Unlocking customer advocacy in retail banking...Unlocking customer advocacy in retail banking...

Unlocking customer advocacy in retail banking

IBM Global Business Services

Customer Relationship Management

The customer focused enterprise

1


IntroductionWe consistently hear banks touting their

commitment to being customer friendly and

going the extra mile for their customers.

Accordingly, branches are once again in

vogue, and executives have declared that

improving the customer experience is the

priority for the organization. As mergers and

acquisitions become less attractive, leading

financial institutions look increasingly to their

existing customer base for growth. Critical

organic growth measures – cross-sell, retention

and new customer acquisition – dominate

nearly every retail bank’s agenda. However,

many banks have yet to identify the right

mix of customers, marketing and sales

programs, employee incentives, and process

and technology improvements to produce

higher returns. Despite significant investment,

the largest banks are not well positioned

for organic growth: our research shows the

majority of customers will be reluctant to

commit to a deeper relationship as a conse-

quence of their prior cumulative experience

with the bank.

In order for banks to fully achieve the benefits

from organic growth, bank executives need

to understand customer attitude and its

impact on customer behavior. Customers who

have a positive attitude toward the bank are

advocates, while those whose experiences

shape negative opinions become antagonists.

As such, a bank’s ability to effectively manage

and influence customer attitude becomes

paramount to achieving organic growth.

The customer focused enterprise

If banks are not aware of customers’ attitudes toward their organizations

– and the impact these perceptions have on financial performance – they

may be counting on organic growth that simply will not materialize.

But by identifying which customers are advocates, apathetics and

antagonists, banks can more precisely target customer experience

improvement initiatives based on a more informed understanding of

customer preferences and future value. To boost the bottom line, we

believe banks must increase focus on customer attitude.


2 IBM Global Business Services

In this study, we establish the link between

advocacy and higher profitability, respon-

siveness and trust and explore three critical

questions:

• Are banks fully positioned to grow organi-

cally?

• Can a focus on improving advocacy unlock

growth potential?

• How can banks capture the opportunity?

Identifying bank customers who can be

converted into advocates must be a tenet of

any customer focused organic growth strategy.

To move customers into advocate-level rela-

tionships, the customer experience must be

well understood, continuously monitored and

proactively managed. We believe that banks

that effectively improve operations to align with

the desired customer experience can create a

new and sustainable competitive advantage.


About the research

The goal of this study was to understand customers’ perceptions of their primary bank’s

performance based on their ranking of key attributes of what we’re calling the customer focused

enterprise (CFE). North American banks were classified into four tiers based on asset level: National,

Regional, Community and Credit Unions.

This quantitative research builds on the IBM customer focused enterprise study completed in

April 2006.1 Over 3000 US banking consumers were surveyed via telephone and the Internet. The

questionnaire consisted of 25 questions about interviewees’ perception of CFE operational character-

istics as they pertained to their primary bank, as well as their purchase intentions and some general

financial services profiling questions.

Customers were classified into advocacy segments based on their answers to three questions: those

who would recommend their bank, would go to their bank first for a new financial services need and

would not switch if offered a competitive product. Advocates, the top tier, have a high likelihood to

recommend, high purchase intent and low switching intent; Apathetics comprise the middle tier, and

antagonistic customers are the lowest tier.

To measure customers’ perception of bank performance, we asked customers to rate their

primary bank on a number of rational and emotive CFE attributes. The rational attributes evaluated

customers’ perception of their physical interactions with the bank and included statements such

as, my bank corrects errors when they occur, my bank uses the information it already has received

from me rather than asking for me to provide it repeatedly, my bank gives me plenty of ways to

bank with them, including in person, on the phone or online. The emotive statements sought to

understand how customers felt toward their bank, and included statements such as: my bank values

my business, my bank understands my financial goals, my bank weighs both sides of the issue when

I have a problem and resolves it fairly.

Workshops were held with a team of senior IBM Financial Services and CRM consultants along

with statistical analysts to review the research findings and develop recommendations for banking

operations.

This study is a continuation of the IBM “CRM Done Right” series, following 2004’s “CRM done right:

Executive handbook for realizing the value of CRM” and the 2006 executive handbook, “Advocacy in

the customer focused enterprise.” 2

3 Unlocking customer advocacy in retail banking

Are banks fully positioned to grow organically?

Traditional competitive levers are nearing exhaustion

Merger and acquisition activity among the

largest players has reached regulatory and

operational limitations. In the U.S. market,

Bank of America’s acquisition of Fleet

Financial puts the bank near the govern-

ment’s limitation that no bank may hold

more than 10 percent of total outstanding

deposits – forcing the bank to look into loan

portfolios domestically (its acquisition of

MBNA is a prime example) and internation-

ally (i.e., its investment in China Construction

Bank) for net new acquisitions.3 Other banks

have reached operational limitations on their

growth trajectory, leading banks to explore

other growth levers such as new product

development and new distribution channels/

partners.

However, with the exception of minor

changes to pricing and terms, little has

changed in the landscape of financial

solutions available to customers. The

majority of product “features” present in

checking, savings, credit and loan products

when they were introduced decades ago

are largely still intact today. Additionally,

banks have sought to derive new sources

of revenue from existing products by

establishing what have become known by

consumers as “nuisance fees.” However,

customers have become sensitive to these

fees; our study showed that 47 percent of

customers agreed that their bank’s fees are

too high. The increase in fees, coupled with

little new product innovation, has affected

customers’ perceptions of banks.

“They just keep adding and adding (fees)

and giving nothing in return”

– Bank customer, IBM survey

The impact of fee income is compounded

by the fact that banks are facing pressure

from wealth management and brokerage

firms that have introduced cash manage-

ment products to attract consumers seeking

a greater breadth of financial services. With

demographic shifts in the United States,

most notably the increase in baby boomer

retirement, the threat of assets walking out

the back door is reality today.

Finally, cost containment efforts made in

the “name of the customer” have had little

impact on differentiating the customer

experience. Many banks have dramati-

cally improved operating efficiency, but lost

connections with their customers. Banks

continue to invest in call center consolida-

tions, channel integration and customer

service improvements, but we see little

improvement in customers’ attitudes and

perceptions of service capabilities. In fact,

other studies indicate that large banks’

customer satisfaction rates are 15 percent

below the scores of other leading companies.4

Unlocking customer advocacy in retail bankingThe customer focused enterprise

Growth through M&A

has legal and practical

limits, but organic

growth is proving just

as challenging.


An outside perspective

By Susan Fournier, Associate Professor, Marketing, Boston University School of Management

This research is a must read for anyone that is serious about becoming a “customer focused” firm. It deals

with a timely metric (advocacy, supposedly “the one number that matters”) in a powerful marketing paradigm

(relationship marketing and CRM) and explores this within a customer-facing service industry (retail banking)

that faces significant imperatives for organic growth.

IBM’s study fine-tunes and advances our understanding of the real content and process issues that are at play

in the pursuit of strong customer relationships. It sensitizes us to the emotional and experiential elements that

truly drive the quality of customer relationships, but on which most firms do not perform. The research refines

our understanding of “advocacy” and the attitudes and behaviors that comprise it. There is much added value

in IBM’s three-part advocacy model: wherein advocates are those not only willing to recommend the brand to

others, but who also stick with the brand in the face of competition, and consider cross-selling opportunities to

boot. Companies can get greater predictive and diagnostic power from this more complex attitude-plus-behavior

metric and the segmentation schemes that derive from it. All of this is guaranteed to improve the relationship

strategies and executions that retail banks develop for their brands.

Perhaps most importantly, IBM’s research makes us ponder a very perplexing conundrum: how could so many

banking service providers re-brand, re-engineer, strategize and act in the service of enhancing consumers’

relationships … and yet get it so very, very wrong? The results are striking: nearly 50 percent of customers of

national banks have antagonistic relationships with their banks. Let me repeat: one out of every two customers

harbors an adversarial relationship with their retail banking brand! These customers are not simply disinter-

ested in developing deeper relationships with their banks. They are not simply non-responsive to the outreach

and relationship-expanding efforts of the firm. These consumers harbor very deep and strong negative feelings

toward their banks; they essentially find fault in everything that bank might do. These current customers see

their banks as opportunistic, self-interested parties looking only out for themselves. And this despite service

experience initiatives, CRM systems, and relationship programs intended to strengthen partnerships between

customers and the brand.

I for one am looking forward to future extensions of this research into other industries and settings. I am

particularly excited by the prospect of moving beyond our fixation with leveraging advocates on the positive

side of the relationship continuum and learning to deal effectively with the “disengaged” and “antagonists” that

this research identifies as significant customer segments for the firm. Current wisdom suggests we fire “high-

cost-to-serve” customers such as these. But with upwards of 70 percent of your customer base in these two

segments, this hardly seems a viable alternative for the firm.


Becoming a customer focused enterprise

Banks continue to explore how to create more

meaningful customer experiences to enhance

their customers’ opinions of their bank.

However, for banks, creating both mean-

ingful and profitable customer experiences

is a significant challenge, particularly given

the typical volume of customer interactions.

Based on the IBM study completed earlier

this year, “Advocacy in the customer focused

enterprise: The next generation of CRM Done

Right,” a new approach has been developed

for delivering customer experiences – one

that enhances customers’ perceptions and

builds a competitively superior experience,

while prioritizing resources and invest-

ments.5

IBM calls companies that excel in

the customer experience arena “customer

focused enterprises” (see Figure 1).

This framework – in combination with

advocacy scores discussed in the following

paragraph – is critical in structuring customer

relationship management improvements.

Unlocking customer advocacy: The IBM Customer Focused Insight Quotient (CFiq)TM

A commitment to the customer experience is

the foundation of an effective organic growth

strategy. To move from a customer strategy

focused on efficiency to one that creates

an effective, mutually beneficial relationship

between bank and customer, we believe

bank executives need to adopt a new view of

customer attitude. Traditional customer satis-

faction measures result in a historical view of

customer attitude and are not credible sources

for making decisions on the potential for

customers to create value in the future.

FIGURE 1.

The six characteristics of a customer focused enterprise.

Source: IBM Global Business Services.

Solution experience

Human performance

Customer focused

organization

Integrated execution

Customer dialog

Customer authority

Companies who understand customer authority are able to approach their customers in ways that build advocacy through understanding their customers’ perspectives, while simultaneously linking the value of the customer to the enterprise.

Customer dialog is a business’ ability to communicate and transact with customers intelligently and responsively during each interaction on a customer-by-customer basis.

Integrated execution allows companies to integrate channels to support a consistent experience, and allow intelligent, cross-channel execution of customer interactions.

Solution experience is about understanding the impact that products and services have on the overall customer experience. By solution, we refer to products and services that address broader customer needs and desires.

Customer focused companies commit to a human performance approach to growing and sustaining employee commitment that allows employees to better meet personal and organizational objectives, all while better serving the customer and being a stronger customer advocate.

Customer focused companies should transform the organization so that functional groups and lines of business collaborate to fulfill customer-centric strategies and initiatives.

Most customer

satisfaction measures

look back; customer

attitude measures like

CFiq look forward.


Our study tests different attitudinal state-

ments in an effort to identify which attributes

contribute to positive customer behavior

patterns. Accordingly, through statistical

regression analysis techniques, we derived

a combined measure that captures key

indicators of customer relationship health:

customers’ likelihood to recommend, their

intent to purchase and their willingness to

stick with the bank even when confronted with

competitive offers. Termed the IBM Customer

Focused Insight Quotient (CFiq), this measure

captures and integrates these attributes

by asking customers to state their level of

agreement with three simple statements:

• I would recommend my bank to friends and

family

• I would go to my bank first for future

financial services needs

• I would stick with my bank if offered a

competitively priced product.

The CFiq results are eye-opening – according

to this measure, only 24 percent of U.S.

banking consumers are advocates of their

bank (see Figure 2).

What’s more telling is that the smaller

players, such as credit unions and

community banks, have a higher propor-

tion of advocates than the national and

regional banks when segmented by CFiq

scores. Thirty-six percent of all credit union

customers and 30 percent of community

bank customers are advocates of their

bank – 50 percent higher than customers

of regional and national banks (23 and 22

percent, respectively).

While most banks are looking to organic

levers as the primary mechanisms for

growth, the largest banks – by our estimates

– are disadvantaged in achieving sustained

organic growth, despite advances in

customer management capabilities.

FIGURE 2.

Banks are disadvantaged in achieving organic growth.

n=1615 customers Source: IBM Customer Focused Enterprise Retail Banking Study 2006.

Advocates = customers who would:1. Recommend their bank to others 2. Look to their bank for future financial services products 3. Stay with their bank if offered competitive products

Less than one quarter of all U.S. bank customers are “advocates” of their bank...

24% Advocates

76% All others

...the largest national players face the most difficult organic growth challenge related to advocacy

Credit Unions

Community Regional

36%

30%

23% 22%

National

Percent of customer base who are advocates by bank segment

Percent of all U.S. bank customers who are advocates


For example, consider a bank with 1 million

retail customers, each of which holds

two products. If we assume the income

generated by each product is US$250

per year, the bank currently produces

US$500 million in income. Without a view

of customer advocacy, bank executives

may believe they can increase the overall

products per customer of their base by 15

percent over the next few years. Applied to

a base of 1 million customers, that would

net additional income of US$75 million

annually and result in 2.3 products held per

customer. Using the CFiq to segment this

group, we find that, in reality, only 24 percent

of the bank’s customers are advocates, 39

percent are apathetics and 37 percent are

antagonists. Conservatively, let us assume

that advocates can be convinced to hold

2.5 products, apathetics 2.2 products, and

antagonists reduce their holdings to 1.9

products. The resulting impact on income

from the same 1 million customers, with a

view of advocacy, is only US$35 million,

or less than half of the original estimate.

Extrapolating this number to large banks

with 10 million customers would net a

potential US$400 million in erroneous

annual income assumptions.

Therefore, as banks continue to explore

traditional organic growth levers, the

business case for growth initiatives should

include a realistic view of the potential

economic value (modified by the CFiq)

attainable by moving those levers on a

bank-by-bank basis.

Can a focus on improving advocacy unlock growth potential?

The possibilities are tremendous

Although the challenge appears daunting,

with an understanding of the critical drivers

of customer attitude and the economic

potential associated with improving those

factors, banks can begin to position the orga-

nization to realize organic growth potential.

Our study shows that advocates, on

average, hold 14 percent more products

than antagonistic customers, and the profit-

ability of products held by advocates is 21

percent higher (see Figure 3).

FIGURE 3.

Banks have the potential to unlock significant value by proactively growing their share of advocates.


Financial impact

Antagonists Advocates

1.90

2.17

Products per customer

3%

52%

17%

83%

73.1

88.3

Profitability of products held (index)

21%+

Responsiveness to offers

5x

Trust their bank

17x

14%+

Antagonists Antagonists Antagonists AdvocatesAdvocatesAdvocates

Underlying contributors


The factors that contribute to this economic

value are also interesting. Customers who are

advocates of their bank are five times as likely

to be responsive to offers and communica-

tions, and over 17 times as likely to trust their

bank. Further, application of the CFiq shows

that only 26 percent of advocates believe that

their bank’s fees are too high, as compared

with a whopping 80 percent of antagonists.

Indeed, as banks look to drive organic growth,

determining how to move customers to a state

of advocacy should be paramount for banking

executives.

Although community banks and credit unions

significantly outperform larger banks in terms

of proportion of advocates, the profile of the

advocates of both small and large banks

is similar. Advocates respond positively to

questions about their experience with the

bank (e.g., seeks my input to develop new

products and services, creates customized

offers), whether they bank with community

banks or national banks. So, as banks

assess the best way to grow organically,

understanding what motivates and drives

behavior among different advocacy levels,

and then executing the right set of strategies

to increase advocacy, will likely prove a viable

avenue for achieving growth.

Leading banks often use different approaches

for achieving customer advocacy. One national

bank, building off of a loyal customer base and

unencumbered by mergers and acquisitions,

has leveraged its commitment to people and

integration of the brand promise throughout

customer touch points. Another bank, that has

been through many mergers and acquisitions,

has recently recommitted itself to the customer

through a focus on improving processes that

support customer interaction. This bank has

incorporated the goal of increasing customer

satisfaction into its branding, advertising and

customer communications.

