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Flexible Interaction How to serve your customers whenever and where-ever they want A Datamonitor white paper prepared for Publication Date: October 2003 www.datamonitor.com Datamonitor USA 1 Park Avenue 14th Floor New York, NY 10016-5802 USA t: +1 212 686 7400 f: +1 212 686 2626 e: [email protected] Datamonitor Europe Charles House 108-110 Finchley Road London NW3 5JJ United Kingdom t: +44 20 7675 7000 f: +44 20 7675 7500 e: [email protected] Datamonitor Germany Messe Turm Box 23 60308 Frankfurt Deutschland t: +49 69 9754 4517 f: +49 69 9754 4900 e: [email protected] Datamonitor Asia Pacific Room 2413-18, 24/F Shui On Centre 6-8 Harbour Road Hong Kong t: +852 2520 1177 f: +852 2520 1165 e: [email protected]

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Page 1: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

How to serve your customers whenever and where-ever they want

A Datamonitor white paper prepared for

Publication Date: October 2003

www.datamonitor.com Datamonitor USA 1 Park Avenue 14th Floor New York, NY 10016-5802 USA t: +1 212 686 7400 f: +1 212 686 2626 e: [email protected]

Datamonitor Europe Charles House 108-110 Finchley Road London NW3 5JJ United Kingdom t: +44 20 7675 7000 f: +44 20 7675 7500 e: [email protected]

Datamonitor Germany Messe Turm Box 23 60308 Frankfurt Deutschland t: +49 69 9754 4517 f: +49 69 9754 4900 e: [email protected]

Datamonitor Asia Pacific Room 2413-18, 24/F Shui On Centre 6-8 Harbour Road Hong Kong t: +852 2520 1177 f: +852 2520 1165 e: [email protected]

Page 2: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 2 This report is a licensed product and is not to be photocopied

ABOUT DATAMONITOR

Datamonitor plc is a premium business information company specializing in industry analysis.

We help our clients, 5000 of the world’s leading companies, to address complex strategic issues.

Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for six industry sectors: Automotive, Consumer Markets, Energy, Financial Services, Healthcare, Technology.

Datamonitor maintains its headquarters in London and has regional offices in New York, Frankfurt and Hong Kong.

Page 3: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Introduction

Flexible Interaction

© Datamonitor (Published October 2003) Page 3 This report is a licensed product and is not to be photocopied

INTRODUCTION

This paper will enable readers to:

1. Understand the number of new channels to market that are available

Customers can now contact organisation through a number of different channels, but which channels are right for your organisation, and which are right for them? This white paper discusses the pros, cons and most appropriate uses of the different channels, both old and new.

2. Deal with increasing customer demands and mobility

People are living busier lives and they are demanding more from companies. They want access wherever they are and at any time of the day. How do organisations provide this level of service without costs escalating out of control?

3. Select self-service channels

Providing self-service channels is one way to cut costs, but at what cost to the organisation and its customers’ satisfaction? Understand which self-service channels are most appropriate for different organisation’s customers, and when they should be deployed.

4. Provide consistency across all channels

Too many companies do not provide customer service across all channels and suffer as a result. This white paper will explain how you can avoid this problem and move towards becoming a customer-centric organisation.

Page 4: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 4 This report is a licensed product and is not to be photocopied

PROLIFERATION OF CHANNELS

All customers are now living in a multichannel world

The number of contact channels available to customers has grown significantly over the last decade. Where previously customers would pick up the telephone, send a letter or walk into a branch or shop, they can now also send an email, click on a website, send an SMS, or communicate through their digital TV. With the usage of these ‘new channels’ expected to further increase over the next decade, many companies are facing a deluge of contacts that they cannot deal with effectively.

