The Catch-22 of Automated Customer Service—Resolved

“Improve Revenues”. “Increased Customer Satisfaction”. “Reduce Costs”. Everyone has an opinion about further automating their customer service operations. We’ve been bombarded with information from all perspectives. From the cost-savings perspective, the answer seems to be: AUTOMATE IT ALL and operate at one-eighth the cost of agent-based support. Of course, the Customer Satisfaction surveys indicate the preference for all live agents. Then again, shareholder feedback indicates the need to increase revenues through internet transactions, while our European colleagues have been able to charge the caller a premium to speak with a live agent…So, how can a Company obtain the economies of automation, while actually improving Customer Satisfaction? For even the most customer-focused Financial executives, it's tough to bust through the clutter and decipher the best mix of automation and personalized service for your Company, and there's a good chance that you may miss the right balance…

The telephone self-service industry has, from its very inception, produced products that offended most of the callers who use them, because these systems produced such a markedly frustrating, inferior customer experience compared to that of a live agent. Speech-enabled systems, introduced over a decade ago, contributed to the problem, because their speech recognition was limited, and was far less accurate than speaking with a live agent. The industry has been the object of jokes and criticisms, including the recent “GetHuman Project”, which offers excellent insight into the public sentiment around Interactive Voice Response (IVR), and identifies companies with poor telephone service.

Now, even the “zero-out option”– providing a live agent for those who require or desire to speak with a live agent – has been compromised by the economic selection of low-cost agents, in distant lands, answering calls in other than their native languages.

In the same way that phone companies were accused of “eliminating the personal touch” when they created telephones which did not require operators to dial and connect our calls for us in the middle of the last century, we know that economic factors will guarantee that automated customer service will remain and grow. Callers adapted to dialing their own phones then, and there is overwhelming evidence that we are accepting self-service systems now—and deriving many benefits such as shorter wait times for basic information, and 24x7 access to information previously available only during business hours. Even today, the view that providing quality self-service will cost more is unfounded—the beauty of using technology is that, when implemented thoughtfully and efficiently, there are higher customer satisfaction ratings, with massively impressive savings.

Renewed emphasis is being placed on how to use the web, speech recognition with increased intelligence, and human sounding text-to-speech, in new combinations, to improve both the user’s experience and vendor cost-of-sales metrics."

For example: instead of customers searching a web site to find the answer to a specific question, an automated or live agent can direct them by speaking or pushing web pages to them which contain the information that the user has requested. We are all more likely to rate our customer experience higher or indeed, to make a purchase, when we receive this level of personalized service.

The goal is to make the user experience more pleasant and, ultimately, more profitable for those selling services via these new technology combinations.
Most customer contact executives are looking at three objectives: higher customer satisfaction ratings, cost reduction and revenue growth. The highest priority strategies are those that can achieve all three often contradictory goals. Overall, leading companies are seeing themselves as a “contact business” - putting the customer at the center, with the entire organization as resources for serving the relationship. Current strategies include segmenting the customer base according to key attributes, predicting behavior and preferences based on the segmentation, and providing agents with a comprehensive view of the customer relationship.
There is an ongoing tradeoff in customer contact between efficiency and caller experience. Reducing the cost of customer contact to create more efficiency often means reducing the quality of the user experience. The best operations find ways of enhancing the customer experience without adding costs. These new contact center metrics—customer satisfaction, first call resolution, service consistency, and revenue generated – create an interrelated set of issues that must be managed to achieve business objectives. Customer contact is evolving from a cost center to a profit center, generating sophisticated technology requirements, agent segmentation, and training and work processes.

New technologies driving the evolution of today’s contact center

New technologies – such as IP telephony, natural language speech recognition and virtualized operations, including outsourced/offshore/home-based agents – are creating both opportunities and challenges. The primary advantage of IP appears to be its lower cost structure, not as simple cost reduction, but because it enables strategies such as resource sharing, which can increase revenue and improve service levels. Natural speech recognition offers potential for increasing customer self-service rates for existing and new automated applications. The costs of natural speech recognition, while still quite high, are coming down, and accuracy rates are improving. Outsourcing continues to grow, and, although many companies are downplaying their use of offshoring, the market trend continues higher.
There are benefits and tradeoffs for each of these. IVR self-service systems and offshoring are getting a great deal of public attention, very little of it positive. We are all familiar with the frustrations experienced attempting to navigate poorly designed IVR applications, or by language and cultural differences in offshore call centers. Technology and wage arbitration can’t be applied in a “broad stroke” without risking customer satisfaction and loyalty.
IVR Self-Service: The times, they are a changing…

