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ADDED VALUE CRM - Dreaming the impossible dream?
Is holding on to customers for life a real possibility for
operators? Alastair Hanlon believes that a new approach to CRM will provide the answer
Given a choice between winning new customers or holding on to the ones they have, any operator worth its salt would plump for ‘both’. It’s a reasonable choice but the fact is that many operators have been less successful at tackling the perennial problem of churn than at luring in new customers with attractive but costly offers. Of course, one person’s churn is another’s new sale.
For many, the solution has been to make heavy investments in IT, CRM systems in particular, in the hope that these will build longer term customer relationships. So far, this has not turned out quite as hoped, partly because the much-vaunted CRM and back office systems have tended to operate in silos and not as a seamless facility that provides a full picture of the customer relationship across all aspects of the business. This is not a deliberate policy, simply a result of rapid expansion and the need to add new systems to support new services. The information usually exists; it is just not readily accessible.
It becomes even more difficult in this era of convergence, as operators add new services.
Unfortunately, a customer trying to contact an operator can be forgiven for wondering whether they are dealing with one company or several. They soon find that call centre agents, their first point of contact, rarely have all the billing, service, offer and helpdesk information at their fingertips, as they might expect.
Things can be just as frustrating for the call centre agents themselves. In order to build a complete picture of a particular customer’s relationship with the company they have to switch between different CRM and back office applications, often resorting to handwritten notes to relate what they find in one with the information they collect from the others. It is inefficient, time consuming and highly frustrating.
If an agent is dealing with someone who is ready to churn, the question is what scope they have to make new offers or set up different deals, in order to retain the customer. Without a complete picture and firm policies in place to guide them, agents can end up giving less valuable customers more than they are worth and neglecting those with the greater long-term value. The customer with greater long-term revenue potential could decide to leave simply because the phone queues are clogged up, e-mail responses are too slow, service levels are poor and offers are unattractive.
Ending the silo culture
It is time for a strategic approach that makes the best use of technology, provides all the data needed and equips organisations to identify the highest potential customers and make the decisions needed to keep them on-board for the long haul.
This has to be supported by technology that goes further than most do at present. Existing CRM systems are just not capable of identifying the true lifetime value of individual customers and turning that into action every time there is a customer contact. Through integrating CRM and back-office systems, upgrading processes and reviewing business rules and procedures, a whole new world of opportunities is opening up.
This will provide a complete view both of the services available and of the customers. This makes agents very much more effective because they are able to see into all systems at the same time and no longer have to ferret for information from different sources. Business policies also become more consistent. This means that customers get the same information and level of service across all contact channels, whether they are interacting over automated self-care or with a call centre agent.
By integrating and making accessible information on customer history and services subscribed to, and having it delivered in a clear and transparent manner, it will be possible to raise the bar in customer service and focus on strategic areas that can transform the business performance.
Revenues for life
A comprehensive route to solving these problems can be found in an approach called Lifetime Value Optimisation. This is a process developed by strategy consultants, McKinsey, which moves well beyond traditional CRM.
LTVO can have direct impact on revenues and profitability by addressing the core issues of customer relationships – perceptions, loyalty and churn.
McKinsey has shown that LTVO can generate dramatic increases in EBITDA (earnings before interest, taxes, depreciation and amortisation). An incremental rise of between three and five per cent in EBITDA is possible and, depending on the size of the business, this can translate into hundreds of millions of dollars per year.
For LTVO to succeed service providers must be able to capture and respond to real-time events in the areas of customer care, billing and service delivery. The focus should be on four key areas, each of which directly influences the customer relationship, namely: customer satisfaction, customer retention, increased usage of existing services and take up of new services.
Rather than just reacting to problems when they come up, automated systems based on LTVO can make agents more efficient and allow them to be more proactive when dealing with customer queries. Automation can be made more effective by tailoring voice or web self-care to the customers’ needs in real time. With fewer incoming calls, call centre agents are freed up to focus on new sales and on serving high value customers. Not only does this reduce the cost of care and help raise revenues, this unified approach also has the potential to improve the overall customer experience and so increase customer satisfaction and loyalty.
With real-time data and proper micro-market segmentation, service providers are in a position to offer an immediate response to situations as they arise. These can be in such areas as billing queries, response to changing usage patterns or solving problems in real-time. Most importantly they can focus on customers with the highest potential lifetime value and give them targeted attention and high quality service.
Greater convergence means that a complete picture of individual customers, the services they use and their past behaviour and future potential is more essential than ever.
As well as increasing customer satisfaction and loyalty, the operator is better placed to take the initiative by making relevant and attractive offers that will increase each customer’s overall value to its business.
Real-time interaction
Underpinning all this is the principle that every time someone gets a bill, makes a payment, uses a service, makes a call or downloads some content, there is an opportunity to improve the effectiveness of those interactions.
By applying the LTVO approach operators can capture real time events in the customer care, billing, and service delivery environments, evaluate policies related to those events, and carry through real-time actions related to those policies.
Ultimately it is all about giving individual customers the level of service they warrant. Those with high lifetime potential are treated differently from those with lower potential but no one is left feeling neglected or unwanted. The system will identify incoming calls from high value customers and route them to an agent, while a lower value customer might be transferred to an automated self-care system.
This approach produces individual solutions for individual customers, personalised to their needs, habits and tastes, and it does this proactively and in real-time. So, if a customer starts downloading music or ring tones to a mobile, the system might suggest an offer – a good-value subscription offer or a two-for-one option. Similarly, another customer who is about to buy their third ‘pay-per-view’ movie in a week might be offered a particular movie package, possibly a free movie as a reward for buying ‘now’.
Taking advantage of these ‘warm’ sales opportunities might be done by e-mail, phone or text but, above all, it happens at precisely the moment when the customer is focused on a particular aspect of the service – right when they are about to make a purchase. Rather than seeing this as ‘hard sell’, they are more likely to view it as a response to a real need.
Proactive troubleshooting
LTVO is not restricted to expanding sales opportunities, it is just as effective in solving customer problems, particularly in anticipating and addressing problems before the user even asks for help. If a customer changes their usage patterns or they suggest that they are having a problem of some kind, help can be offered even before it is requested.
This kind of proactive response to an issue flagged up by the integrated system, in whatever form it takes, can surprise and impress customers who have come to expect, slow, ‘after the event’ reactions.
This will not only help to resolve the customers’ problems, it can also make a strong impression on them and build their trust in, and loyalty to, the operator.
The types of events that might warrant an immediate, pro-active response include: someone who appears to be struggling on a self-care web site; a customer using a service for the first time or showing signs of becoming a regular user; when a fault occurs like a dropped call, failed download or device failure; when bills are being paid or get left unpaid.
The more you know about your customers’ behaviour and priorities, the more you can do to strengthen your relationship with them.
The main benefit of LTVO processes comes from better policy enforcement and improved treatment of inbound contacts, while between 10 and 15 per cent will result from outbound actions triggered by the real-time data being provided through the system.
The holistic approach contrasts strikingly with the traditional tendency to deal with problems piecemeal. At Convergys we see this new approach providing an effective solution to even the toughest sales challenges and, most importantly, one that will be reflected in greatly improved profitability.
Alastair Hanlon is Director, Innovation Strategy, Convergys Corporation, EMEA, and can be contacted via tel: +44 1223 705000
www.convergys.com
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