Channel Shift: Realising the Benefits

Gerald Power

www.trapeze-transformation.com

The White Paper

The aim of the white paper was to challenge some myths about channel shift and explain why….

‘If the benefits of Digital are so obvious then why are they so hard to realise consistently?’

Or“Show me the money!”

Channel Costs

Everything should be made as simple as possible, but not one bit simpler.

Albert Einstein

Source Face to

Face

Telephone Post IVR Online

PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p

SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p

Common cost per transaction assumptions

Channel Costs

What did the analysis say?

Source Face to

Face

Telephone Post IVR Online

PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p

SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p

White Paper Yes* Yes* Yes* Yes* Yes*

They are credible averages, with two big caveats

• Use them as ‘average’ contact costs across many sectors• Don’t ever use them in a business case

Source Face to

Face

Telephone Post IVR Online

PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p

SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p

White Paper Yes* Yes* Yes* ? ?

Why the Caveats?

These values are consistent with providing simple information via the channel. Costs will become much larger and more complex when performing transactions and its transactions that you want.

Source Face to

Face

Telephone Post IVR Online

PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p

SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p

White Paper Yes* Yes* Yes* ? ?

Why the Caveats?

These values are particularly misleading as the proposition is often for transactional digital self service and these costs are far too low for that – they imply a simple page of ‘flat’ content e.g. just information no transaction

Blackburn and Darwen Winter Page

A great example of simple but very effective low cost digital content, £0.08p per hit or low seems credible

DVLA Online Car Tax

It cost around £40M and will take around 10 years to cover its costs, £0.08p per transaction? The NAO don’t think so.

For every Amazon and Facebook there are many forgotten online failures

Success requires a very good understanding of your business and how to deliver benefits using Digital

Savings & Benefits

Ultimately whatever we say about channel costs and whatever logic we use, its not a real saving until it shows up on the bottom line

In the current climate cashable savings are probably your prime objective and there are only two significant sources

•Headcount Reduction•Estates Rationalisation

If your channel shift programme or business model allows the customer to self serve, without an agent, it has the potential to give you cashable benefits

Cashable Savings

The Balance Sheet

Year 1 2 3 4

FTE Cost 250,000 200,000 175,000 175,000

Estate Cost 250,000 250,000 150,000 150,000

Investment 100,000 50,000 0 0

Net Benefit -100,000 -100,000 75,000 250,000

Looking at the balance sheet without the details of the technology and channel strategy can be very informative

Investing is relatively easy, but you don’t realise the savings until you cut your costs and that’s the hard bit

Behaviour Change and

Rate of Change

Change Rate & Net Benefits

Investment

Savings

The faster the shift the quicker the return on investment, so effort spent on influencing will be effort well spent

In the current climate it is vital that you make your investments work for you:

•If you are having to cut to invest its vital that savings come quickly, ideally in-year•The longer it takes to shift customers the bigger the hole the investment makes in your budget•Money spent on marketing can be money very well invested

The jobs not over until the customers shift… and even then its not over as you seek continuous improvement

Time is Money

Contact Volume

Cost Web

F2FTelephone

Channel Cost Profiles: The Mathematical View

This is a generalisation but:

•Face to face and telephone have generally linear cost profiles, the main cost is in answering the call•For digital the main cost is often in setting up the service, once you do that it costs the same where 10 or 1000 people use it

If people are not using the phone or F2F you tend to notice, idle websites often go unnoticed and its money quietly being lost as the investment yields no return

Digital has a Different return profile

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5

10

15

20

25

30

35

40

- 2 4 6 8

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Cost of Site £Millions

Cost vs volume

Cost vs volume

defra.gov.uk (2p)

uktradeinvest.gov.uk (£11.78p)

transportdirect.info (33p)

Cost per Visit

UK Central Government Websites, June 2010 COI

Mean by site = 54p/visit Mean by visits overall = 23p/visit

Cargo Cults of the South Pacific: The Psychological View

The key lessons from the cargo cults:

•Just because it looks digital doesn't mean it is digital

•Digital is an end to end process model not a surface veneer

Its you job to make it clear to your senior team if they are investing in a bamboo hut and a new lawn or an air-traffic control system

Magical Thinking

Gerald PowerThe White Paper is available for download at

http://direct.govdelivery.com/channelshift-wp

There are more resources available at our websitewww.trapeze-transformation.com