Alcatel-Lucent

by Vincent Kavanagh, Practice Leader EMEA, Customer Experience Transformation, Alcatel-Lucent

Pick a number between 5 and 10 (statistically, most people tend to pick 7).

Time is precious. CEM can help your customers get a little of their lost time back.

Many analysts across industries agree that it costs between 5 and 10 TIMES as much to acquire a new customer as it does to retain an existing customer.

So, how do most companies view the relative importance of retaining a customer versus getting in new ones? Money talks, and around 60-70% of marketing spend typically goes on customer acquisition activity. Marketers questioned attribute roughly the same percentages to the importance of acquisition over retention, so it is clear that most companies are going about things, well, wrongly.

There are a multitude of reasons why people end their ‘relationship’ with companies, and sometimes they are just hell-bent on so doing. Suck it up, learn from it if you can, minimise fallout if possible and move on to the next redeemable soul. But there are many, many, more times when the relationship is soured by the way in which interactions (or ‘touch-points’ if you must) between the two parties are handled by the company. Because CEM is usually given a much lower priority than anyone with basic mathematical ability should realise is wise, companies sometimes actively drive away some of their most profitable customers long before their ‘customer lifetime’ would otherwise have come to an end.

Recent research shows that people are less and less willing to spend time in an endless series of telephone menus (or indeed any other form of queue). The trend is accelerating, rapidly, particularly among Gen Y-ers and Millennials. There is a great deal of cosy talk amongst CEM experts about how Facebook and in particular Twitter represent an immediate golden opportunity to interact with these hard to reach types. Wiser heads may suggest that perhaps this happy day is somewhat further away than may be supposed. Forrester recently broke ranks on this ‘groupthink’ with the point that in reality currently the number of online consumers using Twitter for customer support is “under 1%”.

As attention spans reduce and patience wears ever thinner, it is increasingly the case that one of the things people value and cherish most, and resent the loss of, is TIME. That time of theirs may be used for nothing more momentous than Googling, or Twittering (or indeed staring blankly at the wall), but their perception is that their time is a precious commodity, and that commodity prices are rising.

This is where the concept of ‘Customer Effort’ fits snugly into the CEM story. If the customer has to waste time calling about an issue, or waste time on hold/transfer/repeating themselves, or waste more time calling repeatedly about an issue, you as a company are stealing away bits and pieces of their time. And they won’t put up with it. They will go to other companies where effort is lower, where doing business is ‘easier’, i.e. quicker. BT used to talk about the ‘Demand Delta’, the balancing act of efficiency versus service, which for too many companies has veered sharply towards cost-reduction and away from serving customers.

As savvy consumers use the internet to get closer than has ever been possible before to what Economists call ‘perfect knowledge’ of offers and prices, the scope in many markets to differentiate on anything other than a more engaging Customer Experience is shrinking.

A recent article in Wired magazine by Matt Schwartz coined the term “Retail Hacking” to describe the practice of networks of individuals researching and colluding on every conceivable way to get a better deal, long before approaching the company from which the product or service will be purchased or renegotiated. There is a good reason why Groupon was recently labeled by Forbes the “fastest growing company ever”.

So before the customer even reaches your storefront (real or virtual) they often know a great deal about the product or service, and are sometimes more up to date with their information than front-line sales staff. How many such staff have had a smartphone shoved in their faces with the words “that’s not what it says on your website”? This phenomenon is set to increase as customer research is trending away from purely being done on the PC-based web, to being further explored and refined using mobile broadband and then tweaked again on the smartphone, sometimes even down to a location-based variable. According to Coremetrics, consumers using mobile devices on Black Friday 2009 represented 0.1% of visits to retail websites; in 2010 it was 5.6%. And when they do contact a company these smartphone users tend to make longer calls about far more complex issues than traditional callers into contact centres.

In effect, the customer has essentially done your sales job for you, made a decision based on a number of parameters and is looking to conclude the deal. If the company doesn’t make the process quick and easy, then the next alternative on the exhaustively-researched list becomes the new number one option and you lose the business.

This applies in the B2B sphere too. Vodafone’s 2010 Critical Response Time Index revealed amongst other things that 27% of UK businesses expect their suppliers to respond within the hour or they will take their business elsewhere, a figure that rises to 40% if the contact was made through a social network.

This is not in theory a complicated problem to solve. If companies use joined-up thinking to ensure some pretty basic things are done right, the snaffling of customers’ time can be kept to a bare minimum. So, for example, plan for the fact that most customers (89% according to recent survey by Alcatel-Lucent’s Genesys labs) will interact with you over multiple channels, which channels will change randomly/over time. Time leakage will be minimised and customer retention improved if all those channels have the same view of the customer, an awareness of their value, and of their efforts to interact, all threaded together. In some industries this is becoming an absolutely critical issue. For example in mobile telecoms in recent years the cost of acquisition is being matched or even exceeded in some markets by the cost of retention, making a top priority of doing continued business as painless as possible.

So, maybe it is time to take a long hard look at your customer delight index, your customer satisfaction score, your NPS, and see how you can slip back into their pockets the precious time you’ve been pilfering from your customers?

Discover Customer Experience Transformation at Alcatel-Lucent.