Table 1: Which channel to use? Channel Uses Pros Cons

Branch / shop Developing a high street presence

• Very interactive • Excellent for up- &

cross-sell

• Very expensive • Inconvenient –

rarely 24/7

Telephone

Inbound & outbound customer service and sales & marketing activities using agents or automation technology

• Ubiquitous • Cheaper than a

branch & still relatively personal

• Cross- & up-sell • Can cut costs

through self-service

• Agent interaction is expensive

• IVR self-service can be frustrating for customers

• Long hold times during peak hours

Post / fax Distributing product, direct marketing

• Ubiquitous • Effective channel for

product distribution

• Slow • Not interactive

Email Inbound & outbound customer service & marketing

• Cheap & effective outbound marketing

• Popular channel for certain groups

• Email penetration still not 100%

• Slow responses • Inbound expensive

Internet FAQs, order tracking, downloads, text chat, Web collaboration

• Personalisation, good for cross- & up-sell

• Cheap • 24/7 access

• Internet penetration still not 100%

• Rarely interactive • Assisted service is

often unreliable

Mobile WAP info, inbound & outbound messaging

• Mobiles and SMS very popular

• 24/7 access

• Slow uptake of WAP, 2.5G, 3G

• Intrusive Digital TV (iTV)

Service, transactions, messaging

• iTV is popular • Interactive

• Slow uptake of interactive features

Source: Datamonitor D A T A M O N I T O R

Page 5: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 5 This report is a licensed product and is not to be photocopied

Which channel when?

Each customer contact channel has its pros and cons and different channels are suited to different types of companies, different product lines, different levels and types of contact, and different types of customers. Companies need to provide multiple contact channels, but they also need to focus on providing the most appropriate channels for their products and their customer base. Each channel works better in some circumstances than in others. The benefits of each channel are discussed below.

Branch / shop

Although buying certain goods on the Internet is now commonplace, high street shopping will remain the dominant way of purchasing the majority of goods for the foreseeable future.

Retail banks have successfully managed to move a large proportion of their customer contact to the Web or the call centre, but there is now an understanding in the financial services industry that branches do have value, both for certain customer segments (e.g. senior citizens, small businesses) and as a superior channel for selling and marketing many types of products and services. Similarly, the travel industry has been incredibly successful at moving simple transactional sales to the Web (e.g. charter flights, car hire, hotel bookings), but more complicated products, such as package holidays and around the world trips, still require a level of interaction that often needs to be delivered at a travel agent’s branch.

Telephone

Most companies need to be able to provide telephone customer support, as there are some enquiries that can only be solved by actually speaking with someone on the phone. The level of telephone support offered will vary depending on the type of product, the complexity of the interaction, and the customer base. So, for example, a bank selling credit cards aimed at people under 40 can probably do the majority of its business on the Web, but a company selling cruises to retired people will probably have to serve the majority of its customers over the phone.

One way to offer the benefits of the telephone channel at a lower cost is to use self-service technologies such as IVR (interactive voice response) and speech recognition (discussed in more detail on pages 12-17). These allow customers to serve

Page 6: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 6 This report is a licensed product and is not to be photocopied

themselves on the phone without speaking to an agent, thereby significantly reducing the cost of the interaction. However, only relatively simple tasks can be automated in this way. For example, a customer could input a meter reading or book a cinema ticket without talking to an agent, but they would have trouble finding out how to fix their PC or apply for a mortgage.

Post / fax

As an inbound customer service channel, letters and faxes are comparatively slow and inefficient. However, post in particular can still be an effective direct marketing channel – most customers are more likely to read a letter than an unsolicited email. Mass mailings can irritate customers and generate poor responses, but more targeted campaigns can generate significant returns. Companies that send out regular bills (e.g. communications providers, banks and utilities) can use these as opportunities to market new products and services and as a way increasing cross- and up-sell rates, and therefore increasing ARPU (average revenue per user).

Email

Email is growing in popularity, both as an inbound customer service channel and as an outbound marketing channel. Encouraging customers to use email is the right strategy for any company that does a significant proportion of its business on the Internet. Often customers would prefer to send an email rather than wait in a phone queue, especially if their enquiry is not urgent. However, customers do expect a response within 2 days, and for initial receipt of the email to be acknowledged almost immediately.