Don’t put all of your eggs in one basket

According to our research, focusing only

on expanding the pie of advocates yields

suboptimal results. When we evaluated the

national banks (which included Bank of

America, Citibank, JPMorganChase, Wachovia,

Washington Mutual and Wells Fargo), we found

that 42 percent of the surveyed customers

of the largest banks are antagonists. Thus,

understanding and managing the economics

of antagonistic customers could yield faster

profit growth because it helps enhance

revenues and reduce costs. A poor customer

experience – a primary trigger that develops

antagonists – not only creates negative

impressions with customers, it is often more

costly to deliver. Poor experiences result when

a customer needs to contact the bank multiple

times to resolve an issue, or when a process

that is supposed to tie together different

areas within the bank is broken. Fixing broken

processes and understanding how to better

resolve customer issues can directly impact

the bank’s cost to serve and build a platform

for winning customer advocacy.

A significant opportunity

According to our research, the three factors

most highly correlated with advocacy are

emotive drivers of the customer relationship:

1. The bank has an understanding of my

financial goals

2. The bank values my business

3. Employees provide advice to improve my

financial well being.

Customers who are advocates of their bank

score these items higher than all other

factors. The news on how banks performed

on these attributes, however, is not positive.

In total, customers give their banks credit for

delivering on the rational factors 52 percent

of the time, but only agree their banks deliver

on the emotive drivers 26 percent of the time

– a 74 percent improvement opportunity (see

Figure 4).

Understanding the

economics associated

with different advocacy

levels can help banks

identify the most effective

growth initiatives.


This gap in emotive delivery is indicative of

where past investments have focused. As

banks have invested in improving the effi-

ciency of front- and back-office operations,

customers have seen the impact in the bank’s

ability to better serve their needs across

channels, capture and manage information

and deliver consistent answers to routine

inquiries. However, factors that contribute

to building meaningful relationships have

been less of a focus, resulting in the current

gap. Going forward, bank executives should

consider how improvements on the effec-

tiveness side of the equation can yield net

increases in the depth of individual relation-

ships. For example, they should explore how

to increase dialog with their customers and

provide more meaningful financial advice.

A polarizing effect

As banks evaluate ways to better manage their

customer base, executives should consider the

differences in profile between advocate and

antagonistic customers. While we did not find

demonstrable differences in the demographic

profile of consumers who were advocates

versus antagonists (i.e., antagonists are just

as likely to be high net worth customers as

advocates are), we did find significant differ-

ences in how each group felt about the bank.

While the gaps related to individual drivers are

significant, we found even greater contrast in

aggregate (see Figure 5). Advocates of banks

gave their bank credit for doing “everything

right,” while antagonists found fault in almost

everything their bank did. It is clear that

FIGURE 4.

Banks leave money on the table by not focusing on customer needs – a 74 percent improvement opportunity.

Percent agree (weighted index)

Rational attributes (efficient)

Provides plenty of ways to bank 72%

Corrects errors when they occur 47%

Uses information already received 47%

Consistent level of knowledge 42%

Values my business 38%

Employees listen and follow-up 36%

Resolves fairly 32%

Understands my financial goals 28%

Relevant offers 26%

Employees provide advice 22%

Seeks my input 13%

Creates custom products 12%

Percent agree (weighted index)

Emotive attributes (effective)

Banks under delivered on emotive versus rational expectations by a 2:1 margin

52%

26%

Average rating

Average rating



customers who take on an advocate posture

are attune to the actions of their bank and

are open, willing and positive toward interac-

tions. Whereas, antagonists are shut off from

communications and don’t give their bank

credit for even fundamental attributes of a

bank’s delivery system (such as providing

plenty of ways to bank with them).

“I am tired of being spammed and junk

mailed”, “I don’t know anything different about

my bank since I started banking there”

– Antagonist quotes from IBM study

“They respect me as much as I trust them”,

“They have been fair with all my banking”,

“They know me personally”

– Advocate quotes from IBM study

When building communications strategies

and evaluating operational improvements,

bank executives must consider customer

attitude profiles and their impact on the

strategy. For example, consider a company

that seeks to improve the service it provides

customers through its contact center. By

recognizing that a portion of customers are

already antagonistic, a bank may choose

to create processes and training to help

contact center employees deal with antago-

nistic customers. In addition, as banks begin

to understand the triggers of advocacy

and antagonism in specific environments,

management will be able to build mecha-

nisms to predict when customers are likely

to move toward an advocate relationship

as well as identify and proactively address

service failures.

How can banks capture the opportunity?In order to increase your share of advocacy

and increase the odds that your bank will

be successful at growing organically, you’ll

need to act decisively:

1. Adopt a transformative mindset

2. Apply an outside-in perspective

3. Break traditional design constraints.

FIGURE 5.

Banks rarely account for the extreme gap in attitude of their customer base.

AdvocatesPercent who agree

5% Bank values my business 73%

12% Employees listen and follow-up 69%

16% Provides consistent knowledge across interactions 73%

11% Resolves issues fairly 64%

23% Proactively corrects errors 75%

41% Provides me with plenty of ways to bank 90%

6% Provides relevant offers 52%

29% Bank uses the information it already received 68%

16% Bank understands my financial goals 53%

AntagonistsPercent who agree

Larger gap

Find fault with “everything” their

bank does

Smaller gap

Give the bank credit for doing “everything” right


Banks need strategies

that take into

consideration the

polarized attitudes – and

behaviors – of advocates

and antagonists.


“When you create your own destiny, you

prevent others from doing it for you.”

– Anonymous

Shift mindset

The foremost consideration executives

need to accept is that improving customer

attitude must start at the top. A mindset

shift is required, beginning with executive

management. Companies that are successful

at building long-lasting relationships with

customers typically have charismatic leaders

who inspire ongoing innovation and passion

for the customer. Consider some extreme

examples: Howard Shultz at Starbucks,

Richard Branson at Virgin or Steve Jobs at

Apple. Each of these leaders developed a

passionate brand, and motivated their teams

to live the brand though every customer inter-

action. Most organizations do not need a Steve

Jobs or a Richard Branson to be successful,

but, indeed, need to capture the essence of

these leaders’ commitment and approach to

inspire change.

More specifically, we believe banks need to

adopt a transformative mindset in the following

areas:

• Metrics: Move from customer and

employee satisfaction to recommendation,

purchase and switching as the measures of

customer attitude.

• Focus: Move from affecting only the rational

drivers of customer behavior, to addressing

both the rational and emotive drivers of

behavior.

• Brand: Move the brand promise from purely

marketing communications to a tangible

attribute delivered as part of the customer

experience.

• Lifecycle: Move from a view of product

push and pricing levers, to recognizing

customers’ multistage buying lifecycle

and the impact it has on their attitude and

responsiveness in marketing, sales and

service interactions.

• Channel: Move from broad-based channel

integration, where everything is integrated

with everything else, to specialized channels

aligned with the end-to-end experience and

what matters most to your customers.

• Enablers: Move from technology as the

primary enabler of efficiency to people as

the primary asset at the point of delivery.

• Information: Move from historical data inte-

gration and analysis to targeting data and

new research techniques around customer

events to yield timely and relevant customer

insight.

Apply an outside-in perspective

Brand communications set expectations, but

customers’ experiences shape their attitudes.

A customer’s experience is based on the

specific interactions he or she has with the

bank. These interactions, also called moments

of truth, differ by customer segment. When

delivery is not aligned with expectations, a

moment of truth can turn into a point of pain

for the customer and negatively impact his

or her attitude toward the bank. But when

delivery exceeds expectations, and is aligned

to benefit the bank, sources of delight can

emerge to positively impact a customer’s

perception of the bank and alter corre-

sponding patterns of behavior.

For example, for a high net worth customer,

a moment of truth might occur when a large

transfer of funds is completed. This moment

of truth may be a source of delight when

the transaction is completed the same day,

preventing loss of interest income. For a

To change customer

attitudes, leaders

must first change the

mindsets inside their

organizations.


college student, a moment of truth may be

when he is out with his girlfriend and uses his

credit card to pay for their pizza. This inter-

action could be a point of pain if his card is

rejected due to a bank error.

To understand and effectively manage

customer attitude, banks need to identify

specific moments of truth, by advocacy

segment, and design target experiences that

are competitively superior, while prioritizing

resources and investments.

Break the rules

As banks seek to improve the operating

model that supports customer interactions,

executives should work to relieve traditional

design constraints.

• Human performance: In the realm of

meeting emotive needs, human perfor-

mance is still the most effective means

of conveying important attributes like

empathy, dignity, value and responsiveness.

Organizations must create the culture and

organizational model needed to promote

greater commitment, accountability and

competency for leaders and staff – allowing

large organizations to become more agile in

delivering consistently in spite of the natural

barriers that size and silos can create.

• Solution experience: Banks need to

provide easily accessible mechanisms to

capture and integrate customer needs into

the overall banking experience not just into

elements of the product design and sales

approach. The experience needs to include

listening to and understanding customer

financial needs, dispensing appropriate

financial advice and customizing services

that are relevant and appealing.

• Customer focused organization and

operating model innovation: Banks must

open the aperture and create operational

benchmarks that include financial institu-

tions in other segments of the market. The

customer strategy should create differen-

tiation through the bank’s own operational

strengths and by emulating the capabilities

of leaders outside of its peer group.

Questions to consider

As you consider your own position in the

market, assemble your management team and

ask yourselves the following questions:

1. Are our customers our advocates?

• What drivers of advocacy are most

important to our customers?

• How large is the gap between antagonists

and advocates?

• What should our target advocacy share be?

2. What should we be doing to increase our

advocacy share?

• How and why do our customers buy?

• How do we best market, sell and serve?

• How do we turn customers into advocates?

3. What do we get from improving our

advocacy share?

4. How should we be doing it?

• What business capabilities do we need?

• Who should we look to as benchmarks?

• What can we do now (or soon)?

• How do we close the gaps (process, people

or technology)?

Leaders must tailor

customer experiences

for different advocacy

levels – and implement

the operational changes

needed to deliver these

experiences.


5. How do we rally the organization for

sustained action?

6. When should we be implementing critical

capabilities?

• How do we make the changes manage-

able?

• What is the right order of implementation?

• How do we get them done?

ConclusionFor banks to grow organically, a strong

commitment to strategic customer growth

options must be articulated through a well-

structured approach, designed to improve

customer attitudes toward bank capabilities

and assess their potential value. Banks must

break with traditional, one-sided, inwardly

focused customer initiatives and drive toward

a well-balanced, customer focused model to

exploit the potential of its most valuable asset

– its customers.

Unlocking this growth potential is not

easy. We believe it can be more effectively

accomplished through the adoption of a

customer-advocacy-based measure, such

as the CFiq, that highlights the operational

improvements that are key to enhancing the

customer experience and the value of the

relationship.

With the right approach, sustainable organic

growth is more attainable. Those institutions

that understand their CFiq scores and the

impact these measures have on the customer

base, develop a compelling customer expe-

rience, and operationalize the necessary

improvements to create a customer focused

enterprise will have a distinct advantage.

About the authors Scott Lieberman is an IBM Global Business

Services, CRM Business Solutions

Professional. Scott can be reached via email

at [email protected].

Robert Heffernan is the CRM Global Leader

for the IBM Institute for Business Value. Bob

can be reached at [email protected].

com.

Contributors

Contributors to this paper include Steve Ballou,

Bruce Baron, Jonathan Hill and Scott Walters.

Executive sponsors

This research effort was sponsored by John

Armstrong and Steve LaValle, both of

whom are partners at IBM Global Business

Services.

About IBM Global Business ServicesWith business experts in more than 160

countries, IBM Global Business Services

provides clients with deep business process

and industry expertise across 17 industries,

using innovation to identify, create and deliver

value faster. We draw on the full breadth of IBM

capabilities, standing behind our advice to help

clients implement solutions designed to deliver

business outcomes with far-reaching impact

and sustainable results.

G510-6330-00

© Copyright IBM Corporation 2006

IBM Global Services Route 100 Somers, NY 10589 U.S.A.

Produced in the United States of America 10-06 All Rights Reserved

IBM, IBM logo and IBM Customer Focused Insight Quotient (CFiq) are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both.

Other company, product and service names may be trademarks or service marks of others.

References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates.

References1 Heffernan, Robert and Steve LaValle. “Advocacy in the customer focused enterprise: The

next generation of CRM Done Right.” IBM Global Business Services. April 2006. http://www.

ibm.com/innovation/crm

2 Copies of “CRM done right: Executive handbook for realizing the value of CRM” are

available at http://www-935.ibm.com/services/us/bcs/html/2004_global_crm_study_gen.

html and copies of “Advocacy in the customer focused enterprise: The next generation of

CRM Done Right” are available at http://www.ibm.com/innovation/crm

3 “Bank of America Corporation, Order Approving the Merger of Bank Holding Companies.”

Federal Reserve Board Press Release. December 15, 2005. http://www.federalreserve.gov/

boarddocs/press/orders/2005/20051215/attachment.pdf

4 Kopp, Guillermo. “Innovative banks find satisfied customers, sustained growth go hand in

hand.” TowerGroup. February 23, 2005. http://www.microsoft.com/industry/financialservices/

banking/businessvalue/tginnovationarticle.mspx

5 Heffernan, Robert and Steve LaValle. “Advocacy in the customer focused enterprise: The

next generation of CRM Done Right.” IBM Global Business Services. April 2006. http://www.

ibm.com/innovation/crm

About the CRM Practice

IBM clients – businesses worldwide, across industries – are today reaping the rewards of

a self-sustaining approach to CRM that enables them to accurately assess their strengths

and weaknesses, calculate risks, control investments, manage change and set reason-

able expectations from the start.

• CRM Strategy Services span the breadth of CRM transformation – from planning

through implementation and value realization. These services enable companies to

develop and manage customer focused and CRM programs in a thoughtful, informed

way using a practical, focused, best practices-based process.

• Marketing and Sales Transformation focuses on solutions for improving the effective-

ness and efficiency of marketing and sales professionals to help organizations utilize

customer-related data to uncover patterns and behaviors, deploy marketing programs,

increase sales productivity and accurately measure the success – and returns – of

customer focused initiatives.

• Service Transformation helps clients transform service operations to create customer

value, based on reduced service cost and improved customer satisfaction. Service

Transformation drives effectiveness and efficiency through the many stages and

channels of the post-sales service life-cycle.

• Contact Center Optimization improves the efficiency and effectiveness of contact center

operations. It covers inbound and outbound, sales and service contact centers and

their related self service channels.

• Business Intelligence describes an environment where relevant, accurate informa-

tion is provided in time to respond with speed in making decisions and taking action.

IBM provides services that enable companies to learn about their customers via an

Intelligence On Demand environment.

IBM Business Consulting Services

Financial Services

IBM Institute for Business Value

Integrating sales

with service in

financial services

customer care

centers

IBM® Institute for Business ValueIBM Business Consulting Services, through the IBM Institute for Business Value,

develops fact-based strategic insights for senior business executives around critical

industry-specific and cross-industry issues. This executive brief is based on an

in-depth study by the Institute’s research team. It is part of an ongoing commitment

by IBM Business Consulting Services to provide analysis and viewpoints that

help companies realize business value. You may contact the authors or send an

e-mail to [email protected] for more information.

Integrating sales with service in financial services customer care centers

Executive summary Over the past decade, companies in multiple industries

have come to see customer care centers (CCCs) in

a new light: as critical components of their customer

service and distribution strategies. No longer regarding

the running of CCCs solely as a necessary cost of doing

business, executives are becoming savvy to CCCs’

previously untapped potential to boost revenue while

broadening and strengthening customer relationships.

As a result, spending on CCCs is on the rise, with global

technology spending expected to grow at more than 7

percent per year, from US$3.6 billion in 2003 to US$5.1

billion in 2008.1 But, so far anyway, the results of this

newfound focus have been weak, especially for financial

services firms.

