Analyst Forrester the Economic Necessity of Customer Service

8/8/2019 Analyst Forrester the Economic Necessity of Customer Service

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Making Leaders Successul Every Day

Jana 21, 2009

The Economc NecesstO Cstome Seceb Natale L. Petoho, Ph.D., Shan Leae, and Andew Magae

o Bsness Pocess & Applcatons Poessonals
http://www.forrester.com/


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2009, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Inormation is based on best availableresources. Opinions refect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar,and Total Economic Impact are trademarks o Forrester Research, Inc. All other trademarks are the property o their respective companies. Topurchase reprints o this document, please [email protected]. For additional inormation, go to www.orrester.com.

Fo Bsness Pocess & Applcatons Poessonals

ExECuTivE SuMMAry

In this economic climate, no one can aord to lose a customer. Rather than halting spending, smart

customer service executives will use this economic downturn as an opportunity to regroup and

reprioritize. What should they ocus on? op customer service recession-busting strategies that cut

costs and generate more revenue include: proactive chat, agent-customer co-browsing, online customer

communities, unied communications, and multichannel knowledge management.

TABLE OF CONT ENTSCstomer Serice Eperiences Either

Generate Or Diminish Compan Reene

RecessionBsting Strategies To Sae Mone,

Ct Costs, And Increase Sales

rECOMMENDATiONS

How To Capitalie On What Cstomer Serice

Can Ofer In A Poor Econom

Spplemental Material

NOTES & rESOurCESFoeste nteewed 15 endo and end se

companes, ncldng eGan Commncatons,

KANA, Lthm Technologes, and Salesoce.com.

Related Research Docments

Foestes Cstome Sece innoaton

Famewok And Sel-Assessment

Jana 13, 2009

The rOi O inteacte Chat

Feba 4, 2008

The rOi O Web redesgns Made SmpleMach 17, 2006

Jana 21, 2009

The Economc Necesst O Cstome SeceFe recesson-Bstng Stateges To Ct Sece Costs And incease Sales

b Natalie L. Petohof, Ph.D., Sharn Leaer, and Andrew Magarie

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4

7

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mailto:[email protected]://www.forrester.com/http://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/go?docid=44581&src=48321pdfhttp://www.forrester.com/go?docid=38692&src=48321pdfhttp://www.forrester.com/go?docid=38692&src=48321pdfhttp://www.forrester.com/go?docid=44581&src=48321pdfhttp://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/http://www.forrester.com/mailto:[email protected]


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2009, Foeste reseach, inc. repodcton Pohbted Jana 21, 2009

The Economc Necesst O Cstome Sece


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Figre 1 Bette Cstome Epeences Mean Cstomes B Moe And Ae Moe Loal

Source: Forrester Research, Inc.48321

Consumers with good experiences consider purchasing more1-1

Correlation between high customer experience index andwillingness to buy another purchase from provider

Consumers with good experiences dont switch providers1-2

Correlation between high customer experience index andreluctance to switch business away from provider

Banks

Cell phone service providers

TV service providers

Internet service providers

Insurance firms

Credit card providers

Retailers

Investment firms

Medical insurance providers

Degree of correlation:

Banks

Credit card providers

Cell phone service providers

Insurance firms

TV service providers

Internet service providers

Retailers

Investment firms

Medical insurance providers

Degree of correlation:

0.0 0.2 0.4 0.6 0.8 1.0

0.0 0.2 0.4 0.6 0.8 1.0

Low Medium High

0.72

0.69

0.68

0.67

0.67

0.67

0.66

0.64

0.61

Low Medium

0.5

0.48

0.47

0.46

0.46

0.46

0.41

0.34

0.31

Source: North American Technographics Customer Experience Online Survey, Q3 2007

High


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2009, Foeste reseach, inc. repodcton PohbtedJana 21, 2009



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RECESSION-BuSTING STRATEGIES TO SAvE MONEy, CuT COSTS, AND INCREASE SALES

Because o the direct eect o customer service on both the top and bottom lines, customer service

proessionals need to innovate. But the reality o the economic recession means that they must

be smart about which innovations to tackle and when. What can they do to create value without

breaking the bank? Heres a start:

Be proactive about chat. While companies spend billions annually or their Internet presenceand to attract customers to their site, they are wasting their investment as customers abandon

shopping carts mid-order, click away rom partially lled orms, or become rustrated when

they cant nd answers. Why does interactive/proactive chat have a large return on investment

and provide millions o dollars in positive word o mouth (see Figure 2)?3 Proactive chat can

be congured to automatically initiate a chat session to instantly serve your customers in that

moment o truth and stop them rom leaving. Tis service reduces online shopping revenue

loss as well as reduces the need to call the contact center, reducing operational costs.

