Next-generation contact centers can boost customer satisfaction, improve retention and increase top-line sales. Pulling this off requires an enlightened partnership between Marketing and Operations
By Lauren Gibbons Paul
For Overstock.com, 2005 was going to be the “Year of the Customer.” The slogan was grand but the logic behind it was simple: Customer retention could be improved and the cost of acquiring customers could be lowered at the e-tailer of discount brand-name goods. To lay the groundwork for this campaign, Tad Martin, vice president of merchandising and operations, and Kamille Twomey, vice president of online marketing, began brainstorming together last fall.
The two executives set their sights on the contact center. If Overstock.com could find new ways to fulfill customer desires via e-mail, chat and telephone, they reasoned, customers would flock to the site, with a direct impact on the bottom line.
To inspire their teams during this effort, Martin and Twomey took an unusual step. They packed up the stuff in their separate offices and lugged the boxes to a new one, where they set up shop together as partners in their “Year of the Customer” initiative. The move was symbolic as well as practical.
“We hear each other’s phone conversations—and we should hear each other’s phone conversations,” says Martin of their shared quarters. “So much of what we do and the decisions we both make affect the customer’s experience. So much knowledge is passed between merchandising and marketing. It just made sense to do it in real-time rather than waiting for another meeting.” While this degree of togetherness may be uncommon, creating a contact center that will drive profits rather than bleed costs requires this kind of gumption and fresh thinking. For Overstock.com, the contact center has become the front line in the fight to retain customers. But it can also help a company increase satisfaction, build loyalty, grow top-line revenue and learn more about high-value customer segments. As more companies understand this, the contact center is emerging as the fulcrum of a new partnership between marketing and operations.
The partnership is driven in part by today’s harsh business realities. No matter what the industry, more money than ever is needed to land new customers. Loyalty is all but dead. Privacy regulations have circumscribed the effectiveness of many direct marketing channels. And jaded consumers have the means and motivation to avoid marketing messages in their e-mail, on television or surfing the Web.
It’s only natural, then, that marketers would seek to capture customers’ attention as those customers voluntarily share their problems and desires with the contact center via e-mail, chat or telephone. But the trick is to do it right, say specialists.
“When the consumer calls you, it is a major opportunity. That’s when they want to deal with you,” says Elana Anderson, a principal analyst at Forrester Research. Listen to your customers in that moment, and they will tell you how to keep them happy, what unfulfilled need they are harboring. Provide them with the right information in the right form at the right time, and they are more likely to make a purchase, whether you’re selling diamond rings or Internet service.
“When the customer calls with a complaint, it is the perfect time to turn around the situation. First, you rectify the situation to where they are happy again. Then you take that opportunity to cross-sell them or upsell them,” says Julie Casteel, chief sales and marketing officer for ClientLogic, a business process outsourcer and unit of Onex.
Of course, that doesn’t mean blasting messages indiscriminately to everyone who contacts you, Anderson adds. Hit customers with a hard sell when they’re trying to finish a transaction and you risk alienating them, causing them to leave in disgust. Fail to train your contact center agents in how to upsell or cross-sell sensitively, and the best software in the world will not make a difference.
Despite these hazards, the contact center is a huge untapped opportunity for most marketers. Unlocking the potential, however, requires a metamorphosis from the call center of old into a rich customer interaction hub. That transformation is predicated both on new technology and new business processes that require marketers to work more closely than ever with operations in service, support and product development. It’s an all-encompassing and often expensive effort, but some early adopters have seen enticing payoffs.
Increased sales is the most basic ROI for creating an integrated contact center. Forrester studied 28 vendor and user companies on the forefront of this movement. “Most were able to beat their ROI goals,” says Anderson. One company in the study, for example, spent $1 million for real-time marketing technology to push its contact center to the next level. Having projected payback within 18 months, the company hit that point at one year. “The ROI came from increased response rates to offers. If you can take your response rates from 1 percent to 3 percent, that is a huge uplift,” she says. And that’s enough—or should be enough—to get most top marketers excited.