Despite comprising nearly 23 percent of the U.S. CCC

market, behind only telecommunications and technology

(25 percent) and retail and manufacturing (27 percent),2

the efficiency and effectiveness performance of financial

services firms’ CCCs has lagged that of most other

industries (see Figure 1).

Even the efforts of firms that have launched new and

innovative initiatives have been hampered by their

inability to achieve more than one of the three key value

creation objectives – reducing costs, increasing revenue

or retaining customers. Despite firms’ investments

in performance improvement, lack of an integrated

approach to value creation often prevents initiatives from

providing the desired strategic results.

A recent IBM Institute for Business Value study shows

that few financial services firms have been able to strike

the appropriate balance among all three value creation

objectives. Truly optimizing the value of CCCs requires an

integrated approach that blends business priorities into a

cohesive strategy.

An integrated approach will require strategic CCC

investments in several areas at once:

‚" Improving contact flow management

‚" Optimizing workforce productivity

‚" Standardizing processes and infrastructure

‚" Achieving optimal customer profitability.

Financial services firms are expected to keep investing

heavily in CCCs. A better awareness of the required trade-

offs is necessary to craft a comprehensive strategy to

gain the greatest returns on these investments.

1

Catalog

HealthcareTravelUtilities

Consumer productsGovernment

Financial servicesInsurance

Telecommunications

100

Figure 1. Customer care center performance by industry.

0

50

Effe

ctiv

enes

s in

dex

10050

Effi ciency index

Effective, not effi cient Asset

Liability Effi cient, not effective

Source: Anton, Dr. Jon. “eBusiness Best Practices for All Industries.” Benchmark Portal. February 2004.

2


Objectives can seem incompatible As financial services firms try to meet specific business

imperatives, such as “selling more,” “lowering costs” and

“improving the overall customer experience,” they are not

always cognizant of the adverse impact of their actions on

other business objectives. The ongoing challenge, then, is

to find the optimal balance among three main objectives

that sometimes seem to conflict with each other:

‚" Reducing costs and increasing efficiency – Lowering

the costs of staffing, equipping and operating CCCs,

while continuing to meet performance goals.

‚" Increasing sales – Building infrastructure and training

staff to identify and pursue cross-selling and up-selling

opportunities more effectively.

‚" Retaining customers – Meeting customer needs

by identifying customer calls and routing them to

appropriate sales and service channels, and improving

the customer experience by being courteous and

responsive.

Balancing all three is the key to optimizing CCC value.

Excessive focus on costs is likely to limit revenue

potential and negatively impact customer retention.

Supervisors may emphasize metrics too heavily (such

as average handling time). Or, inadequate investment in

training and compensation may result in poorly trained,

unmotivated agents who are unlikely to be effective sellers

or satisfy customers.

Similarly, strongly pushing revenue growth can raise

costs and lower customer satisfaction if customers feel

they are getting the “hard sell.” An excessive emphasis

on customer retention could increase costs and

limit revenue growth if the focus on ease of use and

customer satisfaction hampers proactive selling of new

products and services.

What’s happening now in care centers Across all industries, IT investment is growing for

both inbound and outbound capabilities, with over 90

percent of IT investment devoted to inbound. Outbound

technology investment will continue to be constrained by

new regulations that limit firms’ ability to call customers,

but inbound technology revenues are expected to reach

US$4.6 billion by 2008 (see Figure 2).

Integrating channels enterprisewide

A great deal of CCC investment is prompted by the

need to integrate enterprise resources across channels,

using a mix of technology and people-oriented solutions.

In fact, while spending on multichannel IT for CCCs

represented nearly10 percent of total IT spend on North

American CCCs, multichannel IT is projected to account

for 28 percent of total North American IT CCC spend by

2007.3 These solutions encompass multiple categories:

branch, Internet, wireless, call center, ATM/kiosk and

relationship sales.

6

5

4

3

2

1

0

Figure 2. Projected global customer care center IT investment.

$US

bil

lion

s

Source: “Contact Center Component Technology to 2008.” Datamonitor, May 2004.

0.5

4.6

0.4

4.4

0.4

4.1

0.4

3.8

0.3

3.6

2004 2005 2006 2007 2008

OutboundInbound

5.14.8

4.54.2

3.9

CAGR2004 - 2008

5.5%

10.8%

3.3%

3

Integrating sales with service

Aiming for efficiency

As companies seek to improve CCC efficiency, rising

costs – especially for labor – pose a major challenge. One

reason is the investment needed to hire, train and retain

agents, an ongoing concern because of high turnover

rates. With a reported total cost of US$15,280 to bring on

a new agent, hiring expenses for financial services are far

higher than for other industries.4

In order to better track efficiency and identify areas for

improvement, companies in multiple industries are using

more rigorous, detailed performance metrics. A cross-

industry survey found that the three most common

measurements used are abandonment rate (used by

20 percent of respondents), followed by service levels

(17 percent) and average time in queue (16 percent).5

In addition, the majority of firms are employing multiple

methods to encourage customer self-service, with varying

effectiveness (see Figure 3).

Some industries are increasingly pursuing outsourcing to

improve efficiency, for both inbound and outbound CCC

activity. Though financial services firms recognize that

outsourcing – to both domestic and overseas service

providers – is a way to lower costs and offer round-the-

clock service, they are also discovering that there can

be drawbacks as well. The challenges associated with

outsourcing include:

‚" Enabling data integrity and security

‚" Providing transparency in customer interactions

‚" Meeting realtime processing requirements

‚" Complying with regulations

‚" Managing dispersed teams.

Recently, some financial services firms have scaled back

their outsourcing of CCCs while continuing to pursue other

global sourcing strategies.

Note: Survey base: 176 North American fi rms with annual revenues of US$500 million or more (percentages may not total 100 because of rounding).Source: Forrester Research, January 2005.

Figure 3. Effectiveness of methods used to promote customer self-service.

Improve usability

Proactively market benefi ts of self-service

Use e-mail to drive customers to self-service

Have phone agents train customers in self-service

Offer monetary incentives to use self-service

Advertise self-service on phone when callers are on hold

Have retail agents train customers on self-service

Hide phone contact information on the Web

0 10 20 30 40 50 60 70 80 90 100

Percentage of respondents

6

7

9

11

13

14

48

2

24 4 66

55

69

52

39

38

17

76

2

3

4

5

3

32

12

36

19

33

44

45

2

10

Very effectiveSomewhat effectiveIneffectiveDidn’t use or don’t know

4


Boosting effectiveness of sales and service

To improve the sales and service effectiveness of CCCs,

companies across industries again will need to consider

the optimal combination of human and technology

solutions. With well-trained agents on board, intelligent

call routing technology can be leveraged most effectively.

Call routing applications identify customers and directs

their calls to the appropriate agent or self-service channel

based on:

‚" Customer history and status

‚" Type of service needed

‚" Customer preferences (for example, using electronic

chat instead of live telephone calls).

Calls can even be routed to match customer needs with

agent skills, such as product knowledge or languages

spoken. With this information, intelligent routing rules

support a positive customer experience across channels.

Even with the most advanced call routing technology,

CCCs are still heavily dependent on the skills of individual

agents to make sales and meet customers’ needs. One

way to boost agent effectiveness is to increase their

ability to understand customer needs and provide them

with the appropriate mix of products and services. Sales

techniques – such as active listening, probing to spot

unmet needs and identifying potential customer savings

by adding products or services – continue to be a part of

agent training.

The most-used measures of agent performance illustrate

the dual focus on providing service and selling – the

potential conflict between the two is clear. No longer are

agents evaluated only on traditional CCC metrics like

average handling time and customer satisfaction; the top

four metrics in 2003 included number of units sold and

sales revenue (see Figure 4). Today, an agent must strive

to keep customers happy while selling them more, in less

time. And, even though there has been a trend toward

deemphasizing average handling time as a primary

metric, the presence of daily sales targets continues to

drive agents to spend as little time as possible handling

individual calls that are unlikely to result in new sales.

Undoubtedly, this pressure to “wear two hats” has

contributed to financial services’ full-time agent turnover

(27 percent) being higher than all industries except

automotive.6 To help prevent agent burnout and avoid

the cost of hiring each new agent, industry leaders are

recognizing the potential returns from providing training

to convert service-only agents into service/sales agents.

When the emphasis is on “converting” internal service

representatives into sales agents, transforming service-

oriented centers into high-performance service-and-sales

operations is more cost-efficient. Respondents to a

benchmarking survey reported a 66 percent effectiveness

rate when hiring new sales-oriented agents, compared to

72 percent effectiveness of training incumbent agents.7

Note: Survey of 59 sales and service leaders from 57 leading companies across 20 industries. Source: “Service-to-Sales Excellence: Developing Service Representatives into High-Sales Achievers.” Best Practices LLP. May 2004.

Figure 4. Most common metrics used to evaluate agent performance.

Number of units sold

Customer satisfaction

Average handling time

Sales revenue

Conversion rate (sales/offer)

Percent of representatives meeting sales targets

Average products/customer

Percent of accounts penetrated with up-sell offerings

Share of customer

0 20 40 60 80 100

Percentage of respondents

69

79

80

82

89

89

89

65

55

5


This approach also means lower recruiting and training

costs since managers can select candidates with proven

customer service ability. In addition, existing employees

already have customer relationships, as well as company

and product knowledge. What’s more, internal recruitment

reinforces a visible CCC career path.

Consolidation of CCC center capabilities into fewer

facilities can also improve the returns from CCCs. If initial

costs can be justified, consolidation can offer benefits

in both efficiency and effectiveness. Consolidation also

helps firms to achieve consistency in service quality,

reduce IT spending, lower training costs and speed the

rollout of new marketing initiatives. Firms have to weigh

potential benefits against the impact of costs, including

facilities (50 percent), headcount (30 percent) and

technology (20 percent).8

Because of these costs, consolidation is not a good

option for all. But it often makes sense for firms saddled

with redundant capabilities due to rapid growth in multiple

geographies or large acquisitions.

Strategic financial services initiatives Finding the right mix of people and technology is

essential for stronger returns. To date, financial services

firms have enacted a wide range of strategic CCC

initiatives, with varying degrees of success.

Some firms have made cost reduction the top priority,

while others emphasize either improved revenue or

customer retention. Successful firms are those that are

able to leverage technology in tandem with thoughtful

people strategies that focus on motivation and retention.

Initiatives to lower costs

Methods to reduce costs can take many forms, including:

‚" Migrating customers to lower-cost channels

‚" Improving workforce deployment and agent productivity

‚" Outsourcing CCC operations.

Companies are looking for ways to more effectively

use their workforces to reduce costs. For example,

organizations have explored models whereby high cost,

experienced agents support junior agents via internal

chat sessions to provide superior service at a lower per

unit cost. As part of its focus on cost reduction, Nissan

Motor Acceptance Corporation (NMAC) enacted a

workforce optimization effort.

Reducing costs: NMAC9

With a goal of improving workforce deployment and agent

productivity, NMAC uses a workforce optimization program to

automate planning and add flexibility to agent work schedules.

NMAC introduced “progressive shifts,” whereby staffing is

heavier on Mondays and Tuesdays to handle a typical surge in

calls at the first half of each week.

Results include:

• Unplanned overtime decreased by 39 percent

• Agent response time increased by 66 percent (to less than

50 seconds)

• Call abandonment rates plummeted by 66 percent, to just 2

to 5 percent

• Managerial administration hours reduced by 58 percent

• Agents’ adherence to schedules rose from 70 percent to

95 percent.

Initiatives to raise revenue

Efforts to increase revenue include:

• Providing training tools and incentives that encourage

and enable agents to cross- and up-sell

• Segmenting customers and developing targeted

sales efforts

• Integrating product and channel strategies to

optimize sales.

To grow the top-line, firms are recognizing the value of

teaching agents not only how to provide better service,

but how to sell. Where possible, incentives that enable

agents to further their careers (for example, through

tuition grants or career opportunities in the organization)

can help create a sense of pride and ownership with

significant positive impact to CCC performance. SunTrust

Online aimed to increase revenue through a focus on

agent training.

6


In search of equilibriumTrue value optimization for CCCs requires an integrated

approach. Strategic priorities must be reexamined to

understand how to create the optimal mix of reduced

costs, higher revenue and improved customer retention

rates (see Figure 5).

By reassessing all aspects of center operations, strategic

CCC investments can be prioritized according to opportu-

nities spanning multiple functional areas:

‚" Improving contact flow management

‚" Optimizing workforce productivity

‚" Standardizing processes and infrastructure

‚" Achieving optimal customer profitability.

Improving contact flow management

Better management of contact flow requires

standardized processes, workflow and business rules

across the enterprise and across channels. Along with

reducing agent work volume, improved contact flow

provides customers with appropriate levels of service in

several ways:

‚" Identify and segment incoming calls – Using

interactive voice response (IVR) in combination with

customer data to determine customer needs, existing

relationships, past interactions and recent transactions

across all channels. In addition, by using customer

lifetime value or tiered customer ratings (such as gold,

silver and platinum), banks can also tee up segment-

aligned products and services that provide special

price considerations.

‚" Direct calls to appropriate levels of service – Using

skills-based routing and an agent proficiency matrix to

route transactions to the agent who is best equipped to

complete the call successfully on the first attempt.

‚" Increase levels of self-service, where appropriate –

Directing customers to lower-cost channels, including

IVR and the Web. However, this strategy must be well

thought out since a poorly designed self-service offering

risks increasing the number of online calls exponentially,

to the detriment of the initial objective.

Increasing revenue: SunTrust Online10

To improve cross-selling to customers, SunTrust customer

service representatives are trained as "financial physicians" who

are equipped to walk customers through product options, based

on existing assets and transaction history.

Results include:

• Increased cross-selling activity

• Over half of all sales referrals now come from customer

service representatives

• Customer care center is no longer a “cost drain,” but now

breaks even.

Initiatives to keep customers

Initiatives to retain customers include:

‚" Integrating channels to provide optimal, consistent

service

‚" Sharing customer data across channels and LOBs

‚" Tailoring services to customer needs and preferences.

Financial services firms are aiming to retain their

customers through various process and infrastructure

improvements, including the use of online collaborative

support to seamlessly link calls with call centers. Firms

continue to innovate in their quest to provide differen-

tiated customer service. IndyMac Bank, in this case,

emphasized more personalized customer service to

improve its customer retention rates.

Retaining customers: IndyMac Bank11

To improve customer satisfaction and help mortgage customers

through the often trying loan application and closing processes,

IndyMac provides customers with full access to all parties

involved in the loan process through its customer care centers.

It also includes access to 24/7 live chat through its Web site

and equips agents with multiple tools and educational content

for mortgage purchasers. The enhanced loan process was

geared to raise close rates and reduce drop-out rates (when

applicants fail to complete the process due to frustration with

lengthy delays or uncertainty about the mortgage loan process).

As a result, the change contributed to 41 percent mortgage

volume growth between 1999 and 2004 (compared to industry

average of 8 percent).

7


agent compensation to organizational and CCC

metrics; equipping agents with desktop tools that

support customer-facing processes, integrated scripting

and knowledge management; and rewarding innovation

and the sharing of scalable ideas.

‚" Provide monitoring tools to managers and agents

to raise productivity and service levels – Utilizing

performance metrics systems that drill down into

aggregated data; performing root cause analysis

and identifying best practices; and instituting quality-

monitoring programs that track and evaluate agent

interactions with customers.

Workforce optimization can reduce costs by enabling

agents to handle calls more efficiently in less time, and

by matching the number of agents to call volume. It

can generate revenue by providing agents with the

training, tools and incentives to sell more effectively.

Higher customer retention can result from better service

by trained agents who match needs with appropriate

products and internal resources.

Contact flow management is an opportunity to reduce

costs by limiting manual handling of routine calls and

reallocating resources to focus on more complex,

valuable interactions. Appropriately equipped agents can

focus on cross-selling to increase revenue. In addition,

matching customer needs with the right agents on every

call will improve service and satisfaction, ultimately

helping to raise customer retention rates.

