common customer service-oriented uses of PCC.


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Figure 3: Customer Service Uses of PCC Industry Example Uses Financial Services - Unusual card activity

- Payments due/scheduled/received

- Collections

- Approaching limits (credit limit, checking account balance)

- New cards, checks shipped, card activation

Telecommunications - Approaching contract limits (minutes, text messages)

- Eligibility for upgrade

- Availability of statements

- Automated payments processed

- Balance due

Travel - Notification of changes/delays

- Gate changes

- Flight check-in

- Lost baggage

- Reminders of hotel/car reservation

Healthcare - Appointment reminders

- Appointment changes

- Prescription refill reminders

- Prescriptions ready for pick-up

- Claim processing notifications

Retail - Welcome calls

- Order confirmations

- Shipment/delivery notifications

- Eligibility for loyalty rewards

- Sales promotions

- Birthday wishes

Manufacturing - Product registrations

- Product recalls

- Warranty extensions



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Marketing Uses Marketing organizations should actively use PCC to increase customer loyalty and generate incremental revenue by delivering targeted and personalized information that improves the lives of their customers. A growing number of retailers are using PCC to subtly up-sell products and services that are intended to make people healthier, for example. Other retailers use PCC to sell additional products associated with recent purchases. Still others use PCC to improve customer retention through loyalty programs. When companies build an enterprise PCC strategy that encompasses all customer-facing organizations, there is significant and beneficial synergy between the customer service and marketing uses of PCC. Figure 4 lists common marketing uses of PCC. Figure 4: Marketing Uses of PCC Industry Example Uses Financial Services - Introduction to personal account manager

- Introduction to local branch staff

- Alerts regarding new products and services

- Wealth management offers

Telecommunications - Reminders when customers are due for a new phone

- Program upgrades

- Additional services

Travel - Fare sales

- Packaged vacation offers

- Reward redemption offers

- Last-minute fare reductions

- Helpful travel hints

- Country warnings (for travelers to different regions of the world)

Healthcare - Healthcare hints and tips

- Encouragement for people trying to break a habit, such as smoking

- Offers to reorder a prescription or OTC medication

- Reminders to schedule screenings

- Reminders to people participating in a drug trial

Retail - Loyalty program offers


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Figure 4: Marketing Uses of PCC Industry Example Uses

- Subscription renewals

- Mobile coupons

- Notifications of sales on favorite products

Manufacturing - Warranty renewals

- Product delivery reminders

- Repair dispatch appointments

General - Welcome calls

- Store opening calls

- Special occasion calls

- Customer surveys

Source: DMG Consulting LLC, July 2011 Public Service Uses Federal, state and local governments and regulatory organizations are finding many uses for PCC. Outbound PCC servers enable these organizations to deliver large volumes of notifications in a short time to keep the public informed. Examples of public uses include notification of road closures, emergency procedures, schedule for fireworks, alerts about fugitives, etc. PCC is being used to build relationships with constituents, something the government has always struggled to do. Public service uses of PCC include: emergency notifications, school closings, power and other service outages, catastrophic weather alerts, amber alerts, traffic congestion, political campaign calls, and election reminders and polling locations.


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3.1 PCC Return on Investment

Aside from the benefits derived through increased customer engagement and loyalty, one of the principal benefits of proactive customer care solutions is the reduction of costs within the service organization or support group. Outbound notifications reduce the volume of inbound calls, and allow customers to automatically interact with an IVR to change or cancel appointments, thereby reducing the volume of low-value inbound calls. There is therefore a strong financial justification for investing in PCC solutions, because of their quantifiable benefits. For the six vendors included in this Report, the payback period for proactive customer care solutions varies from a few days or weeks to twelve months, depending upon many factors, including the scale and complexity of the implementation. The most typical ROI reflected by the six leading PCC vendors covered in-depth in this Report is approximately 3 months. When calculating the ROI it’s important to take into consideration many factors, including the cost of the software and services, reduction in call volume and operating costs, incremental revenue and other company-specific quantifiable benefits. Other cost considerations are the resources required during the implementation period, the cost of building a customer opt-in and preference Web portal, etc. The point is that the ROI model should reflect all the costs and benefits of building, implementing and operating a PCC solution.