Uniting Around a Common Goal
Traditionally, the call center was just that—the terminus where incoming customer phone calls were dispensed with as quickly as possible, an expensive pariah managed by the operations or services group.
With the rise of the Internet in the late 1990s, companies selling to both consumers and businesses quickly hit upon Web self-service as a way to cut costs by easing call-center traffic and potentially raising customer satisfaction levels. The most advanced thinkers—financial services providers, multichannel retailers and telecommunications companies—already grasped that they should view the contact center as a source of profit, rather than cost.
Now, there is a plethora of new applications and services designed to help companies go the next step, where each channel and product division is working off the same customer information and giving out a consistent message. Implementing this technology requires marketing and operations to unite around a common goal such as increased retention, higher sales, improving the product or increased customer intimacy.
“So many different organizations have to come together to create the data and processes. They all need to be aligned,” says Tom Stolfi, principal at Inforte, a customer strategy and systems integration firm. Of the 10 major contact center integration projects he has worked on since joining the firm in 1998, he has yet to see a company achieve the ideal: a fully integrated center where data flows to and from customers in all the different channels and is used to further a corporate objective such as increasing sales or building loyalty.
“They haven’t been able to go all the way. Organizational change issues or power struggles within different line managers’ units always get in the way,” says Stolfi.
The potential for tension between marketing and operations flows from the different goals and metrics these groups have traditionally worked toward, according to Anderson of Forrester. “Any traditional call center is measured in terms of cost: How long did the customer have to wait? How many calls went through the call center versus using self-service? How long was the average call? The challenge comes when you want to drive revenue out of the contact center. Those metrics get turned on their head. It takes time to sell to a customer. You’re inherently lengthening that call. That is the number-one disconnect.”
Having a senior executive “sponsor” who can mediate the politics and keep everyone aligned is key. That executive needs to mandate that everyone has to work together toward the same goal. “The [sponsor] has to say, ‘We’re building a strategy that will help us meet our performance goals, and we need everyone on board,'” says ClientLogic’s Casteel.
With that mandate in place, it is much easier to work together—with or without separate offices.
Taking Action on Satisfaction
In 2002, 95 percent of EarthLink’s customer support calls came in via telephone. Costs were high—roughly $8 per call—and customer satisfaction was low. The average support call ran as long as 15 minutes, and users often hung up with a less than warm feeling. To address these issues, EarthLink reinvented its call center by beefing up e-mail and knowledge-based support and by adding chat capability with technology from LivePerson.
EarthLink also added screen pops in its Cisco Systems telephony system so that incoming calls and e-mails would be matched to an agent with relevant expertise. The agent can see the EarthLink products the customer is using, which allows the agent to take appropriate cross-selling and upselling action. “The cross-selling is new to us. We used to take millions of calls, and we didn’t make a single attempt to sell more products to customers. But then we realized the more products of ours they had, the stickier they were,” says Don Berryman, executive vice president for customer support at $1.4 billion EarthLink.
The Internet service provider now sends an e-mail survey to every customer who makes contact via any channel. Berryman monitors those results since they signal how he is doing at his goal of improving customer satisfaction and therefore driving retention levels.
To achieve that goal and to empower subscribers, EarthLink gave them the opportunity to create their own Personal Start Page, where they could choose to be updated on tech support issues such as new virus warnings. It did not take long for EarthLink customers to learn how to help themselves. Now, 20 percent do self-service over the interactive-voice response system on the phone; 20 percent use chat or e-mail; 5 percent help themselves via the website; and 55 percent speak to agents on the phone. The number of phone agents has dropped by 15 percent in the past two years, a significant cost savings.
In the past year, according to a company survey, the number of very satisfied customers has grown from 40 percent to 50 percent, a sign that they appreciate the deep online support features. Still, making half his customers happy isn’t enough for Berryman. “Our goal is to get to 75 percent with a combination of marketing, support and better product development. We want to make it more satisfying for customers to deal with us.”