Optimizing workforce productivity

With workforce optimization, productivity gains are made

by combining better tools, training and incentives for

agents with effective performance management and

measurement. Better customer service goes hand in

hand with higher productivity, through actions that include:

‚" Match workforce levels and agent skills with demand –

Using workforce management applications that address

scheduling, forecasting workloads and budgeting

requirements.

‚" Optimize agent performance to improve efficiency and

raise employee and customer satisfaction – Cultivating

talent by recruiting agents with specific skills; tying

Red

uce

cost

s

Increase revenue Retai n custom

ers

Optimize customer care center value

Figure 5. Integrating strategic priorities to optimize customer care center value.

Source: IBM Institute for Business Value analysis.

Creating a low-cost, highly effi cient environment• Migrating customers to lower-cost channels• Improving workforce deployment and agent

productivity• Consolidating and outsourcing customer care

center operations

Providing customers with a range of tailored product and service options• Integrating channels to provide optimal, consistent

service • Sharing customer data across channels and LOBs to

standardize experience • Tailoring services to customer needs and preferences

Integrating selling into CCC functions• Training, enabling and providing incentives for agents to cross-sell and up-sell • Segmenting customers and developing targeted sales efforts• Integrating product and channel strategies to optimize sales

8


Standardizing processes and infrastructure

Process and infrastructure standardization entails rational-

izing and integrating processes, data, applications and

facilities across channels and lines of business (LOBs).

Best-in-class capabilities can be leveraged across

customer care functions in various ways:

‚" Integrate processes across channels and customer

care functions – Eliminating redundant processes

and activities; identifying and leveraging best-in-class

processes across channels; and fully integrating

electronic channels with existing CCC operations.

‚" Develop common capabilities to support core customer

functions – Adopting universal queuing, routing and

reporting; providing universal access to customer

databases to enable the delivery of consistent

customer support; developing common management

and monitoring across all communication channels;

and cross-training agents to support newer e-mail and

text chat functions.

‚" Standardize applications and infrastructure –

Rationalizing CRM, financial, human resources and

enterprise resource applications to enable multi-

channel transaction handling and increase visibility into

customer interactions.

Process and infrastructure standardization lowers costs

by reducing redundancies and leveraging the best, lowest

cost practices across the CCC. Increased revenue can

come from a unified view of customer data, realtime

transaction history and access to point-of sale applica-

tions across LOBs. And, better customer retention can

result from giving customers a consistent experience and

a “single face” through all channels.

Achieving optimal customer profitability

Optimal customer profitability requires identifying and

targeting customer needs with tailored customer service

and product offers, including the following actions:

‚" Route customer calls to appropriate channel or media –

Identifying and segmenting customers by needs and

preferences, based on data from all interactions and

transactions

‚" Build cross-selling and up-selling capabilities – Enabling

agents to identify opportunities and close sales

‚" Make outbound customer acquisition and retention

calls – Targeting desirable existing and new customers

in target segments.

Customer profitability typically goes up when resources

can focus on calls with higher returns; less time (and cost)

is spent on routine calls and less profitable customers.

Identifying and targeting customer needs with tailored

products and services customarily raises revenue by

boosting cross-selling, share of wallet and lifetime value

of customers. Products, services and offers that match

customer needs will help enable higher customer retention.

Sales plus service: Firms see the lightAs financial services firms seek greater value from their

CCCs, the necessity of integrating sales and service

has seen the light of day. When firms choose from

various CCC solutions that leverage both people and

technology, striking that balance among often-competing

business directives is the key to profitably integrating

sales with service.

9


About the authorsSunny Banerjea is the Global Banking Leader in the IBM

Institute for Business Value, Financial Services Sector.

Sunny can be reached at [email protected].

John M. White is a Managing Consultant in the IBM

Institute for Business Value. John can be reached at

[email protected].

Kimberly Hedley is a Senior Consultant in the IBM Institute

for Business Value. Kim can be reached at khedley@

us.ibm.com.

Contributor

Daniel Latimore, CFA is a partner in IBM Business

Consulting Services and executive director of the IBM

Institute for Business Value.

About IBM Business Consulting ServicesWith business experts in more than 160 countries, IBM

Business Consulting Services provides clients with deep

business process and industry expertise across 17

industries, using innovation to identify, create and deliver

value faster. We draw on the full breadth of IBM capabil-

ities, standing behind our advice to help clients implement

solutions designed to deliver business outcomes with far-

reaching impact and sustainable results.

References1 “Contact Center Component Technology to 2008.”

Datamonitor. May 2004.

2 Ibid.

3 Bradway, Bill. Group VP, Banking. “North American Bank

Channel Spending Projections: 2003-2007.” Financial

Insights. 2003.

4 Anton, Dr. Jon. “eBusiness Best Practices for All

Industries.” Benchmark Portal. February 2004.

5 Benchmarkportal.com. Survey of benchmark portal

members in response to the following question,

“What are the call center performance measures

that you watch most closely in managing your call

center?” 2004. http://www.benchmarkportal.com/

newsite/article_detail.taf?topicid=188; IBM Institute for

Business Value analysis.

6 Anton, Dr. Jon. “eBusiness Best Practices for All

Industries.” Benchmark Portal. February 2004.

7 Survey engaged a benchmark class of 59 sales and

service leaders from 57 leading companies across 20

industries to analyze best practices. Best Practices LLP;

IBM Institute for Business Value analysis.

8 Sodano, Linsey and Preslan, Laura. "Dropping the

Cost of Customer Service, Part 1: Consolidating Call

Centers." AMR Research. July 2003. Need permission?

9 O’Herron, Jennifer. “Answering the Call.” Bank Systems

& Technology Online. May 1, 2004. www.banktech.com

10 Ramsaran, Cynthia. “Contact Centers or Cost Centers?”

Bank Systems & Technology Online. January 1, 2004.

www.banktech.com

11 www.indymacbank.com

.

G510-6208-03


IBM Global ServicesRoute 100Somers, NY 10589U.S.A.

Produced in the United States of America08-05All Rights Reserved

IBM and the IBM logo are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both.

Other company, product and service names may be trademarks or service marks of others.



Banking

IBM Institute for Business Value

Will growing investment in

branches bear fruit for banks?

Branches in bloom

IBM Global Business Services, through the IBM Institute for Business Value, develops fact-

based strategic insights for senior business executives around critical industry-specific and

cross-industry issues. This executive brief is based on an in-depth study by the Institute’s

research team. It is part of an ongoing commitment by IBM Global Business Services to

provide analysis and viewpoints that help companies realize business value. You may contact

the authors or send an e-mail to [email protected] for more information.

Branches in bloom IBM Global Business Services1

Introduction

It was not long ago that electronic banking was expected to replace the branch

as customers’ channel of choice. However, many of the developments that were

expected to signal the branch’s demise are increasing its importance as a critical

component of banks’ customer service strategies. The adoption of self-service,

alternative channels has increased customers’ demand for 24X7 multichannel

access to accounts and has raised expectations for convenient, professional service

from branch personnel.

Major banks are now in a race to expand and renew their branch networks as a way

to enter new markets, increase penetration of existing markets and build wallet share

among customers. In the past decade alone, the number of bank branches in the

United States rose 15 percent despite the fact that the number of banks actually fell

by 29 percent.1 Many banks are diverting money saved through mergers or other

cost-cutting initiatives to invest in branches; others are spending excess capital in

the hope of generating more business through new and renewed branches. But

simply having the most extensive or best-designed branch network may not be

enough to succeed. In order to differentiate themselves from their competitors and

achieve their growth objectives, banks must be able to attract customers to their

branches, identify the needs of each customer in the branch and have the in-branch

capabilities necessary to meet those needs. For branch transformation efforts to

bear fruit, banks must blend their physical presence with innovative products, trained

and motivated personnel and IT proficiency (both out front and behind the scenes)

for a fully integrated approach to creating value.

Back to the future: Banking on the branch

By the end of the nineties, branch banking appeared to be destined for extinction.

But nearly ten years later, the buzz is all about the branch: customers across every

age demographic not only still use the branch, but 86 percent say they visit a branch

at least once a month.2

Branch transformation has been widely touted as a target area for opportunity and

growth. Research shows that branch network expansion and renewal can contribute

to asset growth and stronger operating performance.3 Toward that end, banks are

counting on branches to gain entry into new markets and increase business levels

in existing markets. In fact, while banks continue to invest in new branches, IT

investment to renew existing branches is expected to account for nearly all of the

growth in IT branch spending.4

Contents

1 Introduction

1 Back to the future: Banking

on the branch

2 Beyond the buzz: Basis

for change

4 Getting a high yield from

branch strategy

12 Test yourself

13 Conclusion

14 About the authors

14 About IBM Global Business

Services

15 References


In the midst of increased competition, the key to creating value will be to move past

what branch banking has been to understand what it has the potential to be in the

future. A successful branch strategy depends on making smarter choices that will

bear fruit long into the future. To boost productivity, increase sales and cut costs,

banks must choose the right blend of three crucial elements:

‚" The integration of a renewed branch presence and innovative products and

services tailored to meet defined customer needs

‚" The selection, training, compensation and motivation of branch staff

‚" The proficient use of IT to support sales and streamline customer-facing and

back office processes across channels.

Beyond the buzz: Basis for change

Branches still have considerable impact on where and how customers bank. How

customers pick a bank depends largely on the branch network – 49 percent of

customers cite convenient location as a top reason they chose their bank.5 And in

spite of the availability of online channels, branch activity is nearly uniform across

all age demographics when it comes to purchasing new products. Generation Xers

and Yers, baby boomers and seniors all favor purchasing products in the branch.6

Research shows that customers – especially those of the baby boomer generation

– have been impatient with the ability of online channels to meet their needs. Once

they experience a problem online, they very often abandon that channel for a more

familiar one that offers human interaction. Younger customers, many new to banking,

are more likely to need human assistance to validate their decisions regarding

complex products and services. Older customers, faced with concerns such as

retirement and wealth preservation, often want professional advice and are just

more comfortable servicing their accounts face-to-face.

But customers’ continued reliance on the branch does not guarantee fruitful

business results. The vast majority of customers seek branch service for low-

value transactions. Forty to sixty percent of teller transactions are high-volume,

low-value.7 These low-value transactions drain banks’ resources, taking time away

from potentially higher-value customer relationship building activities. Currently, the

expected sales conversion rates at some of the industry’s more aggressive banks

are less than 2 percent of all teller transactions.8, 9 Branch personnel must be able

to identify customer needs, distinguish between service and sales opportunities

and serve each customer appropriately.


Forty-seven percent of banks say increasing product sales (e.g., new accounts,

loans, deposits and CDs) will be the cornerstone of their branch strategy.10 Many

banks, however, struggle to execute on this strategy since their branch staff lack

necessary sales skills. Furthermore, banks are facing turnover rates as high as 30

percent resulting from exceptionally low pay and limited career opportunities.11 In

one survey, 88 percent of banks report having at least moderate problems retaining

tellers, yet only 29 percent have formal teller-retention initiatives.12

Banks are also increasing their investment in renewing and improving the capabil-

ities of existing branches (see Figure 1). IT spending is expected to focus on

communication technology upgrades, teller systems and Customer Relationship

Management (CRM) functionality. However, it may be difficult for banks to benefit

fully from IT investments without also addressing workforce and sales strategy

challenges. What good is a slick new application if your front line can not use it

to its full potential? A suboptimized infrastructure, for example, slows application

performance, affecting speed of service and often forcing platform staff to resort to

paper forms, defeating the very reason for making technology investments.

Figure 1. Projected IT spending on new branches and branch renewal, 2004-2007.

Seventy-nine percent of retail

bankers surveyed rate lack of

sales skills on the front line

as the biggest challenge to

implementing sales strategies

in branches. Sixty-eight

percent say that inadequate

sales training and coaching, as

well as difficulties in tracking

and managing front-line

skills and activities are major

challenges for banks today.13

CAGR2004 - 2007

US

$ m

illi

ons

2004e 2005e 2006e 2007e

1,600

1,400

1,200

1,000

800

600

400

200

0

Branch renewal

New branches

1,1501,200

1,300

860 850870 875

1,460 8.3%

26.4%

O.6%

Source: Bell, Richard. “U.S. Branch IT Spending Projections: 2003 to 2007.” Financial Insights. July 2003; IBM Institute for Business Value analysis.

290350

430

585

Total


Finally, banks have to attract profitable customers to their branches before the

competition does. Recent rapid expansion, and the race to gain wallet share through

the branch, has amplified competition.14 So, no matter how many strategic locations

a bank has, and what transformative physical features, products or services its

branches offer, it is battling similar initiatives in an increasingly crowded marketplace.

Furthermore, with branches growing at a pace faster than population growth rates,

there is a danger of market saturation.

Getting a high yield from branch strategy

Any time there is real opportunity to create value and expand the bottom line in

any industry, there is the tendency toward following current trends. But will banks’

growing investment in branches really bear fruit? Some banks are reconfiguring their

physical presence. Others are beginning to offer new products and services through

their branches. Still others are rethinking their staffing strategies and investing in IT

proficiency. But taking branch transformation to the next level requires an integrated

approach. Focusing on finding the right mix of the following elements can help

banks differentiate, and overtake the competition.

Presence and products: Tailored by design

Some banks are changing branch presence and products to better cater to

customers. By changing the look and feel of the branch, improving and stream-

lining service and offering attractive and innovative products, banks aim to target

customers interested in high-value transactions. Successful branch strategy includes

a blend of location, look and feel, and products that are tailored for target customers.

Physical presence

Despite the steady rise in the number of physical branches during the past decade,

the increase was not uniform across the United States (see Figure 2). From a

geographic perspective, branch expansion patterns generally mirror the long-term

growth of state economies: Five of the states with the greatest branch growth over

the past decade (Colorado, Texas, Nevada, Idaho and Utah) were also among the

ten states with the greatest job growth.15 In contrast, the number of branches has

actually declined over the same period in states that had earlier relaxation of state

branching restrictions (or had fewer branching restrictions in general). These states

include the major banking markets of California, New York and North Carolina.


Figure 2. Change in number of branches throughout the United States, 1994-2003.

Whether banks focus their branch strategies on expanding branch networks or

renewing existing branches – or both – it is important that they do so strategically.

Optimizing the branch network helps banks take advantage of their organizational

assets, including physical locations, human capital expertise, distribution alliances and

brand equity. Banks should also evaluate nontraditional branch business models and

alliances that could enable them to engage customers whenever and wherever they

are. A number of banks have aligned themselves with grocery stores, for example,

including Citizens bank with Giant Eagle and U.S. Bank with Safeway and Vons so that

customers can perform a wide variety of their daily and weekly tasks in one location.16

Banks should also consider redesigning their branches with layouts that serve

customers more effectively and increase sales activities. Upon entering the branch,

customers should be directed to the most effective point of service either by branch

personnel or through clearly designated branch layout cues – or better still, both.

Low-value service transactions that do not carry the potential for sales should be

channeled to self-service terminals, with potentially higher-value interactions handled

by trained branch personnel.

The 1994 passage of the

Riegle-Neal Interstate

Banking and Branching

Efficiency Act removed many

of the remaining individual

state law restrictions on

interstate banking. As a

result, interstate branching

increased rapidly. Passage of

this legislation had a greater

impact on those states

which previously had more

restrictive branching laws.

Decrease

Up 0 to 10 percent

Up 10 to 20 percent

Up 20 to 30 percent

Up over 30 percent

Source: Spieker, Ronald L. "Bank Branch Growth Has Been Steady – Will It Continue?" FDIC. August 2004.


Washington Mutual (WAMU) makes banking an occasion17

WAMU’s "Occasio" model branches were designed to resemble retail stores. The focus is on a customer-

friendly experience. Greeters and tellers dressed in colorful shirts escort customers to different service

destinations around the perimeter of the store for loans, sales and advice. Freestanding Internet

workstations with touchscreens allow customers to access the bank’s Web content and look up

information either on their own or with a sales associate. In the initial months after opening its first five

Occasio branches in Las Vegas, for example, the bank found that it had opened twice as many checking

accounts as usual and had three times as many deposits.