Answering an email manually can be as expensive as answering a phone call, as both require significant agent time. Automated email response engines can help to reduce these costs, but carry a greater risk of sending out the wrong response. For companies that deal with large volumes of email, investing in such a solution can deliver a significant return on investment (ROI), but the technology must be powered by a suitable knowledge base (see page 20) and provide accurate answers. An automated email response system that provides consistently wrong answers will increase customer dissatisfaction, resulting in customers picking up the phone, thereby increasing service costs and interaction complexity. Only by choosing a quality partner can an organisation reap substantial benefits from automated email response technology.

Page 7: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 7 This report is a licensed product and is not to be photocopied

Email is also an effective outbound channel, but unsolicited outbound email should be avoided at all costs - customers remain extremely intolerant of ‘spam’ email. Email marketing is cheap so the temptation is to send out mass-mailings, but the same basic rules apply to email marketing as apply to telemarketing or postal campaigns. All marketing materials must be relevant, targeted and as personalised as possible to the recipient, and email marketing campaigns should be executed and monitored with effective campaign management tools.

iTV

Digital and interactive television (iTV) is more popular in the UK than in any other country. At the end of 2002, 39% of British households had access to digital satellite, cable or terrestrial TV, and by 2007 this will have risen to 72%. Like mobile phones, digital television is a mass-market technology and has a wider appeal than the Internet. However, as a customer interaction channel it suffers from being perceived as ‘lean back’ rather than a ‘lean forward’ technology. In other words, viewers are used to using television purely as a passive viewing medium and are not use to using it as an interactive medium or for imputing data. The majority of digital TV viewers subscribe to access passive content such as sport or film programming. In contrast, interactive content is often seen as a secondary benefit and broadcasters face the challenge of increasing the use rates amongst viewers.

The opportunities for customer interaction are therefore limited to a number of specific vertical markets:

• Entertainment and media – digital television allows broadcasters and content providers to get much closer to their customers by adding interactive content and enhanced product placement to shows. Viewers of a film set in the Caribbean who like the look of the location could, for example, request a holiday brochure or even purchase a holiday through the television;

• Financial services – eBanking has proven to be very popular, but many people still do not have access to the Internet, and TV banking is an ideal alternative for some demographic groups, such as pensioners and families with young children;

• Retail – TV is an ideal retail channel, and companies can deliver a richer and enhanced version of eCommerce through digital television.

Page 8: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 8 This report is a licensed product and is not to be photocopied

• Public sector – the government has been looking at digital television as a channel for meetings its eGovernment requirements, particularly offering online access to services for households without Internet access.

MOBILITY, 24/7 ACCESS AND SELF-SERVICE

The growth of new technology over the last decade has led to much more demanding customers: they want service wherever they are and at any time of the day. If a customer cannot get in touch with an organisation when and where they want, they will easily be able to find a competitor that will be happy to serve them and take their business.

Mobile channels

Mobile phones are now a truly mass-market technology and, as Figure 1 and Table 2 illustrate, the market is almost saturated – nearly everyone except for the very old and the very young now has a mobile phone.

Figure 1: UK mobile phone penetration rates, 2002 – 2006

0%

10%

20%

30%

40%

50%

60%

70%

80%

UK

mob

ile p

hone

pen

etra

tion

2002 2003 2004 2005 2006

Total

2.5G

3G

0%

10%

20%

30%

40%

50%

60%

70%

80%

UK

mob

ile p

hone

pen

etra

tion

2002 2003 2004 2005 2006

Total

2.5G

3G

2002 2003 2004 2005 2006

Total

2.5G

3G

Source: Datamonitor D A T A M O N I T O R

Page 9: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 9 This report is a licensed product and is not to be photocopied

However, uptake of the ‘next generation’ 2.5G and 3G phones has been lower than many predicted, and the market will continue to lag in the short- and medium-term. Datamonitor believes that mobile phones and other devices will continue to be used primarily as communications devices, for phone calls and messaging (SMS, email and picture messages), rather than as devices used to access data and online content.

Table 2: UK mobile phone penetration rates, 2002 – 2006

2002 2003 2004 2005 2006 Total 65% 70% 73% 74% 75% 2.5G 0% 6% 17% 26% 27%3G 0% 0% 1% 3% 9%

Source: Datamonitor D A T A M O N I T O R

The mobile channel

The effects of the mobile revolution on people’s personal communication habits are well known, but what does it mean for the communications between companies and their customers?