Interactive Voice Response applications were first introduced over fifteen years ago, and offered customers reduced costs by automating basic information access. Application designers created these solutions with a call center-centric approach as opposed to a caller-centric view. They looked at situations that could be handled by an IVR to off-load the agents and implemented them with a standard directed-dialog, menu driven interface. This works very well for highly repetitive applications such as routine balance inquiries; in fact, most callers find that the IVR is faster, more convenient, and sometimes more accurate than dealing with a live agent. The financial services industry has had a great deal of success in getting high utilization rates for these types of applications. The problems with user acceptance of IVR applications surface when dealing with first-time callers or infrequent callers; the second issue occurs when IVR is used to front-end a wide range of options – “for billing say or press 1”, “for repair say or press 6”, etc. Callers become trapped in an IVR purgatory—poorly designed IVR user interfaces, confusing prompt menus, repeating information at different steps, low speech recognition accuracy causing ongoing reprompts (“did you say…?”), and no easy access to a live agent—which becomes an unprofitable customer service nightmare.

If you look at these problems from a caller-centric perspective, the primary need is to find out what the caller wants up-front and then route them appropriately, to either an agent or a self-service process. This initial categorization is critical and is best accomplished with the intelligence of an agent. Natural Language Speech recognition has a long way to go before it can functionally and cost effectively handle a broad “How may I help you?” type of prompt, although an agent can easily route callers using open-ended prompts. A new approach to IVR blends self-service and agents into a unified, collaborative solution, bringing the agent into the caller session only as needed. This allows for much higher accuracy in getting the caller to the right place with minimal frustration, while greatly improving first call problem resolution.

Internet-based WEB services: a major investment with marginal results.

WEB services can be very successful in off-loading contact center traffic, particularly with basic information inquiries. One of the primary reasons for the growth of e-commerce on the Internet is that it is easier to make user-friendly applications with a graphical user interface than it is with an over the telephone application. However, a key issue with WEB services is the low “look to book” ratio, the tendency of customers to use the WEB site to gather information, then call into the contact center and talk to a agent to complete the transaction. In this situation, the enterprise has invested in a second contact channel and gained only a marginal improvement in lowering contact center costs. This is another area where collaboration between self-service and agents is being looked at to improve the transaction close rate, particularly for reservations in the hotel and airline industries.
Offshoring/outsourcing is here to stay, but…

As traditional delivery of customer service became increasingly expensive, companies turned to outsourcing all or part of their customer service functions. Commonly referred to as “call centers,” specialists there delivered reduced cost through lower labor rates and optimized structures. Because the value proposition was mainly viewed in terms of cost savings, both sides soon took advantage of wage/price arbitrage opportunities that existed offshore; the same service call could be resolved in Bangalore far cheaper than in Nebraska, so the outsourcing/offshoring trend accelerated, and savings increased—at the expense of customer satisfaction.

Lower labor costs can offer clients of “nearshore” outsourcer’s savings of eight percent on per-hour call handling in Canada, and ten percent savings in Mexico. Personnel costs in offshore locations such as India and the Philippines can be as low as forty percent. Outsourcing can also greatly reduce the need to invest in new or upgraded contact center facilities and technology.

Initially, it was possible to identify obvious drawbacks inherent to outsourcing and offshoring, but the potential impact was impossible to quantify. Now, given experience and heavy customer feedback, “Best in Class” companies have clearly identified the negative effects of giving up direct control over their customer service functions, on their businesses and customer relationships, and they have begun to quantify “hidden” costs and seek better service delivery models. For example, they have learned how important home-market accents are to maintaining customer satisfaction, and that service-generated customer loyalty is directly linked to growth and profitability. In addition, projected cost savings from offshoring can be affected by factors other than language skills and cultural differences, for example: coordination costs, political risk, and agent attrition rates can be major concerns. The rapid growth of offshoring is causing a shortage of fully qualified personnel and agent turnover is much higher now, approaching domestic rates in some situations.