While competitive with traditional branches in mortgage lending and checking account generation,

Occasio branches achieve significantly higher consumer-lending volumes – 87 percent versus 49 percent

of total loans in traditional branches. Occasio branches also receive mystery shopper scores that exceed

90 percent on average. In addition, these branches, at approximately US$1 million per site, cost less than

many larger, less productive branches and have the potential to become profitable more quickly.

Banks have begun taking cues from leading retailers, making the branch a more

welcoming, efficient and exciting place to be. Their new designs include a mix of

self-service options (to direct low-value transactions away from tellers), more free-

roaming branch staff that ask and answer questions, and centralized and open

"discovery zones" where customers can browse for information on banking products.

Redefining the branch experience: Cues banks are taking from retailers

• Using concierges to greet customers and direct them to appropriate service areas

• Mirroring retail store design elements, such as ceiling height, lighting, promotional signage, colors

and flooring to clearly differentiate service areas

• Training customer representatives extensively to instill the strong service ethic evident in

successful retailers

• Providing well-equipped play areas to entertain children while their parents bank

• Offering full weekend hours, including the ability to bank on Sundays

• Applying automated workforce management tools that take into account customer traffic patterns

to maintain appropriate staffing levels.

Products

Providing access to higher-value, consultative products and services including

financial advice and planning, wealth management, investments, retirement

products, insurance, tax and accounting services, and business services should be

a key tenet of any branch transformation strategy. Products should be innovative,

competitively priced and marketed to target customers at appropriate points in their

lifecycles, instead of on a transaction-by-transaction basis. Rather than attempting


to be one-stop-shops, banks should select a portfolio of best-in-class products that

provide value to their target customers. For more complex services that are beyond

the competencies of branch personnel, banks should identify approved service

providers to whom branch personnel can refer customers.

People: Building a sales culture

In a recent survey, banks’ goal of increasing product sales was superseded only

by the desire to improve staff productivity (see Figure 3). In fact, developing and

retaining effective and efficient branch personnel is critical to the success of any

branch strategy.

Figure 3. Main business goals of banks’ branch strategies.

Branch staff often lack the soft skills required to conduct credible conversations with

customers about their financial goals. Few employees have the active listening, inter-

viewing, fact-finding, relationship-building and problem-solving skills necessary to

identify unmet needs and pair those needs with recommended banking products and

services. Tellers are often not technologically savvy enough to be able to leverage all

available IT resources, including advanced CRM applications designed to help them

help customers. Some staff also experience difficulties with multitasking well enough

to combine sales with customer service activities. Few incumbent branch staff have

licenses to sell nontraditional banking products, including annuities, mutual funds and

insurance. The skill deficiencies of branch staff, however, are not surprising, given that

the median compensation for a teller is less than US$20,000 per year (see Figure 4).18

0 10 20 30 40 50 60

Improve staff productivity

Increase product sales

Enhance wealth management

Automate core teller functions

Integrate branches with other channels

Cut business costs

50

Note: Survey base includes IT executives at 50 U.S. banks.Source: Datamonitor, “Branch renewal for community banks and credit unions,” June 2004.

Percent of respondents

47

43

33

18

5


Figure 4. Median base salaries of U.S. bank employees.

As demands on branch personnel increase, banks need to modify their criteria for

hiring and promoting front-line staff. The process of hiring and developing employees

should be consistent with the greater responsibilities being placed on these

individuals to sell bank products and services. Training should emphasize strong

business development skills, including soft skills such as effective listening. Training

techniques should be revamped to avoid an overly narrow focus on procedures and

product knowledge.

To signal the importance of sales and differentiated service, banks need to

create sales cultures that measure and compensate employees – in the form of

commissions and bonuses – for building relationships, generating revenue and

satisfying customers.

Furthermore, employees need to know how they are doing in order to continue to

develop their skills. Banks should provide supervisory on-the-job coaching as a tool

for sales management. Continually reassessing how sales strategies and employee

incentives are implemented is paramount: building a sales culture is an ongoing

process of experimenting, learning and refining. The branch sales strategy should be

regularly amended to reflect changes in target markets, types of products sold and

the capabilities of branch staff.

To encourage cross-selling on

the front-line, Wells Fargo is

basing a portion of employees’

performance evaluations on

how many customers pursue

their suggested services or

products. Wells Fargo also

sets sales quotas: full-time

tellers are asked to make an

average of one referral to

a personal banker per day,

part-time tellers are asked to

meet half that quota, and the

performance of all employees

is averaged over 90 days.19

0 10,000 20,000 30,000 40,000

Source: DePaula, Matthew. “With Rising Teller Turnover, Banks Aim to Retain.” US Banker. January 2005.

US$

2004

1999

36,249

29,044

30,663

24,420

29,645

23,000

24,326

21,000

20,696

16,942

20,426

16,324

19,138

16,217

Consumer loan oficer

Personal banker

Deposit/new account oficer

Head teller

Custodian

Mail clerk

Teller

% Change

1999 - 2004

24.8

25.6

28.9

15.8

22.2

25.1

18.0


Umpqua provides unique customer experience20

In Portland’s uber-hip Pearl District, branch banking is becoming more than just conducting transactions.

The area’s Umpqua Bank takes service to a new level with branches that borrow design elements and

customer service ideals from posh hotels, and customer relationship development ideas from the

neighborhood community center. The branch location is defined by an open space with plush chairs

where customers can sip Umpqua brand coffee and surf the Web or read the paper. A plasma TV flashes

news from CNN. Tellers’ row is placed out of sight, so as not to disturb the relaxing atmosphere. Out

front, there is a concierge-style "Serious About Service" (SAS) desk where "universal" sales associates

greet customers, answer questions and help customers find a variety of banking and community

information. Cash, change and transaction records are given to customers on old-fashioned silver trays,

with gold coin chocolates to recall a bygone era where customers were catered to. The Pearl District

branch also has a movie night and offers yoga classes. While it may seem that the bank is going to great

lengths to lure customers, these little extra touches have made Umpqua one of the fastest growing banks

in the US, with double-digit organic growth in deposits and loans.

IT proficiency: Optimize your assets

Technology investments should do three things: support employees’ ability to

sell, improve customer service and cut costs by improving efficiency. Yet many

companies are still struggling when it comes to putting these concepts into practice.

Whether a customer is banking online, at an ATM or at the branch, interactions

should be seamless – both behind the scenes and on the sales floor. Customers

should be able to access the same information regardless of channel, and

employees should have easy, organized access to all of the customer information

they need to cross-sell.

Multichannel sales and delivery

While only one-third of all customers prefer to use multiple channels, the majority of

heavy bank users seek multichannel access.21 Banks are increasingly motivated by

the opportunity the branch presents as a key part of an integrated delivery system;

the branch is expected to continue to lead all other channels in multichannel delivery

solution spending.22 But the true value of the branch network can be realized only if it

is supported by a multichannel delivery strategy and architecture. Branches should be

integral to multichannel marketing and sales. To enable branch personnel to pick up

on leads generated by other channels – and to make referrals across channels – they

need advanced customer profiling systems that track multichannel interactions.


Successfully transformed branches will share a multichannel delivery architecture

that coordinates activities of all channels, often built around Internet technologies

(see Figure 5). This architecture should leverage common business logic so that

individual channels handle customer transactions identically. Customer knowledge

systems should be designed to capture and derive valuable business information

from customers’ behavior patterns to enable more personalized customer

experiences. Data and business process workflows need to be reengineered to

promote a consistent experience for the customer and allow the reuse of application

functionality, thus lowering costs over time. A component-based architecture allows

the bank to assemble and configure enterprisewide, scalable business systems

quickly, recycling components across delivery channels.

Figure 5. The levels of a multichannel functional architecture.

Staffed channels

Access services

Role-specific channel applications

Common business logic

Call center

External data

Teller/Platform

ATM PhoneOnline


Customer information,

history

Wireless

Self-service channels

Channel interaction

Enterprise integration External Partners

Core business processing Business analyticsIntegrated customer view

Data warehouse


CIBC cuts cost with component-based architecture23

CIBC upgraded its multichannel architecture to a Web-based solution that incorporates a repository of

reusable software components, which are preassembled into banking processes to support tasks such

as opening an account or applying for a loan, and banking modules to support retail banking services

conducted by bank personnel, including tellers and platform and lending representatives in the branch.

The component architecture enables the bank to assemble and configure scalable business systems

more quickly, and at 40 to 80 percent lower cost than traditional development methods. In the second

phase of its project, CIBC was able to reuse components for its Internet channel. The bank’s ultimate goal

is to reuse components across all distribution channels.

Technology and process improvements

Pairing the right technologies with process reengineering helps branch staff focus

their time on customers, instead of transactions. Most banks are already working

to upgrade or replace disparate and obsolete branch systems. In addition, reengi-

neering and streamlining branch processes to increase service efficiency, reduce

manual and paper-based intervention and enable better integration across channels

is crucial. But to remain competitive, banks need to take technology to the next level

in the branch.

Branch personnel should be equipped with advanced sales tools including mobile

devices, knowledge management and scripting applications, as well as staffing

optimization and performance monitoring applications that enable more effective

sales efforts. Banks should select and train front-line personnel who possess techno-

logical aptitude and the ability to multitask. By making technology training and

knowledge a part of the incentive programs mentioned earlier, banks can motivate

employees to learn about and take advantage of advanced technologies.

PNC Bank enhances its front line with lobby management24

PNC Bank is leveraging its Front-Line Excellence solution to provide plans and approaches for front-line

staff to greet customers entering the branch, as well as techniques for directing customers to the most

convenient service point to meet their immediate needs (e.g., phone, Internet, kiosk, ATM or branch

staff). Benefits include US$1.0-1.7 million in annual cost savings and US$2.7 million in annual salaries

that can now be reinvested in sales and services activities. In addition, customer-reported service

satisfaction increased 10 to 20 percent in branches practicing lobby management.


Migrating transactional, or low-value, customer interactions to self-service channels

and refining process automation allows branch staff to spend more time selling

products to customers. Self-service terminals, including online banking kiosks and

advanced functionality ATMs, should be designed for obvious and easy use to

encourage customer acceptance of advanced technologies. Having bank personnel

available to provide preliminary assistance with self-service options also fosters

increased adoption of these advanced technologies.

BOA fosters greater self-service25

Bank of America recently piloted teller-assisted self-service (TASS) kiosks that allow a single teller

to serve multiple customers simultaneously, in some of its branches. After authenticating their

identification, customers can help themselves to almost anything, except cash. Tellers step in at the end

of the transaction to disburse cash or cashier’s checks, or to provide assistance with the machines when

necessary. Even though it actually takes longer for the customer to key in information than it would for a

teller to do the same thing, the involvement in the task makes for a shorter perceived waiting period.

Test yourself

To get the most out of your branch transformation investment, you first have to ask

the right questions. A well-integrated branch strategy hinges on the knowledge that

success is not wholly dependent on any one aspect of change – be it physical

presence, people or IT proficiency – but on how these aspects are blended to meet

banks’ goals. The following questions are designed to help banking executives begin

to formulate a more fruitful approach to branch transformation.

Figure 6. How fruitful are your branches?

Do your employees have the skills and incentives

necessary to build a sales culture in your branches?

Do you have the branch designs and product

offerings necessary to optimize revenue?

Do you have the in-branch tools and integrated multi-

channel capabilities needed to optimize branch productivity?

Does your branch provide a customer experience that

supports sales goals?

Do branch design, processes and technology effectively support branch offerings?

Are branch employees equipped with the customer data and tools they need to

sell effectively?



Conclusion

Is there an overarching, prescribed strategy for making branch transformation

investments worthwhile? Unfortunately, no. It’s not as easy as an innovative lobby

design. Nor is the answer a slick IT application. In order to draw out the most value,

banks must choose the precise blend of physical presence, products, people and

IT proficiency for their particular needs, as well as the needs of the customers they

want to target.

Emulating market leaders can offer banks a modicum of success. However, to gain

competitive advantage and achieve a fruitful return on investment, banks must blend

the elements of branch transformation to not only generate more revenue, but to

serve customers throughout the customer lifecycle as well. Branch banking must

also become a fully integrated aspect of multichannel banking where customers

can receive exceptional in-person service from knowledgeable, well-equipped

bank personnel.

To understand how your company’s branch transformation investment can become

more fruitful, please contact us at [email protected]. To browse through other

resources for business executives, we invite you to visit:

ibm.com/bcs


About the authors

Sunny Banerjea is the Global Banking Industry Leader for the IBM Institute for

Business Value. He can be contacted at [email protected].

Kimberly Hedley is a Senior Consultant for the IBM Institute for Business Value. She

can be contacted at [email protected].

John White is a Managing Consultant for the IBM Institute for Business Value. He can

be contacted at [email protected].

Contributors

Michael Blum, Partner, Global BTO Banking Leader, IBM Global Business Services

Daniel W. Latimore, Partner, Executive Director, IBM Institute for Business Value

Bryan Lee, Retail Banking Solutions Management, IBM Global Financial Services Sector

About IBM Global Business Services

With consultants and professional staff in more than 160 countries globally, IBM

Global Business Services provides clients with business process and industry

expertise, a deep understanding of technology solutions that address specific

industry issues, and the ability to design, build, and run those solutions in a way that

delivers bottom-line business growth.


References1 Spieker, Ronald L. "Bank Branch Growth Has Been Steady – Will It Continue?"

FDIC. August 2004.

2 "Bricks-and-Mortar Banking Bias?" emarketer.com. October 2004.

3 IBM Institute for Business Value analysis of public company information.

4 Bell, Richard. "U.S. Branch IT Spending Projections: 2003 to 2007." Financial

Insights. July 2003.

5 Shevlin, Ron. "What Influences Consumers’ Choice of Banks?" Forrester Research,

Inc. October 2004.

6 Walsh, Ekaterina O., Bill Doyle and Tom Watson. "Which Channels Financial

Consumers Use." Forrester Research, Inc. March 2003.

7 Taylor, Keith. "Counter Those Teller Problems." thebanker.com. December 2003.

8 Ibid.

9 IBM Institute for Business Value analysis.

10 "Branch Renewal for Community Banks and Credit Unions." Datamonitor.

June 2004.

11 De Paula, Matthew. "With Rising Teller Turnover, Banks Aim to Retain." U.S. Banker.

January 2005.

12 Stoneman, Bill. "Attitude Adjustment," BAI Banking Strategies. October 2002.

13 McAdam, Paul and Ayjay Nagarkette. "Front-Line Performance Gap." BAI Banking

Strategies. December 2004.

14 Spieker, Ronald L., "Bank Branch Growth Has Been Steady – Will It Continue?"

FDIC. August 2004.

15 "FYI: An Update on Emerging Issues in Banking." OTS Summary of Deposits. FDIC.

October 2004.

16 Heller, Al. "Banking on Banks for 2004 and Beyond, In-Store Branches Are Poised

to Become and Integral Part of the Supermarket Offering." Supermarket News.

January 2004.

17 Bell, Richard. "Washington Mutual’s Occasio: Branch of the Future." Financial

Insights. March 2003.

18 De Paula, Matthew. "With Rising Teller Turnover, Banks Aim to Retain." U.S. Banker.

January 2005.


19 Slater, Sherry. "Telling numbers: Banks set quotas for sales pitches." The Journal

Gazette. May 10, 2004.

20 Gilstrap, Michelle. "Banking with a smile: Umpqua creates a community-centered

bank." Display & Design Ideas. Volume 16; Issue 11. Gale Group. November 2004.

21 Anderson, Doug. "Back to the Future: Bank Branches in an Electronic Age."

TowerGroup. June 2002.

22 "Retail Bank Delivery Channel Spending in the United States: 2001-2005."

TowerGroup. December 2001.

23 Bell, Richard. "A Bold Step for a Big Bank: CIBC Branch Renewal." Financial

Insights. July 2003.

24 "Front-line Excellence: Lobby Management and Market-based Staffing at PNC

Bank." Demos Solutions. http://www.demossolutions.com/pdfs/case_study_

pnc.pdf

25 Schneider, Ivan. "Here today…Everywhere tomorrow." Bank Systems & Technology

online. October 28, 2004.