• Customers can now call companies at any time, for example while waiting for a bus or sitting in the back of a taxi. Because customers can contact companies at any time, they also expect service at any time, and consequently companies must provide 24/7 support.

• Datamonitor does not believe that the mainstream will adopt mobile Internet access devices in the short term, but more and more customers are logging on using PDAs and mobile phones connected to next generation mobile networks and through laptops at wireless hotspots. In the latter case, Internet access will be no different from any other remote access scenario (e.g. checking email on a laptop in a hotel room). However, in the former case, customers will be using the mobile Internet for shorter, more targeted activities (e.g. checking email, looking for location specific information or following up on previous transactions).

Page 10: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 10 This report is a licensed product and is not to be photocopied

• Companies, primarily those with products and services aimed at the youth and entertainment markets, can use SMS (text messages) as a customer contact channel. SMS is primarily useful as an outbound marketing channel, although unsolicited text messages are considered intrusive by customers and should be avoided. Companies can also send SMS alerts, such as stock prices or flight information, but SMS has little scope as an independent inbound channel.

Mobile employees

It isn’t only employees based in a call centre or branch that provide customer service; mobile employees do it as well. Although there will not be significant demand to provide customer service directly to customer’s mobile devices, there is a viable business case to arm mobile employees with devices that provide them with access to data and applications that enable them to provide more effective customer support. There are two particular applications that companies with a large number of mobile employees should consider:

• Field sales automation – Providing field sales professionals access to sales force automation (SFA) applications over mobile networks improves their effectiveness during meetings and therefore increases sales. Mobile SFA applications will deliver benefits to any company with a significant field sales force – primarily companies working in the B2B space, but also financial services brokers;

• Field service automation – Providing field service employees with access to mobile applications delivers two benefits. Firstly, the employees have access to data, enabling them to do their jobs more effectively. Secondly, use of field sales automation can lead to improved logistics and increased efficiency. Mobile field service automation applications will deliver benefits to any company with a large field service force, including companies operating the utilities, technology, healthcare, transport and communications markets.

Page 11: Publication Date: October 2003 - BTChannel Uses Pros Cons Branch / shop Developing a high street presence • Very interactive • Excellent for up- & cross-sell • Very expensive

Flexible Interaction

Flexible Interaction

© Datamonitor (Published October 2003) Page 11 This report is a licensed product and is not to be photocopied

24/7 Access

The growth in communications channels, and the increasing mobility of these channels, means that customers can demand access to companies at any time, wherever they are. People lead busier lives than ever before and access to mobile phones, PDAs, wireless hotspots and a number of other technologies mean that they can now contact companies when they want, rather than when the company chooses to offer access. As Figure 2 illustrates, it is not just customers that now have 24/7 access, but employees too. Companies must not only support customers at any time, but in a today’s competitive environment they must also enable their employees to access applications at any time.

Figure 2: 24/7 access

Firm

PDA

?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Customer access% w/ devices

Customer use•Use 1•Use2•Use 3•Use 4•Use 5•etc

24/7access

Locationspecific

Firm

PDA

Mobile

Laptop ??

B2E B2C

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Benefits of mCRM for internal

24/7access

Personalized Location specific

Firm

PDA

?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Customer accessCustomer use:• personalization• marketing• service• sales

24/7access

Locationspecific

Firm

B2E B2C

Inte

ract

ion

Dev

ice

Field sales

Field service

Sales

Service

Mktg

Appl

icat

ion

Contact center

Benefits of mCRM

24/7access

Personalized Location specific

Any time

Personalizedexperience

Any where

Firm

PDA

?

Internal

Interaction

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Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

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Customer use•Use 1•Use2•Use 3•Use 4•Use 5•etc

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B2E B2C

Interaction

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?