For customer service vendors, passing on cost savings alone will no longer be enough to grow or defend their business. Best in Class companies will increasingly judge their suppliers on call outcome quality, and the key metrics they use for benchmarking performance will often come from direct customer feedback. Vendors, whether offshore or onshore, will have to make customers happier, keep them comfortable, and never give them reason to guess their calls are being handled externally. All of this will have to be achieved without changing present cost structures, which means that technological or process innovations must be found that can satisfy demands for higher quality.

Smart Self-Care: Managing the tradeoffs between efficiency and customer satisfaction, new technology performance and risk.

Optimizing existing infrastructure, getting more out of what you’ve got, and determining where and how to deploy new technologies while minimizing risk is essential. A new approach, blending self-service and agents into a collaborative solution, appears to offer the best possible immediate and long-term potential. We call it “Smart Self-Care”; it leverages agent expertise with speech-enabled IVR to achieve higher self-service rates, increased customer satisfaction, more efficient segmentation of agent skills, and continuous process optimization.

The foundation of Smart Self-Care is its ability to bring a Call Control Agent into an IVR interaction, without the caller being aware, to direct the automated process as needed. Dialogue with the customer is presented via recorded phrases and text-to-speech. The agent can guide the application, clarifying the customer’s needs in case of a speech recognition error, direct the application flow, add work items to the process, speak directly to the caller or transfer the call when appropriate. This presents the customer with a consistent interface, quick and easy access to information, a low call handling time, and elegant error handling that hides technical details – a user friendly, “smart”, high-quality experience.

Smart Self-Care also enables companies to leverage contact center agents more efficiently, blending offshore and domestic, skilled and entry level, skills-based routing, and other best practices without the usual drawbacks. For example, smart self-service calls can be monitored by low-cost, offshore agents (who do not require polished language skills), and, as needed, redirected to near-shore or domestic agents to handle complex requests.
The Smart Self-Care concept involves more than just agent-assisted IVR; it includes continuous process improvement. All contact data (voice and application) is captured and recycled to identify and optimize call flow and trouble spots. The data can also be used to identify customer buying and call patterns, enabling customized treatment for different customers.

Revamping the customer contact process.

For many products and services, the lion’s share of time in total lifetime customer interactions is spent in contact centers. The role and structure of today’s contact center is shifting from a “speed and cost” approach to a customer-centric, value-add model. Organizations will need to look comprehensively across their service process - keeping the customer at the front – to tie together the strategy, applications and technology needed for the transition. Managing this process places a premium on balancing customer and organizational needs with a realistic expectation of the performance and cost of new technologies, not just a vendor’s technology-driven view of self-service objectives.

Customer interaction is a diverse and difficult job, and most of the technology applied to it recently has contributed little to making it easier. The smart self-care, agent-centric focus is consistent with historically successful technology development approaches, which have emphasized supplying progressively more powerful automation tools to workers skilled in a task domain, thereby extending their reach. It offers the advantages of simplicity and flexibility, provides a framework for continuous process improvement and service optimization, and leverages agent expertise and best practices. Smart self-care is an incremental approach to closing the gaps that exist between contact center business needs and technology.

Peter Drucker said, “Business only has just two functions, and only two. Marketing and Innovation. Marketing and Innovation make money; everything else is a cost.” My challenge to that opinion is that Customer Service, when properly deployed, can drive both Marketing and Innovation, ensuring customer loyalty and future revenues. With next generation technology solutions such as “Smart Self-Care”, even automated solutions are able to nurture the customer relationship, improving the client experience, and generating substantial savings and revenue improvements.

Through effective management of data, knowledge, and technology, the client-centric, proactive contact centers can be developed, which will bear little resemblance to the legacy, reactive call centers of the past. More importantly, they will deliver the capabilities that finally allow Customer Service departments to deliver significant and measurable growth to the corporate bottom line.

Bill Jones is Vice President with Aumtech, Inc., a leading designer and provider of innovative “customer interaction” solutions to the global carrier, service provider and enterprise markets. More information is available at Aumtech’s website, www.aumtech.com, or contact Mr. Jones at bjones@aumtech.com .