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G510-4020-01

White Paper

Contact Center Practice

The Customer Focused Contact CenterA Companion Paper to IBM’s Advocacy in the Customer Focused Enterprise Paper


Prepared by Martin Prunty and Andy Pritchard

Contributions from Robert M. Heffernan


Page 2


Page 3

The customer focused enterprise begins within

the customer focused contact center This paper is a companion to the recent IBM release “Advocacy in the Customer

Focused Enterprise”. It will expound of the base concepts discussed there and

describe how the theories and practices apply to one of the most vital customer-

focused operations for companies today: the contact center. Readers should

reference the IBM handbook “Advocacy in the Customer Focused Enterprise” for

more detailed descriptions of the concepts presented here.

I. Do we need to do things differently?

An opportunity for customer experience transformation in

the contact centerSmart companies want to build strong bases of loyal, profitable customers who are

also advocates for the company. In order to drive sustainable, profitable organic

growth and competitive differentiation, organizations must better integrate and

align the way they treat customers with their sales and service strategy at each

touch point of the relationship, especially those that occur within the contact

center. Achieving this is a continual, uphill battle as competitors increasingly

raise the stakes. Customers’ expectations continue to rise – largely through their

experiences with a vast commercial world – but also through unrepentant brand

marketing and well-publicized customer-focus programs. Given the vast number

of experiences companies have to manage – over channels, employees and vast

customer bases – the key challenge is to create the right experiences at the right

time in a real-life operational model.

The Crux of an Interaction: The Contact Center

Call it what you will - the call center, interaction center, the 800 number, the

service function – the contact center is a critical area where the customer’s

experience and attitude towards the company are developed. Historically limited

to agents and phones, the modern contact center manages a wide array of

critical customer interactions including voice, e-mail, online interaction, self-

service assistance, and collaboration. The modern contact center also serves

‘customers’ other than consumers, including business partners, employees, and

field agents. As CRM strategies run broad and deep, from data analytics to

campaign development, the contact center truly is the place where the rubber

meets the road, where companies make or break their customer strategies in real

I. Do we need to do things differently?

Opportunity for customer experience

transformation in the Contact Center

II. What is the new prescription for

the customer experience? New

view of the contact center customer

experience

III How do we operationalize this new

view? Operationalize contact center

experiences through a customer

focused enterprise

IV. How do we get it done? Get it “done

right” in the contact center through

new IBM project technique


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application. It’s where the customer experience happens, where many interactions

takes place, and where a high percentage of the total transactions finally occur.

It shouldn’t be surprising that the contact center is at the visceral core of the

customer focused enterprise.

Drivers of rising customer’s expectations in the modern contact center

There are many reasons why customers expect more and companies feel they

must improve. Some of these reasons include:

Companies’ brand marketing and promises often show or describe the treatment

customers can expect via the contact center: happy, helpful, empathetic agents;

a caring ear; a concerned partner; a multi-channel interaction with little hassle

a lot of smiles. These images and messages have become commonplace in brand

marketing.

Competitors increase their marketing, sales and service options and capabilities

continually, usually for the better. It has only been matter of years since such

basic service options as accessing account balances over the phone or receiving

e-mail updates were unheard of. Now they are expected. Companies introduce

new services constantly, and customers get used to them quickly.

Customers’ interactions within one industry drive change in others. If a cable

company offers help on the phone, why shouldn’t the power company? Customers

develop their expectations from their general commercial experience and often

expect all service providers to rise to the same baseline.

Customers’ experience and familiarity with multiple channels and methods of

communication is rapidly increasing. Within the past decade, e-channels went

from nerd-niche to general usage. Mobile phones went from a business luxury

to a must-have for everyone from children to the elderly. The mix of interaction

technologies will only grow in complexity and sophistication going forward.

Knowledge of customer-focused programs at large companies (e.g., “customer

is job #1” type slogans) has permeated the minds of consumers. Customers

know their value to companies, and hold their providers to the standards they

proclaim.

Customers’ embrace and backlash of new technologies and outsourcing. It seems

that many of the new advancements in the contact center can bring both cheers

and groans to a finicky customer base. Despite being able to do more faster,

customer often bemoan IVRs, primitive voice recognition, and other capabilities

that cause confusion and frustration. Offshore outsourcing is often pegged as a

social mar on television. Customers want accessibility, features and flexibility, but

are sensitive to change.

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Other factors driving change in the contact center

It’s not just the customers and competitors driving change in the contact center.

Other drivers include:

Expansion of CRM and other customer and growth focused initiatives within

the company. CRM isn’t new and it isn’t going away. The customer is still a

top priority and a key strategic focus, and contact center management is at the

center of this drive.

Executive mandates to reduce costs and improve efficiency are a routine within

the contact center. The contact center’s commonly viewed position as a cost

center further drives these mandates when times get tight. At its base, the

contact center seems a calculable formula of seats, calls and resources, all of

which are the focus of reduction, streamlining, or automating.

New technologies and new application of technologies, including the use of

IP-enabled contact centers, voice recognition, and sophisticated routing drive

change from the bottom-up. Leading edge companies understand the current

technology opportunities and leverage them to obtain their customer and cost-

reduction goals.

The imperative to integrate channels, including the contact center, web, IVR,

kiosks, and the retail branch becomes more important as customers demand

more choices and companies look for ways to increase usage of lower cost self-

service channels. Channel integration delivers multiple benefits, including

improving customer experiences, building more efficient processes, gathering

better data, and reducing redundant or wasteful business operations.

The imperative to further integrate the contact center with other key business

functions, including sales, marketing, distribution, and supply chain to enable

better customer experiences, improved operational performance, and a tighter

ship from back-office to the front. The contact center is often the default

mouthpiece and ear for the company, reinforcing the need to integrate across

business units and functions.

The emergence and popularity of outsourcing and offshoring, like a

technological innovation, is an important shift in a contact center’s ability to

provide live customer assistance at a manageable cost. The procedural and

organizational implications, though are daunting.

The need to acquire new and more extensive customer data drives change

within the contact center, a key creator and user of customer data.

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Accountability and proof of return on investment will always affect the decisions

of contact center leadership. In many ways, the contact center has always been

scrutinized for performance and ROI, given the amount of trackable data and

metrics that are available. These, though, typically only shed light on the cost

equation. The modern contact center plays a strategic role in managing the

customer, one that directly and indirectly affects lifetime value, retention rates,

and advocacy. As managers progress forward, they will have to understand and

embrace new ways of accounting for their contribution and value within the

enterprise.

Understanding customers is key

Regardless of how change is driven in the contact center, it’s clear that companies

must take outward action to influence their customers’ perspectives. A problem

is created when contact centers take action without really understanding their

customers. According to IBM research, 79 percent of business leaders have only

a generalized or superficial/absent understanding of their customers. As a result,

we could interpret that business leaders act on an operational basis or “how can

we handle customer interactions more efficiently, or less expensively?””, versus

acting on factors that customers indicate are most valuable.. It is not surprising,

therefore, that 74 percent of business leaders make decisions based upon what’s

right for their operations instead of what is right for both them and the customer.

By acting without understanding the customer, and focusing mostly on tactile

and operational attributes, companies are taking a ‘shot in the dark’ at their

customers, often investing big money in contact center capabilities that may miss

the needs of the customer.

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It’s too much! There are too many interactions to be perfect all the time

Companies today are meeting their customers in a lot of different places under a

lot of different rules – online, over their devices, through channel partners and,

of course, in all the old favorites places, such as the phone and the store and at

the tradeshow and in their homes. Many of these interactions are managed by

the contact center. The largest organizations can have thousands or millions of

customers interacting at all times of the day, often being treated by thousands of

independently-minded representatives and agents. Considering the many variables

impacting each of these transactions, companies have their hands full trying to

deliver service to customers with any level of consistency, much less with any

degree of perfection.

Constraints hindering the delivery of perfect experiences include:

It’s too expensive to try to ensure that every contact center interaction is

perfectly aligned to each customer at every point of contact. What’s the point of

advocacy if it lowers profitability?

Customers are not created equal. Each company has its mix of customers,

some which are very profitable and some that are much less profitable. Often

described with the 80-20 rule (80% of revenue is produced by 20% of the

customers), the logic prevails that very profitable customers should receive

impeccable service, while service costs should be managed for customers who

are less profitable. In some cases, companies actually lose money serving lower

value customers.

There are not enough of the right kind of resources within any organization to

meet every customer interaction. Besides, there is an equally pressing imperative

to reduce and refine resource usage and expenditures.

There’s not enough time to build out every possible service and treatment option

for every type of customer. CRM projects are probably already stacked up in

queues at most businesses.

Things are going to change anyway, long before “everything” is rebuilt or

reconfigured. Most serious transformations can take years at large organizations

and the benefits are needed today. Savvy competitors aren’t waiting for others to

catch up.

•

•

•

•

•

Being perfect all the time is impossible

given the enormity of the customer

interaction load companies have today.


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The new challenges and opportunities

IBM understands the emotional imperative of the customer experience and

believes that this area will be a key battleground for companies’ competitiveness

in the future. Two questions summarize the relevant challenges and

opportunities:

How do companies operationalize in their contact centers the advocacy-building,

higher-order emotive attributes that brand messaging often promises, such as

being caring, attentive, considerate, or empathetic?

How can companies deliver competitively superior customer experiences within

their contact centers using a realistic, achievable operational model?

The contact center as a customer experience test bed and

logical starting pointIn most organizations, the contact center is the logical starting point for

customer focused initiatives. It simultaneously provides a unique environment

of control while also providing a significant and meaningful base of customers

who represent a full spectrum of needs and interactions. The contact center

often manages its interaction from start to finish, providing a good basis to

test interactions in their entirety. The contact center is also a data-intensive

environment, where most interaction attributes can be tracked and monitored in

a controlled fashion.

In this sense, companies should look to the contact center as an ideal ‘test bed’

for customer focused initiatives. Companies can test concepts and programs, fine-

tune them, quantify their benefits, and make cases for their wide-spread adoption

throughout the enterprise. Listed below are some reasons why the contact center

should be the test bed for customer focused initiatives:

A high percentage of total transactions occur in the contact center for most

companies. In some cases, companies interact with clients almost exclusively

through contact centers and self-service channels.

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It is a closely managed, structured environment. Unlike retail or branch

channels, the contact center is typically centralized in some fashion, staff

undergo similar training, have access to similar tool-sets, and geographical

disparities are minimized. Additionally, the contact center is more data-intensive

than retail or partner channels, and thereby more measurable. Internal

environmental factors include:

Supervisors actively coach and mentor agents to drive the appropriate

behavior

Quality monitoring and recording technology is used to capture actual

employee performance and customer interactions

Performance metrics are routinely measured

Customer satisfaction feedback is received

Segment strategies are easier to deploy. Customer treatment may be customized

and personalized by different segments, either by customer preference or

customer profitably/value. While it is possible to achieve this in face-to-face

channels, it is often much more difficult to implement since transactions often

begin without authentication and customers can view and request differentiated

treatment with little regard to company strategy. The contact center can be a

valuable testing ground for segment strategies since customers can be identified

by calling number, special access numbers can be distributed (e.g., a 800

number for premier customers), authentication is typically always a first step

(enabling the customer to be identified systematically), and through sophisticated

routing technologies that can deliver the right customer to the right service

schema.

Current techniques can be incomplete in addressing the advancing customer

experience imperative given the enormity of the customer operation at large

organizations. But there is a way. The following sections describe how companies

may successfully create differentiated customer experiences within a realistic and

achievable operational model by creating a customer experience framework.

•

•

•

•

•

•

CRM straight talk: Business

leaders know it’s important to build

advocates through the right customer

experiences. The problem is that its

getting harder and harder each day to

do so. The customers’ expectations

are growing from competitors, their

commercial experience and brand

messaging. To complicate matters,

customer experiences have emotional

characteristics which companies haven’t

been good at delivering. Given the

enormity of experiences companies

have to manage – over channels,

employees and vast customer bases

– the key challenge is to create the right

experiences at the right time in a real-

life operational model. Because of its

inherent qualities, companies should

look to the contact center as a logical

starting point and ‘test bed’ for customer

focused initiatives.


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II. What is the new prescription for the customer

experience in the customer focused contact center?

A new view is needed for delivering customer experiences. One that builds a

competitively superior experience while prioritizing the resources, the competitive

shelf-life and investments of the company’s CRM programs. This new view has

several key characteristics:

Knowing what we are trying to accomplish: A deep understanding of which

interactions have the most importance to a customer and which ones play a

part in changing the customers’ attitude toward the company, also known as

“moments of truth”.

Delivering tactile and emotive performance, or in other words, delivering

both physical aspects and more psychological aspects of service: The customer

experience cannot be boiled down to merely who called first and which agent

is available to serve them. The importance of different aspects varies by

interaction, so knowing the value of customers and when to focus on the tactile

or emotional (or both) performance is key.

Prioritizing customer operations: Focus resources and timeframes toward those

attributes that will change the customers’ mindset, while leaving attributes that

don’t affect the customers’ attitude on the drawing board.

What we are trying to accomplish: Create advocacy among customers

Changing customer experiences is about changing their interactions and their attitudes

The goal of delivering successful customer experiences is to create advocates.

Advocates are superior to merely satisfied customers. Advocates spend more,

remain customers longer, and refer new customers. On the flip side, antagonists

and detractors of a company destroy value. It should be the goal of customer-

focused contact centers to create advocates, or at least begin to migrate customers

toward advocacy.

Advocacy is largely a measure of a customer’s attitude towards a company.

A customer’s attitude towards a company is developed during the series of

interactions (e.g., service calls, web visits, transactions, advertisements, etc)

they have with the company. In the most general terms, a customer’s attitude

is improved when their expectations are met or exceeded, and is harmed when

expectations are unmet. The amount that their attitude changes is determined

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by how important or intrusive the interaction is to the customer. Some interactions

are vital, others are unimportant enough to almost be ignored. Understanding these

distinctions enable companies to prioritize where they focus their energies. These

concepts are addressed in detail in the CFE handbook under separate cover.

Customer Experience Framework

The entire scope of managing a customer’s experience can generally be described

by the categories listed in the framework below. This framework can be used

to dissect, understand, and assemble a meaningful analysis and vision of the

customer experience. It is used as an ‘outside-in’ view, meaning that it focuses

on what the experience is, not necessarily how the company may actually fulfill

it operationally. This framework is discussed in detail in the Customer Focused

Enterprise, and is presented here with its specific contact center implications.

The following are Customer Experience Categories and the corresponding Contact

Center Implications:

1. Interactions

Customers increasingly expect their information to be available for every

interaction, regardless of channel, over the course of their relationship. This

means if they call on Wednesday, the company is aware of the online order they

placed on Tuesday, and if they resolve a problem this year, the company knows

about it next year. These expectations remain true as they speak to different

agents, different departments, different product groups, and different channels.

The operational implications stretch well beyond the purview of the contact

center, and become a data-sharing and experience definition imperative for the

entire enterprise.


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2. Channels and touchpoints

Customers are growing to expect the same level of service over the web, over the

phone, and through other channels (devices, ATM, branch, store). This means

providing consistent treatment and ‘one company-one voice’ type messaging

across the phone, e-mail and non-contact center locations. Customers will expect

to be able to choose which channels and media through which they interact, and

will expect services comparable to those that they receive from other companies.

3. Tactile performance

Tactile performance in the contact center has been a long-standing historical

focus, with many of the tactile measurements being the primary indices of

the contact center’s operation. Think average wait time, average handle time,

abandonment rate, etc. In customer terms, these are represented in more

qualitative measurements such as “they answer quickly” or “they were able

to resolve my problem efficiently”. Customers expect service to be quick and

efficient. Customers expect most transactions, from a simple address change to

fulfillment of products, to be fulfilled instantly (or at least with the appearance of

instantly). Customers may expect agents and service to always be available or to

possess very specific skills. The tactile attributes of a contact center are an ever-

changing and ever-growing mix, and understanding them and perfecting them

itself is a massive and complex undertaking.