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% w/ appsCustomeraccess

Customer use:• personalization• marketing• service• sales

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Locationspecific

Firm

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Field service

Sales

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Mktg

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24/7access

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Any time

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Any where

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Firm

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B2E B2C

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Device

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24/7access

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Customer accessCustomer use:• personalization• marketing• service• sales

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24/7access

Personalized Location specific

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?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

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Mktg

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% w/ appsCustomeraccess

Customer use:• Personalization• Marketing• Service• Sales

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Locationspecific

Firm

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Device

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Benefits of mCRM for internal

24/7access

Personalized Location specific

Firm

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?

Internal

Interaction

Device

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Field service% w/ apps% w/ devices

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Mktg

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Contact center% w/ apps% w/ devices

Customer accessCustomer use:• personalization• marketing• service• sales

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Locationspecific

Firm

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ice

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Benefits of mCRM

24/7access

Personalized Location specific

Any time

Personalizedexperience

Any where

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?

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Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

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24/7access

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24/7access

Personalized Location specific

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Customer use:• personalization• marketing• service• sales

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ract

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ice

Field sales

Field service

Sales

Service

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24/7access

Personalized Location specific

Any time

Personalizedexperience

Any where

Firm

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?

Internal

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Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Customer access% w/ devices

Customer use•Use 1•Use2•Use 3•Use 4•Use 5•etc

24/7access

Locationspecific

Firm

PDA

Mobile

Laptop ??

B2E B2C

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Benefits of mCRM for internal

24/7access

Personalized Location specific

Firm

PDA

?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Customer accessCustomer use:• personalization• marketing• service• sales

24/7access

Locationspecific

Firm

B2E B2C

Inte

ract

ion

Dev

ice

Field sales

Field service

Sales

Service

Mktg

Appl

icat

ion

Contact center

Benefits of mCRM

24/7access

Personalized Location specific

Any time

Personalizedexperience

Any where

Firm

PDA

?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Customer access% w/ devices

Customer use•Use 1•Use2•Use 3•Use 4•Use 5•etc

24/7access

Locationspecific

Firm

PDA

Mobile

Laptop ??

B2E B2C

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

Contact center% w/ apps% w/ devices

Benefits of mCRM for internal

24/7access

Personalized Location specific

Firm

PDA

?

Internal

Interaction

Device

Field sales% w/ apps% w/ devices

Field service% w/ apps% w/ devices

Sales

Service

Mktg

Application

% w/ appsCustomeraccess

Customer use:• Personalization• Marketing• Service• Sales

24/7access

Locationspecific

Firm

B2E B2C

Inte

ract

ion

Dev

ice

Field sales

Field service

Sales

Service

Mktg

Appl

icat

ion

Contact centre

CRM

24/7access

Personalized Location specific

Any time

Personalizedexperience

Anywhere

Source: Datamonitor D A T A M O N I T O R

Companies must support multiple access channels in order to satisfy their cash-rich, time-poor customers, but that is only part of the story. Providing service outside of office hours is expensive – no bank, for example, can afford to open its branches 24-

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hours per day – so companies must find ways of providing 24-hour service without significantly increasing costs.

For some enquiries there must be some interaction with people, and this is why companies provide 24-hour call centres. These are expensive to run, but costs can be reduced by using follow-the-sun call centres (i.e. using multiple locations around the globe that are only ever open during office hours) or by outsourcing offshore. However, most customer contacts can be dealt with by directing customers towards self-service channels. Although these may not be able to offer the rich user experience of human interaction, customers do accept that the price they must pay for wanting to check their bank balance at 3:00AM is dealing with a machine rather than a human being.

Self-service

Providing customer service is necessary, but it costs money. There a number of ways in which companies can provide customer service, and a range of different costs associated with this. For example, providing customer service in the traditional manner within a call centre costs on average £6.50 per call, but answering the call with an IVR or providing the answer on a website would cost less than £1. Therefore, encouraging customers to use self-service channels can rapidly lead to significant cost reductions.

Web based self-service

There are a number of ways in which a company can enable its customers to serve themselves on the Web, from simply offering a list of frequently asked questions (FAQs) to allowing access to real-time product and delivery tracking information. However, in order for a Web-based self-service strategy to really work, the service provided on the Web must be good enough for the customer to get the answer they need without having to resort to other channels. This means making the answers dynamic, most commonly by linking them to an intelligent knowledge base of company information or linking them to back office systems containing information about customer accounts information, distribution and stock levels.