Customer chat sessions can be customized based on a slew o inputs including customer click-

through rates or paths, time spent on various parts o the Web site, prior average order size, and

demographics. Solutions options include: text chat, phone callback, screen push, escorting, and

orm collaboration. And i capital expenditures are not within your means, chat can be deployed

as a third-party, SaaS solution via vendors with deep experience, knowledge, and wisdom in this

pioneering interaction channel. Whether you choose an on-demand or on-premise solution,

partnering with a vendor that is immersed in the emerging world o chat will increase your

initiatives success and provide a aster, positive return on investment.

Empower sales agents with co-browse tools. Forresters research shows that 50% o Webtransactions are completed with the help o a customer service agent. And while chat oers

many benets, what chat alone cant oer is the type o guided Web site assistance that only

co-browsing can. How does co-browsing work? Lets say a customer is online, lling out an

application or a new account or placing an order. In the process, they get stuck. raditionally

they would call the contact center or abandon the interaction. With co-browsing, the system

takes note o the abandoned process and reaches out to the customer. By viewing the same

Web site page together in real-time, the agent can discern why a customer is stuck and in the

moment o need guide the customer to orm or order completion. Without co-browsing, Web

site guidance is limited and rustrating.

Beware o simple URL-based co-browsing products, which requently encounter issues such as

double posting, rame breaking, cookie synchronization, and ailure on Web pages with complex

layouts or orms. Business rules can hide sensitive inormation, like credit card numbers, mothers

maiden names, or passwords, protecting the customers data to prevent identity the. Agents can

also demonstrate the sites sel-service eatures, increasing the likelihood o customer adoption.


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With robust proxy-based co-browsing tools, co-browsing delivers real-time assistance, minimizes

customer rustration, and converts site visitors into protable, long-term customers all especially

critical to capitalizing on increasing sales revenue and realizing the benets o sel-service.

Explore unifed communication. Unied communication (UC) is the successul blending o allcommunication channels and communication devices (smartphones) into one interconnected

entity, breaking down any barriers to communication with a company.4 An example o how a

company might benet rom using UC is i a customer calls about an order and the agent does

not have access to the order management database. Rather than asking the customer to hold or

transerring them to another department, the agent can contact an expert in another department.

How does UC work? It provides presence via chat and collaboration, meaning that an agent

is able to see who in the order department is present and considered the expert. Te agent

can instant message the order rep and/or pull them into the call. UC combines the resources

o the contact center with inormal experts to create a better customer experience and improve

employee productivity and rst-call resolution, which can lead to reduced operational costs.

Invest in online social networking communities. Online communities have evolved rom thebulletin boards o yester year to posts in the orm o orums, blogs, and chat. Updated posts

sent via email or RSS syndication subscriptions instantly distribute new inormation to users,

and posted solutions are oen added to the companys knowledge management (KM) database.

What is the value o an online community? First, customers can solve each others problems

with much less or no interaction rom a company. How? Customers get answers by reading

posts made by other customers that have had solved similar issues rather than calling customerservice, and agents, using the community-enhanced KM database, can reduce their call time

and provide more satisying answers. Second, when bad word o mouth happens, online

moderators can alert executives and quickly post a resolution to the community, avoiding brand

damage and increased call volume. And with a built-in system to recognize, rank, and reward

users, even inormants can be turned into advocates by acknowledging their suggestions that

helped millions o customers. Lastly, new ideas coming rom communities can save product

development millions, not to mention marketing and sales, which would then be promoting a

product that was designed with customer input.

Make sel-service work in all channels. Te ROI o sel-service is highly dependent oncustomer adoption. Customers only use sel-service i they can reliably and consistently

get what they need done. Call center defection occurs when customers who want specic

inormation can nd it quickly and easily online instead o having to make a call (see Figure 3).5

With all o the various interaction channels, customers expect interactions to be seamless and

the inormation to be consistent across channels.6


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Determine i the access to your knowledge management databases and search capabilities is

the same across all interaction channels, especially or sel-service. Inormation inconsistencies

or distrust o a sel-service channel will invariably prompt a call to a customer service agent,

resulting in higher operating costs and loss in the savings expected rom sel-service. I the Website is not run by customer service, contact center and customer service managers need to tell

eService managers what customers are calling about to get at the root causes o calls in order to

reduce them.

Figre 2 Poacte Chat Cts Cost And inceases reene


Dimension Interactive chat helps by . . .

Shorten the sales process Creating additional positive impressions that move a prospectthrough the sales cycle.

Resolving customer issues and objections immediately.

Reduce call center costs Reducing the average interaction cost.

Showing customers where to find information and potentiallyavoiding future calls.