4. Emotive performance

Historically, emotive performance with the contact center (e.g., how friendly

agents are, how empathetic they are, how considerate they act, how well the

express concern for customers) was perhaps understood as a function of the

unique personalities who were staffing individual agent seats. The brand

messaging that companies blasted through the airwaves may have told of ‘caring

service’, but its execution was often a sore point for customers and contact center

managers alike.

Not surprisingly, the traditional tools and approaches to emotive performance – hiring

the right people, training, incentives and communications – are the same ones needed

today. The difference today is that greater sophistication is required to understand

the most important emotive events, and then to find techniques that explicitly and

formally address these important interactions. Companies must take charge of the

emotive equation and not delegate it to the chance behaviors of individual agents.


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Sound tough? It is. But the new competitive battlefield will be one where companies

make good on the emotional needs of the customers when it counts.

5. Products and services

A traditional mindset may think of the contact center as a place for problem

resolution, billing questions, or account information. In many industries, the

contact center must also deliver on key features of products and services.

In financial services, it’s the ability to transfer funds or make a trade over the

phone. In pharmaceutical retail, it’s the ability to renew a prescription or find

health advice. In telecom, it’s the ability to upgrade service packages and change

feature options. In most verticals, it’s the ability to purchase over the phone with

expert product advice and assistance without needing to ever visit a store or a

branch. Soon, the online product experience will connect with the contact center, as

live service options augment web service and web product fulfillment. As with other

“cross-pollination” of contact center expectations, features that were once enabled

for the sake of service will be expected on the products and services front.

6. Customer expectations by segment

While customers may not think of themselves in terms of ‘segment’, they do

differentiate their own needs and expectations based on location, the amount

they spend with a company, or the tenure of their relationship. For example,

business customers using bulk agreements with a wireless provider may expect

differentiated treatment in comparison to individual wireless customers.

The segment challenge presented to contact centers is by no means simple: there

are intriguing plays to differentiate service by customer value while they also may

set expectations for differentiated treatment in both positive and negative lights.

Segmentation allows contact centers to extend better service, say with live agents,

to high-value customers, while migrating less profitable customers to self-service

channels. The operational implications can be challenging as companies manage

expectations over segments, identify customers at the point of interaction by their

segment, and successfully deliver multiple modes of differentiated treatment

simultaneously.


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Meeting the challenge: The appearance of perfection

While being perfect may be impossible, prioritization enables companies to

appear more perfect, more often and more frequently. A simplified recipe for

success can be thought of this way:

Manage key interactions to improve the customer’s attitude

toward a company. This is achieved by:

Fix where the company fails on a promise

Delight customers when it makes sense (and cents)

Right-size delivery when an interaction doesn’t matter

By understanding how an experience is built and applying the simple concepts

above, companies can overcome common challenges to improving the customer

experience in a realistic operational model.

The customer experience… Prioritization allows…

It’s too expensive Focus on what really counts

There are not enough or Smart deployment of resources, the right kind of resources including low-cost and automated options

There’s not enough time Realization of benefits and competitiveness in the short term

Things are going to change Improvement of the here-and-now anyway without spending on programs that will be obsolete before they are finished

Note: there is a more discussion of prioritization and “moment of truth” analysis

under separate cover in the CFE Handbook.

•

•

•

CRM straight talk: The customer

experience is more than a boil-down of

hard metrics about speed, availability

and information. These tactile

performance measures are critical, but

real progress in shaping the customer

experience has to involve the emotional

aspects. The key to understanding

emotional success is understanding the

customers’ needs and expectations. By

doing so, contact centers can understand

what the most important interactions

are: the moments of truth. By prioritizing

delivery on these key moments, contact

centers can deliver the right experiences

at the right times and build customer

advocacy within a realistic, achievable

operational model.


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III. How do we operationalize this new view?

Operationalize customer experiences through a Customer

Focused Enterprise (CFE)

The “Customer Focused Enterprise” describes a company that understands the

entire customer experience and delivers against it to build customer advocates

while deploying resources effectively and smartly. The CFE embeds new

competencies and practices into the contact center that make leading-edge

customer experience strategies viable and operational. The IBM CFE model is

composed of six top-level characteristics, shown below:

Listed below are more detailed descriptions of the six characteristics of the CFE.

Embedded in each competency is a discipline of innovation that defines and

shapes change within that function.

Customer authority

Customer authority is the consumer driven, “outside in” approach to designing

customer interactions that delivers against the specific levers that drive optimal

customer behavior. Contact centers that understand customer authority are able

to approach their customers in ways that build advocacy through knowing the

mindset of their customers, while simultaneously understanding the value of the

customer to the enterprise.


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Listed below are some of the key competencies and indicators of customer

authority:

Enterprise-wide Customer Authority

Theme

Contact Center Considerations

Customer intelligence is the ability to

capture customer information that creates

true insight, including interaction data,

transaction data, preference information,

demographics and contextual information.

Companies that develop customer

intelligence are able to get to the truth

about what customers feel and desire,

and are able to convert that truth into

actionable insight.

Customer information forms the

foundation of real-time intelligent

messaging in the contact center. By

delivering critical customer information

(such as contact history, profitability,

recent purchases, and customer value)

to the contact center agent during an

interaction, a stronger bond can be

formed with selected customers and

higher profitability can be achieved.

Real-time intelligent messaging allows

contact centers to personalize its services

for those customers it determines to be

most valuable. It can also be proactive,

automatically generating emails or instant

messages to keep customers informed on

order progress, service restoration, or can

even be used to acknowledge birthdays,

anniversary dates, etc.

Multi-dimensional segmentation is

used to define customers by narrow

segments that cut across life stage,

product usage, behavior profile and

profitability. This segmentation is used to

understand customers, and is also applied

to programs, operations, and specific

customer interactions.

Contact Center managers have a valuable

corroborator in their cases for improving

the contact center: the customer. Capturing

and expressing the ‘voice of the customer’

can be a critical tool in framing operational

decisions and building cases for change in

the contact center.

The contact center is capable of capturing

valuable information from its customers

by means of post-contact or real-time

customer surveys. Most customer surveys

fall short of their potential, however, by

limiting questioning to feedback relating

directly to the contact itself. Creating an

effective customer feedback strategy will

result in the capture of information that

can have be used to better understand

customer needs, leading to higher

customer satisfaction and advocacy.


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Feedback loops are formal efforts

to learn about customers’ opinions.

Smart companies use them – at both

the individual and aggregate levels

– to redefine business processes and

programs. Customer focused enterprises

find it important to prove to customers that

their feedback is being used, validating the

interchange with customers.

Within the contact center, data can

be captured in real-time during the

transaction by means of quality monitoring

or recording, or with formal collection

means such as surveys. In each case, the

perspective of the customer is gathered

to understand their expectations and drive

improvements within the contact center.

New customer research methods are used

to understand customer needs, emotions

and behaviors. These techniques improve

upon conventional means such as surveys

and focus groups to capture more realistic,

more truthful behavior, and measure actual

outcomes when they occur.

Perhaps one of the most interesting

developments in contact center research

is the analysis of voice data for tonal and

emotive response. This type of analysis

determines stress levels, frustration levels

and other emotional metrics that can be

combined with the contextual information

happening during the interaction for new

insight. At an analytical level, managers

can gain new insights into their customer.

At the transactional level, action can be

taken during the interaction to mitigate

customer dissatisfaction or capitalize on

delight.

Customer dialog

Customer dialog refers to a business’s ability to communicate and transact with

customers intelligently and responsively during each interaction, on a customer-

by-customer basis. This is achieved by capturing discrete behavioral triggers,

secondary events and patterns. This information is used to generate specific

communications, then route these communications in a seamless multi-channel

fashion based upon sophisticated business, channel capacity and customer

preference rules.


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Listed below are some of the key competencies and indicators of customer dialog:


Theme


Real-time intelligent messaging elevates

every communication to a meaningful,

smart interaction through the application

of relationship attributes, life event

information and data driven insights.

Companies use intelligent messaging to

transform generic, misfired or ineffectual

communications into relationship-building

events and new sales opportunities.

Customer information forms the

foundation of real-time intelligent

messaging in the contact center. By

delivering critical customer information

(such as contact history, profitability,

recent purchases, and customer value)

to the contact center agent during an

interaction, a stronger bond can be

formed with selected customers and

higher profitability can be achieved.

Real-time intelligent messaging allows

contact centers to personalize its services

for those customers it determines to be

most valuable. It can also be proactive,

automatically generating emails or instant

messages to keep customers informed on

order progress, service restoration, or can

even be used to acknowledge birthdays,

anniversary dates, etc.

Voice of the customer is a process

for understanding and integrating the

customer’s perspective in designing

interactions. Smart companies encourage

customers to provide feedback and

insights. This information becomes a

representative of the customers’ needs,

and can be the impetus and champion for

transforming business operations.

Contact Center managers have a valuable

corroborator in their cases for improving

the contact center: the customer. Capturing

and expressing the ‘voice of the customer’

can be a critical tool in framing operational

decisions and building cases for change in

the contact center.

The contact center is capable of capturing

valuable information from its customers

by means of post-contact or real-time

customer surveys. Most customer surveys

fall short of their potential, however, by

limiting questioning to feedback relating

directly to the contact itself. Creating an

effective customer feedback strategy will

result in the capture of information that

can have be used to better understand

customer needs, leading to higher

customer satisfaction and advocacy.


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Realistic segmented treatment is the idea

that different customers should be treated

differently, based on their profitability to

the company and their preferences. While

this is a powerful strategy, companies

must verify that these tactics are possible

with real life resources, as some programs

may be difficult to deploy within complex

organizations.

What happens when twenty callers are

in queue and the last in line is your most

valuable customer? What happens when a

‘gold’ member is recognized on the phone

but not e-mail? These types of challenges

can transform a well-intentioned service

strategy into a customer breakdown if

not handled correctly. Contact Center

Managers must be able to successfully

operationalize segmentation strategies to

insure that their most valuable customers

receive consistent treatment, regardless

of which method of communication they

choose.

Leveraging capabilities such as Skills-

Based and Data-Driven Routing, contact

centers can transform the traditional “first-

in, first-out” method of routing calls to

one that delivers higher customer value by

providing preferential, more personalized

treatment to valuable customers, matching

them to the agent best equipped to serve

their needs.

Event-based rules are instructions on

how a company should react to specific

customer stimuli. In other words, when

X happens, we should do Y. Companies

should define and maintain a library

of event-based rules that trigger

communication events based on customer

and company actions. By doing so,

companies can respond to customers

consistently while acting towards specific

goals and objectives.

A leading edge tool for the contact center

is the rules engine (reactive and proactive).

A rules engine can be used to determine

how each transaction (phone, email, web,

etc.) is handled based upon the value

placed on the client and specific contextual

information of the interaction. For instance,

a rules engine can be used to personalize

a customer’s voice menu options to only

include those choices for products and

services they use. Or, the rules engine

can be leveraged to determine which

agent should handle a specific customer’s

transactions. Proactive, events-based

rules engines could also be used to predict

the reason for a customer’s transaction

using information such as recent order

activity, open trouble tickets, etc. As part

of a customer dialog, contact centers are

the natural starting point for use of event-

based rules engines.


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Active recovery and service-to-sales is a

discipline of treating service inquiries as

an opportunity for relationship-building.

Companies should establish a service-

to-sales approach that senses sales

opportunities during inbound customer

contacts and effectively “earns the right”

to transition to sales activities. The best

businesses are proactive in service

recovery, creating advocacy-building

moments out of potential breakdowns in

the customer experience.

As the owner of a high percentage of

service transactions, the contact center

is the natural place to resolve customer

issues and to leverage opportunities

to convert service requests into new

sales. This prospect has long garnered

excitement among marketing and sales

heads who understand the opportunity for

new revenue.

Contact center managers understand that

service is a much different skill set than

sales. Therefore, equipping agents to

handle both, and teaching them how to

transition from one to the other gracefully,

is a tall order. From the customers’ view,

a botched service-to-sales pitch can

seem cheap and intrusive. Contact center

managers must examine the skills and

technologies needed for this provocative

concept, and understand the operational

pitfalls as well as the prospective upside

opportunities.


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Integrated execution

Integrated execution is how companies deliver a consistent experience and allow

intelligent, cross-channel execution of customer interactions. Different channels are

used to enable a consistent interaction based on customer needs, preferences and

profitability.

Listed below are some of the key competencies and indicators of integrated

execution:

Enterprise-wide Integrated Execution

Theme


Method of choice allows customers to

personalize and choose the channels

they would like to use for interaction

and receipt and delivery of information.

This competency takes more than just

recording a customer’s preferred channel.

It requires being able to act on it with every

communication, and having the proper

channel infrastructure to do so.

Using customer feedback, Contact

center managers should champion and

take ownership of ‘method of choice’

programs, sharing important interaction

data with marketing, sales and others.

Organizationally, the contact center must

help establish explicit rules and integral

programs with other channel participants

to determine what channels are offered in

response to customer needs and whether

every customer has access to every

channel.

Multi-modal interaction is used to

enable customers to conduct interactions

and dialog over multiple modes of

communication, such as voice, data,

or different channels with ease and with

consistent treatment, data availability,

and quality of experience. Companies

able to do this meet their customers’

expectations, minimize frustration, and are

able to present a consistent and unified

experience.

One of the most recent developments in

cross-channel coordination is the capability

for the customer to request and receive

live agent assistance while exploring the

web site. This multi-modal interaction is

more than a gimmicky new feature, it helps

reinforce and improve the customer’s self-

service experience by delivering back-up

support when it is necessary.

In addition to helping drive self-service

transactions, new and more complex

transactions can be added to the contact

center mix by leveraging collaboration

capabilities, where agents can physically

assist web self-service clients in filling out

forms, receiving requested information in

real-time, etc.


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Distributed delivery is when companies

deploy resources to reduce the need for

central infrastructure and thereby lower

costs. Companies should use this as an

opportunity to meet customers according

to their preferences to improve the

customer experience. This phenomenon

is being driven by the adoption of remote

technologies (e.g., web, devices) of

both customers and distribution channel

employees, such as sales reps.

With more sophisticated IP technology,

the wide-availability of broadband, and

the opening of offshore labor markets,

the contact center has more opportunities

now to distribute their workforces

geographically than ever before. Contact

centers can ‘de-centralize’ their operations,

virtually routing calls offshore or to work-

at-home agents as easily as they do on

campus.

In the consideration that other labor

forces are distributed (such as field agents

working from home), companies will seek

to ‘centralize’ services previously available

at the branch office. These services may

open new audiences to contact centers as

they begin servicing employees as well as

customers.

Demographic circles are a method of

understanding customer preferences by a

geographical or demographic preference,

such as culture and nationality. Companies

provide customers an experience that is

consistent with their own habitats, such

as matching accents or speaking patterns.

This is increasingly more important with

distributed workforces.

This opportunity to address the

demographic needs of customer is easily

managed within the contact center domain.

Foreign language-speaking callers may be

routed to the appropriate agent based upon

their language preference. For example,

callers who are identified as Spanish

speakers can automatically be routed to

a Spanish-speaking agent without asking

them the question each and every time.

Partners as an extended view is the

concept that external partner businesses

require consistent customer information

and customer treatment policies in

order to fulfill the company’s customer

focused strategies. Companies should

treat partners as an extended view of the

enterprise by equipping them with the

ability to emulate the brand, operations

and skills of the company to become

transparent to the customer.

This issue and opportunity cannot be

boiled down to simply technology,

infrastructure or resource combinations

like other programs. Getting partners to

adopt service standards or maintain a

consistent customer experience typically

requires critical policy agreements,

service level agreements, organizational

cooperation, and even solidarity on

customer vision. At a tactical level,

investments have to be made in data

integration and sharing, and co-mingling of

training, skills, and technology.


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Solution experience

Solution experience is about delivering needs-based solutions (combinations of

products and services) that contribute to the holistic customer experience, based on

the wants and needs of the customer as understood across the enterprise.

Listed below are some of the key competencies and indicators of solution

experience:


Theme


Needs-based orientation is the practice

of building products and services around

the specific requirements of individual

customers. Companies can transform

sales and product delivery to address the

needs of the customer, delivering custom

solutions versus one-size-fits-all products

when it makes sense to do so. This can

create stronger ties to the company,

increase switching efforts for customers,

and create higher satisfaction among

customers.