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IVR

IVR systems can be operated either by traditional touch-tone (e.g. ‘Press 1 for sales, 2 for service, etc…’) or by a natural language speech recognition engine. Traditional IVR is only capable of fully automating relatively simple queries, such as checking account balances, and is primarily used as a way of collecting information and routing the call before it is answered. However, adding a speech recognition front-end not only leads to a much richer user experience but also means that more queries can be answered without expensive agent interaction. On average, a call centre with traditional IVR can answer 14% of calls without agent interaction, whereas a call centre that uses speech recognition technology can increase this to 25%.

Speech recognition and voice self-service

The telephone is still the only truly mass-market technology, and consequently IVR and voice self-service are the only truly mass market self service technologies. Datamonitor recommends that all companies should focus on automating at least some of their voice call centre traffic if they wish to save costs through deploying self-service technology. It is because of this focus on automating call centre traffic that Datamonitor believes investment in speech recognition technologies in the UK will increase rapidly over the next five years, as illustrated in Figure 3 and Table 3.

Figure 3: UK investment in speech recognition technologies, 2002 - 2007

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20

40

60

80

100

120

140

160

180

200

220

2002 2003 2004 2005 2006 2007

Mar

ket v

alue

(£m

)

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40

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120

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2002 2003 2004 2005 2006 2007

Mar

ket v

alue

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Source: Datamonitor D A T A M O N I T O R

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Table 3: UK investment in speech recognition technologies, 2002 - 2007 £m 2002 2003 2004 2005 2006 2007 CAGR Investment 35 47 67 99 148 219 44.5% Source: Datamonitor D A T A M O N I T O R

Trends in voice self service

Adoption of speech recognition technology is still very low, but there are already examples of successful implementations in the UK, and many more companies either have projects in the pipeline or are assessing the opportunities for speech recognition. As the market matures, Datamonitor has identified a number of trends:

• IVR enhancement - IVR is a technology that is popular with enterprises, but not universally popular with customers. A large proportion of the investment in speech technologies is currently focused on upgrading IVR with richer and more user-friendly interfaces. Touch tone IVRs are useful for collecting numbers, for example, but are not so good for inputting flight destinations;

• Hosted solutions – Speech recognition technology is very suited to hosting in the network, and many companies are working with telecom providers to access speech-enabled technology in this way, from basic call routing services to fully functioning voice portals;

• Verticalized applications – Speech recognition technology is by no means perfect and therefore the most useful applications on the market are those that are designed for a specific purpose, and most of these are designed for specific vertical industries. The most popular vertical-specific applications include:

o Financial services – applications include customer service automation, stock quotes, security and authentication, outbound notification alerts and transaction automation;

o Communications and utilities - applications include customer service automation, meter reading, directory assistance, bill payment and field service;

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o Travel and tourism – availability information, bookings, check in and outbound notification alerts;

o Healthcare - appointment scheduling, supply management, clinical trial recruitment, sales force automation and prescriptions.

Limiting factors

Datamonitor has strong opinions on the benefits and drawbacks of voice-based self-service.

Opinion 1 – Speech recognition must be deployed well or not at all

Badly deployed speech recognition technology can cause irreversible harm, not just in relationships with customers but also in the acceptance of speech recognition elsewhere in the organisation. Companies deploying speech recognition must work with partners that can help them to develop and test applications that will prove popular with customers and deliver the required ROI.

Opinion 2 – Speech recognition technology is most suited to specific tasks

Natural language recognition technology is still a long way from perfect, but if used in the right circumstances it can deliver real benefits. Therefore Datamonitor recommends that companies focus on areas where solutions are being developed, such as those listed above.

Opinion 3 – Companies must deploy speech recognition gradually and offer alternatives

Speaking to a machine is alien to many people, and shouting ‘Heathrow’ or ‘Transfer £500’ into a mobile phone on the train even more so. Many people are still not comfortable about using speech recognition technology, and Datamonitor advises companies to introduce it slowly and offer customers alternatives, at least in the early days.