4. Proactive Customer Care Trends

The move to interactive PCC solutions is leading enterprises to consider PCC as part of a larger customer engagement program. As a result, a growing number of vendors now offer PCC solutions with consumer-facing Web portals that allow consumers to set their personal preferences for contact channels and windows. Consumer willingness to respond to personalized self-service interactions is encouraging enterprises to push PCC beyond its initial purpose of notifications and alerts and to focus on revenue generation. DMG expects revenue generation to become the “new frontier” for PCC during the next two years. Demand for low-risk implementations that can be rolled out quickly has driven vendors to develop hosted, packaged PCC solutions. Many of the PCC vendors concentrate on delivering PCC solutions with a focus on specific industry verticals. To date, the proactive customer care market has been dominated by hosted (cloud-based) IVR vendors. However, DMG is seeing a change as a growing number of premise-based IVR and dialing providers are now offering vertical-independent PCC solutions.


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Figure 5 provides a list of the 2011 – 2012 trends for proactive customer care vendors and users. Figure 5: Proactive Customer Care Trends



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4.1 Proactive Customer Care Challenges

Proactive customer care is currently a tactical rather than strategic initiative, as indicated by the role and location of buyers within the enterprise. To date, proactive customer care has been implemented primarily as separate projects by different enterprise business units, such as collections or customer service. It’s also used by organizations to send alerts and notifications for everything from school and road closings to warnings about a gunman on a college campus. The proactive customer care market has grown more by default than due to business plan. Its benefits are so compelling and the solutions easy enough to use that organizations of all types try these solutions and keep on using them. However, the competitors need to improve the effectiveness of their messaging and communication about the uses and benefits of PCC in order to increase organization-wide adoption and turn PCC into a “need to have” and not simply a “nice to have” solution. Vendors are releasing industry-specific PCC solutions that can have a positive impact on the entire customer lifecycle. Enterprises should consider how PCC fits into their customer relationship management or customer experience management strategy. Enterprises that have a centralized customer champion (e.g., Chief Customer Officer, VP Customer Experience) should consider having PCC managed by this customer-centric function. As enterprise customers gain more experience and comfort with implementations of proactive customer care solutions, they will demand more control over the use of these solutions than is currently available from most vendors. As a result, DMG recommends that vendors create easy-to-use self-service environments, and continue to deliver packaged applications that span the entire customer lifecycle. There is a huge opportunity and little current PCC deployment outside North America. PCC vendors should look to expand outside of North America through partnerships, by opening offices outside the US, and possibly by making acquisitions. As is typically the case, initial penetration outside of North America will accommodate the needs of multi-national accounts that are managed in the US. But while adoption outside of North America can be sped up with strategic initiatives, vendors are cautioned to address regional differences as they look to establish themselves abroad. DMG also cautions that not all geographies will be welcoming of PCC. Figure 6 provides a list of challenges that are expected to face proactive customer care vendors and users in 2011 and 2012.


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Figure 6: Proactive Customer Care Challenges



About CSG International

CSG Systems International, Inc. (NASDAQ: CSGS) is a market-leading business support

solutions and services company serving the majority of the top 100 global communications

service providers, including leaders in fixed, mobile and next-generation networks such as AT&T,

Comcast, DISH Network, France Telecom, MasterCard, Orange, T-Mobile, Telefonica, Time

Warner Cable, Vodafone, Vivo and Verizon. With over 25 years of experience and expertise in

voice, video, data and content services, CSG International offers a broad portfolio of licensed and

Software-as-a-Service (SaaS)-based products and solutions that help clients compete more

effectively, improve business operations and deliver a more impactful customer experience

across a variety of touch points. For more information, visit our website at www.csgi.com.

About DMG Consulting LLC

DMG Consulting is the leading provider of contact center and analytics research, market analysis

and consulting services. DMG’s mission is to help end users build world-class, differentiated

contact centers and to assist vendors in developing high-value solutions for the market. DMG

devotes more than 10,000 hours annually to researching various segments of the contact center

market, including vendors, solutions, technologies, best practices, and the benefits and ROI for

end users. Our research covers Hosted Contact Center Infrastructure, Hosted/Managed Service

IVR, Quality Management/Liability Recording (Workforce Optimization), Speech Analytics,

Surveying/Enterprise Feedback Management, Contact Center Performance Management,

Workforce Management, and Contact Center Analytics. DMG is an independent firm that provides

information and consulting services to contact center management, the financial and investment

community, and vendors in the market.

This reprint is excerpted from the 2011 Proactive Customer Care Product and Market Report,

which was released in July 2011 with the permission of DMG Consulting LLC. More information

about this Report and DMG Consulting is available at www.dmgconsult.com.

http://ir.csgsystems.com/phoenix.zhtml?c=113558&p=irol-irhome

http://www.csgi.com/

http://www.dmgconsult.com/

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