As in product development, the live

sales, service, and support functions of a

company’s value proposition should also

be tailored via a needs-based orientation.

The contact center manager should come

to the table with the same enthusiasm

for custom solutions as the product

development team, and should advocate

for delivering a needs-based orientation

through the contact center.

Development of customized, needs-based

solutions are limitless possibilities, and

include customization of client menus

(designed to address only those products

and services they use), transaction routing

to requested agents, proactive outreach

calling, customized queue messages, etc.


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Bundles and up-sell sophistication

combine products and services to fulfill

multiple needs of the customer while often

providing them other advantages, such

as integrated access or price discounts.

Bundles and up-selling can be a win-win

for companies and customers. Customers

get more while companies increase their

hold on the customer, capture a larger

share of wallet, and gain deeper insights

into the customer’s behavior.

Converting service to sales, cross-selling

and up-selling new products and services

to customers has enormous relevance in

the contact center environment today. By

identifying a product or service weakness

that is the source of customer frustration,

and offering the customer an upgrade

or bundle that will better meet their

needs, agents can improve the customer

experience and make a significant revenue

contribution at the same time. Although

these specific interactions are not

appropriate for all customer interactions,

knowing when and how to capitalize upon

these opportunities is critically important.

The key is to have formal systems

and processes, including knowledge

management and training, that enables the

agent to identify a sales opportunity and

then empowers them to close the deal.

Human performance

Human performance is how companies foster sustained employee commitment

and engagement to allow employees to better meet personal and organizational

objectives, all while better serving and being advocates for the customer.

Listed below are some of the key competencies and indicators of human

performance:


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Enterprise-wide Human Performance

Theme


Agile workforces provide employees

with human development progression

planning capabilities based on personal

and lifestage objectives. Companies with

agile workforces are able to evaluate staff

at the individual, departmental, division,

and geographic levels, determine the needs

of the organization, and redeploy resources

smartly.

Arguably, agile workforces may be the

most significant operational shift in the

contact center in the past decade, perhaps

only paralleled (and, of course, enabled

by) the leaps in technology also seen this

same period. Outsourcing, for instance,

provides enormous benefits in speed,

capacity management, and cost control,

while mitigating internal constraints

and resource expenditures. At the same

time, these tactics are rife with their own

complications, such as data management,

process control, security and even public

relations backlash. Today, many contact

center managers are likely to have some

portion of their operations outsourced,

with further tests and plans for future

usage. There is no optimal solution

or combination of operational models

that fits each company, and the savvy

contact center manager understands that

outsourcing is a powerful tool that must be

balanced with the objectives and needs of

the company and its customers. With this

in mind, contact center managers must

take a strategic view of their operations,

incorporating agile workforce decisions in

their strategic planning and blueprinting

efforts, and not attempt to use outsourcing

as a complete, stand-alone solution.

Virtualization is another intriguing trend

impacting today’s contact center. By

configuring multiple centers to function

as one, deploying work-at-home agents,

and leveraging other non-contact center

resources available throughout the

enterprise, contact centers are able to

improve overall productivity, increase

their capacity to handle transactions

and improve their capability to respond

to periodic spikes in volume. The result

is improved customer and employee

satisfaction at lower cost.


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Cognitive-based change management

entails advanced methods for supporting

change that utilize psychological and

motivational factors. Companies should

utilize these new human development

techniques that move beyond traditional

skills and basic knowledge retention.

Companies that are successful in

this are able to obtain employee and

leadership commitment, engagement and

productivity.

It’s always been a challenge to get large

populations of employees to march to the

same drummer, regardless of backgrounds

or payscale. The fact that there is often

high employee turnover in contact centers

complicates this task considerably. The

best customer data-driven analysis or CRM

vision is useless unless it is consistently

executed on the front line.

These new training techniques were

made with contact center agents in mind.

By adding new training and behavioral

techniques to the skill developer’s toolbox,

contact center managers can find new

ways to direct how the agent behaves and

how effectively they deliver on customer

focused programs.

Role alignment is used to match the

right person with the right job, including

matching skills, aptitude, and personality.

Companies should use personality and

competency evaluations and tools to best

match employees with jobs that fit their

personalities and skills. These techniques

can be used in recruiting and to deploy

existing staff.

At the recruiting level, contact centers

should conduct employee personality

and competency evaluations to select

employees who are suited for the

particular style of service and interaction

the company requires. There are external

vendors who specialize in this form of

evaluation and recruiting.

At an interaction level, contact centers

can use sophisticated routing processes

to match the right type of interaction

with the right type of skill. This involves a

much deeper understanding of individual

skill sets and the ability to ‘systemize’ this

understanding within the routing process.

Personal customer commitment should be

generated among employees. Commitment

should go beyond cosmetic employee

slogans and be based on meaningful

motivation within the employees’ job. To

do this, companies must provide each

customer-facing employee with a personal

motivation to sustain a customer focus.

Gaining a personal customer commitment

among legions of contact center staff can’t

be reliably accomplished by ‘force feeding’

them mantras and directives. Educational

and motivational programs are required

to reinforce the commitment to serve the

customer. At the baseline, companies must

invest in development of employees who

understand the benefits of advocating

customers: revenue, company health, and

for the agent, a smoother, more effective,

and more satisfying workday.


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Parallel interest and rewards involves

creating motivations and incentives for

customer-facing employees that align to

customer strategies. Companies should

align the personnel interests of employees

with job roles and use customer-focused

metrics to measure success

Strong companions to education are real

rewards for customer focused behavior:

compensatory consideration, incentives,

career path, perks, and recognition. This

suggests a need for customer focused

metrics that are applied to the reward

process.

Identifying and addressing the personal

interests of agents is another path to

sustaining agent commitment to customer

causes. This involves a serious approach

to developing career paths and career

development. Although it won’t benefit all

types of agents, it does benefit the best

kind – those who demonstrate interest in

their careers and the customer. For the

company, it increases retention among the

best and most valuable agents, improving

overall contact center effectiveness while

mitigating the costs of replacing quality

employees.

Knowledge management and continuous

learning is required to direct and

increase human performance. Successful

companies enable resources to leverage

institutional knowledge quickly and

systemically, providing a basis for

continuous learning throughout the

employee population.

A beneficial application of knowledge

management is the delivery of intelligence

on demand, or, in other words, delivering

knowledge at the exact point it is needed

by an agent. Imagine an agent being asked

a question for the first time by a customer

and being able to expertly answer it

because it was delivered to her at the exact

moment of need using a sophisticated

knowledge-based system capable of

prompting answers based on the context

of the call. Although this vision has

been considered for some time, today’s

technology is finally making is a more

affordable, short-term reality.


Page 28

Customer-focused organization

Customer-focused organization entails how functional groups and lines of

business collaborate to fulfill customer-centric strategies and tactics. (for example,

adjust organizational boundaries and measurements to facilitate customer

segment-focused activity by redefining profit and loss [P&L] responsibility)

Listed below are some of the key competencies and indicators of a customer

focused organization:

Enterprise-wide Customer-Focused

Theme


A Segment-influenced operating model

involves the realignment of organization

boundaries and control structures towards

customer strategies. Companies should

redefine silos, divisions and organization

around customer segments so that

decision making can be made in the

interest of customer-focused strategies,

not short-term divisional objectives. To

do this, companies must place decision-

making authority in line with customers

and segments, versus the traditional

alignment against products and channels.

Corporate accountability, including

revenue attribution and budgeting, should

be placed under the management of

customer-focused leadership.

Intuitively, there is a natural bundle of

capabilities in the contact center that

logically seem like they should remain

under consistent leadership. This said,

real customer strategies will always have

difficulty taking root if they never hold

a true power seat within the enterprise.

The contact center must determine if its

operational organization will serve segment

leadership, or whether segment leadership

will be parsed out of the operational

leadership. In either case, a transformation

to a segment-influenced operating

model should be taken under serious

contemplation for both its power to make

effective change, and its real complexity in

effective management.

Cross-functional collaboration is often

necessary to enable many key customer

strategies, especially management of the

customer experience, the coordination of

channels, product bundling and solution

selling strategies, and brand alignment

programs. By enabling departments

and channels to collaborate on fulfilling

singular customer experiences and

customer strategies, businesses are able

to deliver on consistent experiences for the

customer.

In many organizations, the contact center

may be seen as a bureau or vendor to

sales and marketing. In others, they are

the peer that delivers customer service.

In any case, the contact center must be

a willing participant in cross-functional

collaboration with marketing, sales, self-

service, e-channels, and other departments

to fully realize most CRM and customer-

focused initiatives. At the tactical level, this

may involve setting jurisdictions, service

level agreements, cross-functional teams,

and formal problem solving processes.


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Customer leadership and alignment

is putting real representation of the

customer and the customer objectives in

the executive suite. To do this, companies

often establish top-level executive

leadership that advocates for and has

authority to serve the customer. Examples

of titles may be Chief Customer Officer,

Chief Loyalty Officer or SVP of Customer

Experience.

At the contact center level, there may

opportunities to extend this notion to

senior and middle management within

the contact center operation. These roles

may be strategic in terms of defining new

customer programs and advocating for the

customer, or tactical where the customer-

aligned staff have daily responsibilities tied

to the customer focused programs.

Innovation discipline

Innovation should fuel the change across the entire CFE. Companies should

establish an environment that promotes a systematic ideation capability to

cultivate the intersection of insight with invention. Companies need to increase

collaboration both within their enterprises and with partners to know when

incremental (or monumental) change is beneficial to the entire business model

and to act on that change in a meaningful way.

CRM straight talk: Delivering successful

customer experiences needs to happen

across many different disciplines

within a contact center. Customer

focused enterprises embrace six key

disciplines: customer authority, customer

dialog, integrated execution, solution

experience, human performance

and customer-focused organization.

Innovation must be injected into each of

these disciplines on an ongoing basis as

companies grow and improve.


Page 30

IV. How do we get it done?Get it “done right” through new IBM project techniques

The CRM done right framework for developing sustainable, successful CRM

operations is illustrated below. It has five main interlinked components that

describe key steps to completing transformation projects at large companies. A

complete, detailed account of this approach is available in the IBM executive

handbook, “CRM done right: executive handbook for realizing the value of CRM.”

All phases are critical to building customer experience operations and each phase

has different considerations, strengths and obstacles as they apply to customer

experience operations specifically.


Page 31

Success factor Summary description Contact Center Considerations

A. Realize your CRM Value case for change

This is the answer to the question “why are we doing this?” The value case for change is the format by which management establishes projected benefits of the project, initiative or program and sets the baseline costs and business implications of making the change. It also defines:- Justification for moving ahead with the change- Areas of highest ROI- A framework for prescribing, supporting and monitoring subsequent actions – including when to make incremental “sense and respond” course corrections and when to make significant, strategic shifts

Contact center leadership has historically been adept at calculating costs and margins, being able to track tight knit metrics and account for infrastructure costs right down to headsets and carpeting square footage. The more challenging aspects of the contact center value case will be in understanding the upside benefits of customer advocacy and its resulting effects on loyalty and new revenue.

B. Identify and prioritize your CRM value propositions

Here we define the specific strategies that create value for the various stakeholders in our CRM equation, including the company’s interest, customers, employees and partners. We consider what imperatives are important for business success such as competitive threats, financial pressures or new opportunities. Essentially, we define at the outset how value will be created by our efforts.

There are new techniques for designing CRM and customer value propositions within the contact center. Use the customer experience framework shown in section II to develop a full view of a contact center value proposition, inclusive of emotive and tactile performance. Understand key ‘moments of truth’ as a way to understand and prioritize the vision.


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C. Design your new CRM operational blueprint

By designing the blueprint, the company chooses the end-state operational vision for the new CRM operations. This includes determining what the specific experiences will be for stakeholders, determining how the company will deploy resources, how new technologies and infrastructure are built, how new process are designed and creating a comprehensive strategy for managing the change.

The contact center blueprint defines the future state of the new contact center. Blueprinting challenges for contact center leadership include the inclusion of newer technologies such as IP telephony, voice recognition, and online interaction. It also should include innovations in staffing, including many of the ones listed in section III, such as outsourcing, virtualization, and cognitive based change management. Use a component-based business architecture approach to maximize effectiveness in design.

D. Construct your multi-generational roadmap and implement your solutions

The roadmap is the plan the organization creates to realize the blueprint of the CRM operating model. It turns the blueprint into a prioritized, sequence of time-fixed workstreams (also known as projects) that are implemented at a rate that the organization can handle and manage successfully. The multigenerational roadmap, by nature, defines projects that contribute value and ROI on their own, as well as building toward the long-term vision. This duality enables organizations to realize ongoing business value while making necessary interim changes and course corrections.

View the contact center as the place to find early results and benefits for broader CRM initiatives. Use the contact center as controlled test bed for new initiatives, proving the benefits of customer focused programs and making the case for enterprise-wide adoption.


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E. Build support for your CRM efforts and stay on track through sponsorship, governance and change management

By building support for your CRM efforts, you verify that the organization stays committed throughout the deployment of the new operations. Here we answer the question, “Is everybody on board?” Building support for CRM efforts helps ensure that projects and transformations are measured and directed toward their goals. The organization engenders cooperation and collaboration, leadership consensus and a formal policy for making decisions and guiding the efforts. Additionally, the employee population is shepherded through the change.

At the employee level, adoption and change will often be the most challenging for contact center leadership in comparison with other departments in the enterprise. Contact centers have large staffs that have significant daily contact with customers. Transforming the customer-touching staff is arguably one of the most critical transformations that must occur for successful CRM initiatives.At the departmental level, the contact center should seek to both enthusiastically participate in, and when they can, lead customer-focused initiatives.

CRM straight talk: Developing a

new perspective or vision for better

customer experiences is only the

beginning. Successful companies must

embrace a structured and purposeful

means of change to transfer customer

experience ideals from the drawing

board to real life operations. The

“CRM done right” approach provides

a sound, structured, and proven path

for organizational transformation,

from securing agreement on a

comprehensive vision, to confirming

commitment throughout multiple

implementation phases


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ConclusionCompanies ready to move forward with improving their customer experiences

have significant challenges ahead of them, but also stand to make significant

gains. Creating a Customer Focused Enterprise is a significant and worthwhile

undertaking that cannot realistically be rolled out across an organization all

at once. Establishment of a test-bed, one that leverages the strengths, control

and flexibility available only in the contact center, allows an organization to

try out and adjust its customer strategies in an ideal setting, thereby increasing

its prospects for a successful enterprise-wide implementation. By employing a

rational customer experience framework that prioritizes resources according to

the impact of particular customer interactions, the Customer-Focused Contact

Center can build achievable operational models that create customer advocates

and, simultaneously, validate strategies and practices that may be replicated

throughout the enterprise.


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ContributorsAbout IBM Global Business Services and the Contact Center Practice

IBM clients – businesses worldwide, across industries – are today reaping the

rewards of a self-sustaining approach to CRM that enables them to accurately

assess their strengths and weaknesses, calculate risks, control investments,

manage change and set reasonable expectations from the start.

Contact Center Optimization improves the efficiency and effectiveness of contact

center operations. It covers inbound and outbound, sales and service contact

centers and their related self service channels.

With 5,700 consultants serving thousands of clients across the globe, IBM offers

a wide spectrum of contact center-specific services, positioning us as a strategic

partner to our clients.

Contact Center Strategic Consulting

Systems Integration

Telephony Systems

Self-Service Applications

Desktop and Support Applications

Contact Center Outsourcing

IP Contact Center Transformation

ibm.com/bcs

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IBM Global Services

Route 100

Somers, NY 10589

U.S.A.

Produced in the United States of America

08-06

All Rights Reserved

IBM and the IBM logo are trademarks or

registered trademarks of International Business

Machines Corporation in the United States,

other countries, or both.

Other company, product and service names

may be trademarks or service marks of others.

References in this publication to IBM products

or services do not imply that IBM intends to

make them available in all countries in which

IBM operates.

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