ServiceXRG The Economics of Support Knowledge Management.

ServiceXRGServiceXRG

The Economics of Support Knowledge The Economics of Support Knowledge ManagementManagement

©Copyright 2006 ServiceXRG

About ServiceXRGAbout ServiceXRG

Market research and business consulting firm dedicated to service industry issues

We offer subscription based services, custom research and analysis and topical research reports

Mission to help companies strengthen customer relationships and optimize financial performance through effective service strategies


About our ResearchAbout our Research

A balanced perspective with views from users, vendors and partners

Hundreds of surveys and interviews conducted annually

Performance benchmarking, competitive analysis, trend analysis and demand drivers

Coverage in North America, Europe and China


Knowledge Knowledge Management DefinedManagement Defined

ServiceXRG defines Knowledge Management as the process of capturing, enhancing and reusing the

knowledge and expertise gained from creating, using, and supporting a product.

The output from a Knowledge Management process will enable effective knowledge transfer to customers,

partners and employees through self-service and assisted means.

ServiceXRG defines Knowledge Management as the process of capturing, enhancing and reusing the

knowledge and expertise gained from creating, using, and supporting a product.

The output from a Knowledge Management process will enable effective knowledge transfer to customers,

partners and employees through self-service and assisted means.


Expected Benefits Expected Benefits from from Knowledge ManagementKnowledge Management

3.3

3.5

4.1

4.2

4.3

4.3

4.5

4.5

0 1 2 3 4 5

Reduce Training Time

Reduce Staff

Increase Consistency of Response

Case Deflection

Reduce Service Delivery Costs

Internal Knowledge Transfer

Improve Customer Satisfaction

External Knowledge Transfer

Not Not ImportantImportant

VeryVeryImportantImportant


The Economic RealityThe Economic RealityMeasuring Tangible BenefitMeasuring Tangible Benefit

External Knowledge Transfer

Improve Customer Satisfaction

Internal Knowledge Transfer

Reduce Service Delivery Costs

Case Deflection

Increase Consistency of Response

Reduce Staff

Reduce Training Time

GoalsGoals

What is the measure of What is the measure of success for these success for these

goals?goals?

MetricsMetrics

How do we quantify the How do we quantify the impact of attaining impact of attaining

these goals?these goals?

BenefitsBenefits

How much do we How much do we spend to achieve these spend to achieve these

goals?goals?

CostCost

KM Cost < KM BenefitKM Cost < KM Benefit

Tangible BenefitTangible Benefit

Knowledge Knowledge ManagementManagement

CostsCosts


Knowledge Management Knowledge Management CostsCosts

Knowledge Management Activities Knowledge Creation Knowledge Administration Distribution

Technology & Infrastructure

KM Activities + Technology = KM CostKM Activities + Technology = KM Cost


Allocation of Support Allocation of Support SpendingSpending


Dedicated KM StaffDedicated KM StaffBy Size of the Support OrganizationBy Size of the Support Organization

Small Medium Large

Size of the Support DepartmentSize of the Support Department

KM

Tea

m a

s a

%

KM

Tea

m a

s a

%

of

To

tal

Sta

ffo

f T

ota

l S

taff

Industry Average8.4%

♦


The Cost of Dedicated KM The Cost of Dedicated KM StaffStaffAs a percent of the total support budgetAs a percent of the total support budget

Cost of Dedicated KM Support Staff

Support SpendingSupport Spending


The Cost of KM ContributionsThe Cost of KM ContributionsAs a percent of the total support budgetAs a percent of the total support budget

Support Staff Contribution Costs

Cost of Dedicated KM Support Staff

KM Cost = 17% of Support SpendingKM Cost = 17% of Support Spending

Knowledge Knowledge ManagementManagement

ImpactImpact


Measurable Impact of Measurable Impact of KMKM

Revenue Impact Retain profitable relationships

Efficiency Increase service capacity

Prevention Minimize need for live assistance

Retention + Efficiency + Prevention = KM BenefitRetention + Efficiency + Prevention = KM Benefit

Revenue Impact Revenue Impact through Retentionthrough Retention


The KM – Retention The KM – Retention Connection Connection

Increase the value of the support relationship

Address service quality issues Enhance customer satisfaction


Factors that Influence Customer Factors that Influence Customer SatisfactionSatisfaction

Timeliness

89% of customers that received a solution at first contact were satisfied

69% of customers that received a solution in 5 or more days were dissatisfied

Effectiveness

89% of customers that received a solution that completely resolved their issue were satisfied.

81% of customers that received a partial or ineffective solution were dissatisfied.