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Which self service channel is right for you?

In order to compete effectively, companies must realise that they have a range of customers, and that these customers need to be offered a range of channels through which to communicate depending on their preferences. However, companies also need to minimize costs, and consequently wish to direct customers to the channels that can effectively service them at the lowest cost.

In the past, some companies have chosen to force customers to use the cheapest channel (for example, by charging exorbitant rates to answer the phone, or sometimes by simply not offering a telephone number at all). However, more often than not, this strategy backfires and the end result is a set of angry customers and a damaged reputation. Conversely, companies that have managed to successfully reduce their customer service costs while retaining or increasing customer satisfaction levels have done so by encouraging customers to use self service channels. They have achieved this by striving for customer excellence across all channels – if a customer receives the level of service they require through self-service channels, they will return and use them again and again.

Table 4 lists the benefits, drawbacks and most appropriate uses of the various self-service channels that are available.

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Table 4: Self-service channels: their benefits, drawbacks and uses

Channel IVR and voice automation Web self service Automated email

response

Benefits

12% of the cost of using an agent to answer the telephone call Mass market – everyone has a telephone and so can use IVR Already widely deployed – there is lots of experience in the market

Low cost Allows users who are browsing the Internet to quickly access the relevant information

The lowest cost self-service channel Many customers prefer the ease of sending an email to picking up the telephone, and the volume of emails sent to companies are continuing to increase

Drawbacks

Customers can become frustrated with menus and pressing buttons

Not everyone has access to the Internet

Not everyone has access to email The quality of the automatically generated responses can vary greatly

Most appropriate uses

Any call centre that wishes to reduce costs and improve customer service

Organisations that conduct a significant proportion of their business on the Internet

Organisations that conduct a significant proportion of their business on the Internet

Source: Datamonitor D A T A M O N I T O R

Excellence in the self-service environment can only be achieved if the self-service applications are powered by a suitable knowledge base. A knowledge base is a centralised store of customer support information that can be accessed by people or applications providing customer service, from call centre agents to IVRs. Companies must ensure that all customer service channels have access to the knowledge base, and that it is kept up to date. In addition, service requests that cannot be answered by self-service applications must have the ability to be escalated to an agent via a computer telephony integration (CTI) application. A CTI application links data to a telephone call so that it can be identified and then routed to the most appropriate

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location. A common use for CTI applications is a screen pop, where customer data is ‘popped’ on to an agent’s screen, allowing him or her to serve a customer immediately without having to go through the customer’s details in order to access account information.

What does this mean for companies? Simply put, it means that they must provide the self-service channels their customers require, and this differs by company and customer. So for a company selling books on the Internet, Web-based self-service is clearly the best place to focus investment. However, for the majority of companies the phone is their dominant channel for customer service, so automating these calls must be the priority.

HOW TO PROVIDE CONSISTENT CUSTOMER SERVICE

Considering the pressure on companies as a result of the proliferation of channels, the need to provide 24/7 access and the drive to satisfy ever more demanding customers, how does a company support flexible interactions while maintaining excellent customer service?

Channel integration

Too many companies have contact silos, with one department handling the call centre, another the Web site and another working on a mobile project. These different departments will often each have access to different systems and have different processes. The result is contact chaos resulting in inconsistent and incompetent customer service. Many people will have experienced the frustration of sending an email to a company and, after it still hadn’t been responded to within a week, calling the call centre only to find the agent has no record of the email. Currently 22% of emails sent to companies in the UK are not answered effectively and have to be escalated to telephone, costing British millions of pounds every year.

In order to overcome problems like these, companies must integrate channels and build a centre of customer service excellence. This is best achieved in a multimedia contact centre, as described in Figure 4.