With any luck, that will go a long way toward keeping notoriously fickle ISP customers in the fold.
Ringing Up Sales
Like many financial services companies, Providian Financial has been on the forefront of harvesting additional sales from its contact center. To accomplish this, the $2.7 billion consumer lender uses predictive-analytic software from Austin Logistics. When customers call in to take advantage of a balance-transfer offer on a credit card, for example, the agent gets a pop-up prompting them to make offers, such as a home-equity loan or card-protection service, based on customer history.
Providian’s call center is “owned” organizationally by operations, but marketing techniques and goals have clearly permeated it. “The best call center managers in this industry think like marketers, and ours is no exception,” says Warren Wilcox, Providian’s vice chairman for marketing and strategic planning. Although the company’s center manager aims for first-call resolution, a typical call-center metric, “He also has objectives related to balance transfer production. He thinks both ways,” says Wilcox. One sign Providian is far along in the evolution of its call center: It provides agents with appropriate training as well as rewards, including modest financial incentives for making additional sales.
To protect against the possibility that this metric might result in pushy agents, Providian employs verification technology in the background. “We have to make sure the caller was actually interested [in the promotion] and the agent did a good job of handling the call,” says Wilcox. “Our agents have the skill set to sell a product or service that matches the customer’s needs,” a necessary precondition to boosting top-line revenue but one that is often overlooked.
Wilcox declined to offer specifics as to ROI but did say the three-year effort was paying off for the company.
Seducing the Customer
Overstock.com has more than 400 agents and four centers to handle customer requests via phone, e-mail and chat for the $495 million e-store. But its executives are not working overtime dreaming up ways to reduce call center costs. Instead, Martin believes customers should engage on their own terms. “It’s more important for us to offer the customer the contact method they prefer rather than pushing them to something they don’t like,” says Martin, whose center works to create customer loyalty and intimacy, driving added sales along the way.
Overstock.com sells high-ticket items—such as $6,000 Piaget watches and diamond tennis bracelets priced up to $50,000—along with more prosaic offerings. So its contact center is a place where agents not only respond to customer queries but also actively extend help in the decision-making process. Powered by LivePerson’s Timpani software, Overstock.com has defined 20 business rules—conditions under which an agent will query the Web visitor if he or she would like to chat. An invitation to chat with an agent could be triggered when a customer gets an error message after logging in to his account, or by someone spending 15 minutes surfing the pricey estate jewelry listings. The visitor can accept the chat, decline it or ignore the pop-up and go on his merry way. This functionality has been live on the site only since last October, perhaps one reason the chat acceptance rates are not as high as Martin would like. He declines to specify further, saying that acceptance rates are within the overall LivePerson customer average range of 10 percent to 25 percent. Conversion rates—transactions that result in a sale—are good to excellent for the chat channel, which goes right to top-line revenue.
The ability to be in the moment with the customer, giving more information as questions arise—such as the gram weight of the 18-karat gold necklace—creates a unique brand experience for Overstock.com. “The more they can make people comfortable, the more they can keep them on their website,” says Kevin Kohn, executive vice president for marketing at LivePerson. “If you can create the intimacy, you can reap the profits.”
This two-directional chat capability goes to the heart of Overstock.com’s goal of seducing and delighting customers. “This is a big customer retention game. People are much more Internet savvy than they used to be. With the click of a mouse, they can go to one of our competitors,” adds Twomey. If the chat function keeps them there a moment longer, it may be just enough to consummate the deal.
No one can yet directly link this new form of customer interaction with profits. However, Overstock.com’s fourth quarter 2004 sales—which include its first holiday season running LivePerson’s software—were up 80 percent versus the same quarter a year ago. And revenue for the year rose to $495 million from $239 million in 2003.