Source: 2006 User Perceptions of Support


Implications of a Satisfied Implications of a Satisfied CustomerCustomer

Repurchase Repurchase 96%96% of satisfied customers plan to buy additional productsbuy additional products,

72%72% of dissatisfied customers will not

RenewRenew 88%88% of satisfied customers plan to renew their support renew their support

contractcontract

85%85% of dissatisfied customers will not

ReferRefer 99%99% of satisfied customers are willing to recommend you to recommend you to

othersothers

78%78% of customers with a negative experience will not


RetentionRetentionOpportunityOpportunity: Reduce Customer Attrition: Reduce Customer Attrition

Percent of Customers Under ContractPercent of Customers Under Contract

Renewal Rate = 90%Renewal Rate = 90%

Renewal Rate = 82.4%Renewal Rate = 82.4%


Retention Retention OpportunityOpportunity: Influence Contract Renewal: Influence Contract Renewal

Increase in RevenueIncrease in Revenue

Renewal Rate Increase = 1%Renewal Rate Increase = 1%

Renewal Rate Increase = 5%Renewal Rate Increase = 5%

Renewal Rate Increase = 2.5%Renewal Rate Increase = 2.5%

Impact on EfficiencyImpact on Efficiency


The KM – Efficiency The KM – Efficiency ConnectionConnection

Increase first contact closure rate Reduce repeat calls / duplicate

cases Reduced time to transfer

knowledge (talk time)


First Contact Closure First Contact Closure RatesRatesIndustry AverageIndustry Average

65.7%

40.5%

53.1%

0%

20%

40%

60%

80%

Phone Electronic All Channels

Fir

st

Co

nta

ct

Clo

su

re R

ate

Fir

st

Co

nta

ct

Clo

su

re R

ate

Service Delivery ChannelService Delivery Channel


Service Delivery Costs vs. Service Delivery Costs vs. Time to ResolveTime to Resolve

Time to Resolve a Service RequestTime to Resolve a Service Request

Co

st t

o R

es

olv

e a

Ser

vic

e R

eq

ue

st

Co

st t

o R

es

olv

e a

Ser

vic

e R

eq

ue

st

First Contact

Multiple Days

Low

High

First Contact $49

First Contact First Contact $49$49

10+ Days> $300

10+ Days10+ Days> $300> $300

24 Hours$61

24 Hours24 Hours$61$61

2 Days$155

2 Days2 Days$155$155


KM Impact on EfficiencyKM Impact on Efficiency

Cost Reduction Cost Reduction Opportunity Opportunity InputInput KM KM

ImpactImpact ResultResult How How EfficiencyEfficiency

First Contact Close Rate 53% +25% 66%Immediate access to the right answer

16.8%

Net Efficiency Increase 16.8%






16.8%

DeflectionProvide access to information to prevent need for live assistance

Net Efficiency Increase


Deflection DefinedDeflection Defined

Users that are Entitled to Request Live Assistance

Users that Intend to Seek Live Assistance

Successful Self-Service Transactions

No Further Action

Required

Intent * Entitlement * Success * No Further Action


DeflectionDeflectionReported RatesReported Rates

23.4%

40.2%

0%

10%

20%

30%

40%

50%

Industry Reported Customer Reported






16.8%

DeflectionProvide access to information to prevent need for live assistance

23.4%

Net Efficiency Increase 40.2%

The Economics of The Economics of Knowledge Knowledge

Management Management


KM Cost / BenefitKM Cost / Benefit

KM Benefit KM Benefit Potential ImpactPotential Impact The Role of KM The Role of KM

Revenue Impact 1.9% to 9.7% IncreaseValue of Knowledge Management and/or impact on customer satisfaction results in increase in renewal rate

Efficiency 16.8% increase in case handling capacity

Increase in first call resolution, reduction of repeat calls, and shorter talk time

Prevention 23.4% increase in case handling capacity

Proactively pushing and/or providing customer access to relevant content

KM Cost KM Cost Potential CostPotential Cost DescriptionDescription

Cost 6.5% of support spending FTE Dedicated KM Staff

Efficiency 10.5% of Support spendingAllocation of support staff time to Knowledge Management activities

17% of support spending = 40% increase in support 17% of support spending = 40% increase in support efficiency + revenue potentialefficiency + revenue potential


Measure, Measure, Measure, Measure, MeasureMeasure

KM benefits must be expressed as increased capacity or true reduction in costs

Measurement is difficult but necessary Building the cost/benefit analysis is only

the first step Optimization of KM effectiveness is

critical to achieve maximum benefit


Optimization the Key to Optimization the Key to Maximum KM ROIMaximum KM ROI

Monitor the gap between topic coverage and topic demand

Allocate KM resources to the highest value topics

Set and achieve KM service levels Track adoption use and

effectiveness of content

ServiceXRG The Economics of Support Knowledge Management.

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