Close sales Recovering customers before they abandon a transaction.

Assisting in the order and form completion.

Increase transaction size Creating upsell/cross-sell opportunities.

Enabling persuasive selling.


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Figre 3 Well-Deploed Stes reslt in Lowe Cost O Sece, Sales, Moe Leads, And Hghe Sales


CommentsDrivers of ROI

Higher sales

Improved user experience means more directed shoppers are able to findwhat they want and get the information needed to make a purchasedecision.

Fewer buyers abandon improved shopping carts.

New information architecture exposes shoppers to upsell and cross-sellopportunities.

Conversion rate

Average order size

More leads

Improved content means prospects get the information they need to makea decision.

Fewer buyers abandon improved forms.

More forms are completed with full, accurate info.

Conversion rate

Lower cost of sales

Improved user experience on Web site means fewer buyers abandon theironline orders and switch to the call center to complete their purchase.

The upgraded site becomes the ordering channel of choice for more buyers.

Call center orders

Lower cost of service

Declines as sites add new functionality, such as order tracking, and newcontent, such as FAQs.

Builds over time as the upgraded site becomes the self-service channel ofchoice for more users.

Call center service calls

Search Engine Optimization (SEO) drives new visitors from natural search.

Increased satisfaction boosts repeat visits.

Number of site visitors

Site traffic

r E C O M M E N D A T i O N S

HOW TO CAPITALIzE ON WHAT CuSTOMER SERvICE CAN OFFER IN A POOR ECONOMy

The paadgm o contact centes as cost centes doesnt hold wate. it onl apples to contact

centes that oe poo epeences. Those centes do cost the oganzaton not onl n hghe

opeatng costs, bt also n edced eene, band eqt, and maket longet. Wth the

edence so clea on what companes mst do, and do mmedatel, qckl, and smatl, whee

shold cstome sece eectes stat? Foeste ecommends:


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Step 1: Reject the old paradigms that a contact center is a cost center. Dont ocs onthe downtn, look beond t. Cstome sece and contact centes hae the most dect

contact wth cstomes, ths make the lagest mpesson. Eectes mst mmedatel

stop nde-ndng contact centes, becase dong that s clpable n the destcton o the

cstome epeence, edcng eene and nceasng costs.

Step 2: Demand ownership o the cstomer eperience. Cleal, wth the bottom-lne aleo cstome epeences, someone n the oganzaton needs to own the cstome epeence.

The CEO needs to ge that new CCO postonal powe to spend, he, and tansom. The CEO

and the CCO mst be fscall esponsble o the otcomes, ncldng shaeholdes holdng

them accontable o cstome-elated metcs to ean the bonses wthot bons

eleanc cstome epeence becomes et anothe management ntate du jour. i o

dont demand owneshp, someone else wll.

Step 3: Listen to or cstomers to create or cstomer strateg. Foeste seedneal 5,000 consmes abot the cstome epeences and ond that whle the phone sstll the most peeed method o eceng sece, moe than hal o the espondents wee

nhapp wth the epeence. Foeste also asked, When thnkng abot cstome cae,

how satsfed ae o wth sel-sece? The satsacton atngs wee low, angng between

30% and 40%. Companes mst deplo oce-o-the-cstome (voC) pogams to ndestand

wh cstome nteactons ae lackng, and se that as pat o the nnoaton analss.7

Step 4: Condct a cstomer serice gap analsis and implement best practices. Otents nclea what, wthn cstome sece, mst be changed o how to potze ntates.

When Foeste asked companes the wee mplementng best pactces onl 30% to 40

pecent sad es. use Foestes Cstome Sece innoaton Famewok as a tool to condcta gap analss, enollng all stakeholdes nto the analss, ncldng iT, COs, sales, maketng,

etc.8 As a collecte, pnpont the best oppotntes o qck wns and bld a potzaton

plan to close gaps.

Step 5: Ealate sotware with cstomer eperience as the top goal or a bsiness case.use Foestes Cstome Sece Solton Wae speadsheets wth o mltdscplna

team to compae sotwae capabltes and make a shotlst o endos.9 Hang all

stakeholdes ate the oganzatons cstome sece capabltes s ctcal to ganng sold

sppot both fnancall and oganzatonall. Stakeholde algnment saes mone b

edcng poject scope ceep, tmelne, and bdget slps. And wth sold b-n, bldng a

bsness case (wth the help o iT, fnance, sales and maketng) cstome sece eectescan show wh thee got a msson-ctcal ntate.