Overstock.com has also learned that transforming the contact center into a profit center does not require putting off plans to outsource any aspect of it—even offshore. Last year it launched a pilot program to see how agents in India would do with responding to e-mail inquiries. The e-tailer sent two of its training managers over for the initial training sessions. “Our trainers trained their agents and trainers. Now they have our standardized training system and are quite good at training new agents,” says Martin. And these agents are just as good as their U.S.-based counterparts at cross-selling and upselling, he adds.
Better Data, Better Products
For some companies, the contact center provides a valuable opportunity to troll for customer feedback that can improve existing products or lead to new ones. Two that have done so are Black & Decker and Thule.
Black & Decker gathers customer information via e-mail surveys enabled by RightNow Technologies’ software and routes it to the appropriate product manager in real-time so that managers know what problems users are experiencing. This is particularly helpful with product launches, according to Chuck Udzinski, North American end user services manager for the $5.4 billion manufacturer of power tools.
The company also uses RightNow’s CRM for call tracking. Through workflow rules in RightNow, “we notify product managers and other individuals throughout the corporation about the good and the bad calls we receive,” says Udzinski. With a new product launch, “we’ll find out what’s being said about the product. We’ll notify legal if something is wrong with a product that raises any liability issues.”
Thule, a maker of car rack systems, traditionally dealt with customers at arm’s length through its dealers. With no formal procedure for responding to e-mail inquiries, Thule began using RightNow’s software in 2000 to get to know its customers through interactive surveys on its website. It didn’t take long before the company was putting that feedback to work in new products. For example, when a new form of disc brakes for bikes came into widespread usage, Thule engineers scrambled to decide whether to make an adapter to the existing product or create a whole new one.
“It’s very difficult to get customer information through our dealers. So we went into [RightNow] and by date and by customer pulled the names of everyone who had asked disc brake questions on the website in the past six months,” says Steve Doviak, marketing manager for Thule. “We did a blind mass e-mail to them and got qualitative feedback from them about how their product wasn’t working and what would be the best solution.” With that data in hand, Thule was able to serve both needs, putting out an adapter within three months and introducing a new product within six months.
Proceed with Care
Transforming a contact center into a key touch point for customer retention, loyalty building and cross-selling is not without its risks. Some of the first attempts to cross-sell via an integrated contact center were incredibly wrongheaded. Making a caller listen to a lengthy recorded message about a promotion before completing the original transaction is a major no-no. “You can’t be too eager,” says Forrester’s Anderson. “If customer satisfaction is eroding, you have to stop the program until you figure it out.”
You have to earn the right to cross-sell. Until you have quickly resolved a customer’s problem, you have not earned the right to engage them with another offer, says Kohn of LivePerson. And “you have to give the chance to opt out immediately. It all has to be permissions-based.”
Monitor customer satisfaction levels very closely when you first implement sales-oriented service. Expect to do a lot of fine-tuning. When EarthLink first began to experiment with cross-selling in the contact center, it had to tweak the agent metrics to get the right result. “We started rewarding agents on the number of upsells they got. We were getting a great response rate,” says Berryman. But verification of those calls revealed “some of the agents were not letting the customer off the phone. You have to incent the agent not only on sales but customer satisfaction.”
Most companies are not about to undergo a major reorganization to remove the contact center from operations or services just to put it under marketing’s domain in order to capitalize on these new opportunities. But marketing can still make its influence felt. At the end of the day, the role of the CMO is to determine who, how and when customers are “touched” and with what desired result. “Marketing will play more and more of a role in the call center,” says Kohn.
What’s critical is that marketing and operations work together. Says Anderson, “The left hand has to know what the right hand is doing. Marketing has the revenue goals and crafts the offers and has the analytics to understand what is going on. Service has the expertise in dealing directly with the customer.”
When the two come together, those cash registers are going to sing.
Lauren Gibbons Paul is a freelance writer based in Waban, Mass.
From CMO magazine (a publication of CXO Media, Inc.), April 2005