Teleservices
Customer care pays
How to get a solid ROI out of your customer care initiative
By Curt Harler
Smart Business Cleveland | May 2008
Paul Derbyshire
Director of strategic marketing
InfoCision Management Corp.
Every company is in business to make
money. One of the best ways to generate a solid profit is to take care of your customers. The input costs are low;
the returns are good. This is true whether
the customer interaction is face-to-face or
over the phone. However, customer care is
a complex area.
Smart Business spoke with Paul
Derbyshire, director of strategic marketing at InfoCision Management Corp.,
about the issues of customer care and the
potential return on investment of a well-planned customer care initiative.
How low are customer care input costs?
When considering the cost of your customer care activities, spending the ‘talk
time’ to introduce new products and services through a thoughtful, coordinated
cross-sell program more than pays for the
additional per-minute cost, effectively
turning customer care into a profit-generating activity instead of a cost center. The
budgets that companies allocate to handle
customer care are substantial and, as a
result, the trend historically has been to
pursue a unilateral cost-minimization
strategy. From putting the squeeze on talk
times and employing impersonal IVR
(interactive voice response) solutions for
in-house centers to courting less effective,
less costly third-party solutions from the
other side of the world, the perception that
a customer care solution must remain a
cost center has become firmly rooted in
corporate psyches.
Is customer care generally an expense or a
profit-maker?
We have taken a more holistic approach
to serving clients, adopting the philosophy
that customer care applications need to be viewed as profit-generating activities.
We’re not talking about hard-to-define
metrics like customer loyalty and brand
image here; we are talking about real revenue generated by the cross-sale of appropriate products and services that fit with
your customers’ needs and wants.
So beyond warm-and-fuzzy relationships, are
there hard-dollar returns?
A customer who calls your inbound customer care line and receives assistance
that satisfies his or her needs is the most
receptive candidate for a cross-sell —
more receptive than if you had placed an
outbound call or sent that person a mail
piece. Adding a well-thought-out matrix of
add-on products and services to your customer care process can turn this costly but
necessary service into a profitable activity, covering the call center costs and providing a profit back to your enterprise.
Do you have some numbers to back that up?
Consider the following example (see
table) of a customer care program we run
for a nationally recognized bundled media
services provider. We proposed a shift in
strategy away from cost minimization
toward profit maximization by using additional talk time to cross-sell add-on
services. Before cross-selling products,
InfoCision was handling the customer’s
service questions and politely exiting the
call. With a talk time of 5.5 minutes, it was
costing our client $4.13 per call that came
in. Over the course of the 99,696 calls
received during this period, the billing
and, in turn, the cost to our client was
$411,744.
After adding a series of cross-sell opportunities, which were tailored to the services the customer already had, we handled
126,220 customer care calls. Because of
the extra talk time necessary to cross-sell
these products, our talk time increased to
seven minutes per call, thus the billing to
our client was $5.32 per call. The annualized net income that we generated
through the sale of these add-on services
was equal to $8.25 per call, meaning the
client’s customer care was essentially free
and, in addition, it received $2.93 in profit
for every call that used to cost the client
$4.13. Everyone wins in that scenario.
PAUL DERBYSHIRE is director of strategic marketing at InfoCision Management Corp. Reach him at paul.derbyshire@infocision.com.