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SuPPLEMENTAL MATERIAL

Companies Interiewed For This Docment

eGain CommunicationsKANA

Lithium echnologies

Salesorce.com

ENDNOTES

1 Executives know that customer experience is important, but they cant always tie it directly to business

results. Our analysis shows that good customer experience correlates highly to loyalty especially when it

comes to consumers plans or making additional purchases. See the March 24, 2008, Te Business Impact

O Customer Experience report.

2 o make the business case about customer experiences, executives need to be educated on the impact o

problems on customer loyalty, the ailure o most customers to complain, the potential impact o service on

loyalty, and the impact o service on word o mouth. Source: John Goodman, urning CFOs Into Quality

Champions, Quality Progress, June 2006.

3 oo many companies sit passively by while prospects on the verge o buying abandon their online shopping

carts or applications, potentially never to return. Smart organizations are evaluating the merits o adding

chat and other interactive unctions to their Web sites to better engage the customer and potentially

increase sales. See the February 4, 2008, Te ROI O Interactive Chat report.

4

Unied communications (UC) solutions are gaining momentum in enterprises today due to their ability toimprove business processes and employee communications. Forresters 2008 survey o enterprise unied

communications decision-makers indicates that they understand the value o UC solutions overall and

nd most UC eatures critically important in their purchase decisions. See the June 30, 2008, Unied

Communications Adoption Plans report.

5 Users require specic content about products and services in order to achieve their online goals. Building

greater brand loyalty and improving customer service are critical to Web site designs that provide high ROI.

See the March 17, 2006, Te ROI O Web Redesigns Made Simple report.

6 o get answers and to resolve service issues, 45% o consumers preer to speak with a customer service

agent, but most walk away rom customer service agent interactions disillusioned, disappointed, and

disgruntled. Sel-service channels dont always get the job done, and poor channel integration leads tocustomer rustration. Companies need a process to evaluate their best practices and create an innovation

plan to consistently provide extraordinary sel-service and agent-assisted customer service experiences. See

the August 29, 2008, Why alking to Your Customers Is Ruining Your Business report.

7 Many companies say that they dont have a good connection with customers. Tats why rms should

consider developing a systematic approach or incorporating the needs o customers into the design
http://www.forrester.com/go?docid=45189&src=48321pdfhttp://www.forrester.com/go?docid=45189&src=48321pdfhttp://www.forrester.com/go?docid=44581&src=48321pdfhttp://www.forrester.com/go?docid=46173&src=48321pdfhttp://www.forrester.com/go?docid=46173&src=48321pdfhttp://www.forrester.com/go?docid=38692&src=48321pdfhttp://www.forrester.com/go?docid=46448&src=48321pdfhttp://www.forrester.com/go?docid=46448&src=48321pdfhttp://www.forrester.com/go?docid=38692&src=48321pdfhttp://www.forrester.com/go?docid=46173&src=48321pdfhttp://www.forrester.com/go?docid=46173&src=48321pdfhttp://www.forrester.com/go?docid=44581&src=48321pdfhttp://www.forrester.com/go?docid=45189&src=48321pdfhttp://www.forrester.com/go?docid=45189&src=48321pdf


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o customer experiences, what Forrester calls a voice o the customer (VoC) program. Successul VoC

programs will incorporate listening, interpreting, responding, and monitoring. See the February 8, 2007,

Building Your Voice O Te Customer Program report.

8 Customer service disappointments are oen a result o poor strategy. Forresters Customer Service

Innovation Framework provides you with 150 best practice capabilities organized into six categories

that drive customer retention, loyalty, reduced costs, and increased revenue. Te sel-assessment tool allows

you to compare your company against best practices and identiy which initiatives are mission critical. Both

this document and the sel-assessment tool will help you to gain executive buy-in, build stakeholder

consensus, hire better agents, and select the right technologies or loyalty creating customer experiences. See

the January 13, 2009, Forresters Customer Service Innovation Framework And Sel-Assessment report.

9 As product and price dierentiation erodes, businesses are turning to customer experience to gain market

share over their competitors. Tis move toward experience-based dierentiation (EBD) raises the stakes

or customer service proessionals to make the right technology decisions. See the October 21, 2008, Te

Forrester Wave: Customer Service Soware Solutions, Q4 2008 report.
http://www.forrester.com/go?docid=41506&src=48321pdfhttp://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/go?docid=45543&src=48321pdfhttp://www.forrester.com/go?docid=45543&src=48321pdfhttp://www.forrester.com/go?docid=45543&src=48321pdfhttp://www.forrester.com/go?docid=45543&src=48321pdfhttp://www.forrester.com/go?docid=47688&src=48321pdfhttp://www.forrester.com/go?docid=41506&src=48321pdf


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is an independent research company

that provides pragmatic and orward-

thinking advice to global leaders in

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Analyst Forrester the Economic Necessity of Customer Service