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Figure 4: Multimedia contact centre

Multimedia Agent:

• Sales • Service • Support

Telephone

Fax

Branch/ATM

Letter

Trad

ition

al

Text Chat Email

VoIP Web CollaborationIn

tern

et

SMS WAP N

ew

Cha

nnel

s

iTV

Multimedia Contact Center:

Universal

Queue

Multimedia Agent:

• Sales • Service • Support

Telephone

Fax

Branch/ATM

Letter

Text Chat Email

VoIP Web Collaboration

SMS WAP iTV

Multimedia Contact Centre:

Universal

Queue

Source: Datamonitor D A T A M O N I T O R

Central to the multimedia contact centre is the concept of the ‘universal queue’, sometimes referred to as integrated channel management (ICM). The concept behind the universal queue is that all contacts are routed to agents using a single set of business rules, regardless of whether they are inbound / outbound or voice / data. The criteria for the routing could include customer value (e.g. platinum card holder), agent skills (e.g. languages spoken or sales / service agent) and media type (e.g. phone call or Web chat).

Introducing a multimedia contact centre will require significant investment, so naturally there must be an ROI case in place. There are three main areas where a multimedia contact centre generates business benefits:

1. Increased customer satisfaction – Intelligently routing contacts means that they are routed to the most appropriate place and can be answered more effectively. This could mean routing a call from a French customer to a French-speaking agent, or it could mean routing a call to an agent that the customer has spoken to before. During peak hours it could mean routing a call to an IVR rather making a customer wait in a queue for 15 minutes. The more effectively and quickly the customer’s request is answered, the more satisfied the customer.

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2. Cost savings – Intelligent routing makes a contact centre and the broader enterprise more efficient. Routing contacts to the most appropriate agent or self-service system means that customers are more likely to have their questions answered the first time, which reduces both the average length of calls and call back rates.

3. Increased revenues through cross- and up-sell – Intelligent routing increases customer satisfaction, which itself leads to increased revenues, and routing contacts based on customer value ensures that a company’s best customers receive the best possible service. Routing contacts based on the customer’s likelihood to purchase additional products or services also leads to increased cross- and up-sell activity, vital in industries that are focusing on increasing average revenue per user (ARPU).

Knowledge bases

For any company implementing a multimedia contact centre, data quality is vital. Using the most up to date customer information is important for dealing with inbound and outbound contact, but that is only half the story. Once the customer request has been directed to an agent (or a self-service system), that agent must have access to information that is needed to answer and serve the customer.

Excellence in customer service can only be achieved if agent and self-service applications have access to a suitable knowledge base, as illustrated in Figure 5. A knowledge base is a centralised store of customer support information that can be accessed by people or applications providing customer service, from call centre agents to email management applications. Companies must ensure that all customer service channels have access to the knowledge base, and that it is kept up to date.

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Figure 5: Using a knowledge base to power customer service

Phone Email Textchat Web Speech

recognition IVR Automatedemail Mobile

Knowledge base

Customer data

Agent assisted service Self service

Phone Email Textchat Web Speech

recognition IVR Automatedemail Mobile

Knowledge base

Customer data

Agent assisted service Self service

Source: Datamonitor D A T A M O N I T O R

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DATAMONITOR CONCLUSIONS

All companies are operating in a multi-channel world

Customers now have a choice of channels through which they can contact an organisation, and organisations must aim to support all of these channels. However, different channels are suited to different types of customers and products, so organisations must prioritise the channels on which they want to focus if they are to operate effectively.

Customers are becoming more demanding and more mobile

Many of these new channels allow customers to be more mobile, so not only can they now contact organisations through a number of different channels, they can contact them whenever they like. People are leading busier lives and want customer service 24/7. Organisations must support this desire, but realise that customers are willing to accept less interactivity and human interaction in return for greater levels of access.

Self service is key

One of the key ways to deal with more demanding customers and cut costs is to offer and encourage the use of self-service channels, including the Web, IVR and speech recognition. However, self-service must be of a high enough quality not to leave dissatisfied customers, and companies must provide alternatives for customer that do not like interacting solely with machines.

Channel integration and presenting a consistent face to the customer

Whatever the customer service channel, the message must be consistent for individual customers, and the customer service must be of the highest possible standard. Companies must integrate channels and build a centre of customer service excellence. This can only be achieved by using quality customer data and a consistent knowledge base that supports agents and self-service systems.

Flexible Interaction

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