The three most read posts on Alen’s Think Place

The three most read articles at www.gojceta.com during the past year

After more than a year of posting to www.gojceta.com, it seems that the most popular articles were those written with intention to be posted to Alen’s Think Place. In competition with English translations of my articles published in Croatian business and technology magazines during the past decade, the winners were the two posts created out of pure intellectual joy, reflecting my thoughts, without expectation for a financial reward.

The most read article on www.gojceta.com was the story of my experience at the first McCafe’ in Zagreb: “A coffee shop in the hamburger kingdom“. It explored the business model and the McCafe’ service in general.

The other most read article, missing only one visit to equal the McCafe’s score was the story about brand extension of Cedevita multivitamin drink to their line of tea. “Dad does it dissolve in water?” was doomed to be written the day when my son confirmed to me that my own confusion with the brand message goes beyond my own perception.

The third most accessed article was “The bdp triangle – my framework to managing successful proactive telephone campaigns described in an article in Croatian business magazine Lider. Despite the fact that the “triangle” was around 10% behind the two winners, I’m very proud of this concept and I believe that it has deserved the position.

The most read articles at www.gojceta.com:

  1. A coffee shop in the hamburger kingdom
  2. Dad does it dissolve in water?
  3. The bdp triangle

The above articles are copyright of Alen Gojčeta

©2006-2010 Alen Gojčeta

The “bdp Triangle” – my Article on challenges of telesales campaigns – (English translation), Liderpress, 11/2005

Outbound telesales campaigns take part of many contemporary channel strategies. Those are often used to cover large customer base within sales models with simple transactions. There are plenty of arguments that support such approach, but there are some rules to respect as well. I have embedded these rules into the “bdp Triangle”…

Managing proactive telephone campaigns

Alen Gojceta

Today’s organizations that operate in intensively competitive environments need to adopt comprehensive customer relationship management (CRM) strategies. These strategies are striving to integrate the one to one marketing principle. It fosters approach to each person, member of a large customer base, as an individual with his or her needs, characteristics and specific behaviors. This approach, among organizations embracing CRM, has brought customer interaction channels on top of the business agenda. In addition to traditional brick and mortar offices and ever present sales representatives, modern technologies brought new interaction channels that are by their very nature, more convenient to customers and more profitable to the organization. Besides the Internet, contact centers are the most important means of interaction with large customer base.

The power of telephone marketing

Development of management disciplines within call centers and increase of their complexity had impact on widening the area of their

Pro-active calling activities are among contact center's most challenging tasks

applicability. Sharing knowledge among inexperienced agents, conversational scripts, intelligent call routing, education and quality assurance are just some of the challenges faced by management within call centers. However, pro-active calling activities have always been among their most challenging tasks. There are two different ways of such interaction: incoming (inbound) proactive activities and outgoing (outbound) calls.

An organization can proactively act upon incoming calls by anticipating needs of their customers by proposing products or services, in addition to fulfilling the original scope of the customer call. There are a number of processes, policies and technologies that support proactive proposals during incoming calls. Those will not be further discussed in this article. The following text will investigate the topic of outgoing telephone campaigns. Its multi-disciplinary and complex challenges have to balance contact center technologies with psychology, ethics, legislation, sales techniques and marketing know-how.

According to the recent data (2005) from Direct Marketing Association (DMA), in US, telephone marketing is ranked second with 47 billion dollars behind direct mail with 49.8 billion. These data are even more significant if one takes into account other studies sponsored by the same organization, which puts telephone marketing on the throne in terms of response rate with 5.78% and the rate of return on investment (ROI) with a significant 18.2%, higher than e-mail marketing with 16%. In year 2005, direct marketing will participate with as many as 10.3% in the United States’ GDP.

About 50% of today’s call centers in the United States use the functionality of outgoing telephone campaigns. About 45% of those use this functionality for telesales and telemarketing, and about 22% of them for market research.

Telephone marketing and privacy threats

By implementing call centers with outbound functionalities and campaign management capabilities, organizations gain control over a powerful tool that can bring significant business savings as well as realize substantial added value through sales and marketing campaigns. This is a bright side of the coin. Unfortunately, telephone campaigns have their dark side too. Conducting telephone campaigns which are inconsistent with consumer’s expectations, their cultural habits or the current needs around company’s offerings, can lead to a complete disaster. The consequences can range from a complete collapse of a specific campaign to many insulted and forever lost customers.

Only a doorstep is perceived as more private property than a private phone number. Knocking on the door of someone?s home by a sales representative or a call to a private phone number is the event that can create or destroy customer’s good opinion about an organization.

Business phone numbers, as well as offices, are completely differently positioned in our minds. In order to perform work, purchasing decision-makers will be happy to listen to persons who represent their providers. Business phones are used precisely for this – to support business activities. Outgoing telephone campaigns in business environments are mostly used to create sales leads, and could be characterized as a combination of market research and sales initiatives. Already in 1989, the direct marketing department in Oracle Corporation used to sell their products using combination of a call center and internally developed application for campaign management. This fact is even more interesting when taking into consideration that they where selling databases worth several hundreds thousands dollars. Many were skeptical at the time about the strategy of the department which was headed by Tom Siebel, later founder of Siebel Systems. The strategy was confirmed by almost double the sales from the previous year.

Approach to consumers by means of telephone campaigns is different in many aspects. The consumer is more sensitive to privacy issues, he is protected by law, and cultural constraints may be of critical importance, especially in multi-cultural environments.

Consumers are hunters, not prey. Although the marketing industry has been targeting customers for decades, trying to arouse need and awareness about a product or service through various forms of marketing communications, at the end the customer had the opportunity to choose among various options. Growing awareness on consumer’s rights, increased share of the educated individuals within a population and the increased customer care by organizations in deregulated and competitive markets, made the average consumer less open to the traditional marketing manipulations around attitudes and nonexistent needs. Modern consumer gradually realizes that he is the “boss.” Outgoing telephone campaigns today are more complex and challenging for marketers than ever before.

The “bdp” triangle – first rules, then calls

Proactive outbound telephone campaigns should be run when combination of conditions that border by the “bdp triangle” are fulfilled. Its corner points are marked by: benefit, debt and permission.

The "bdp Triangle" visualizes the rules to follow when triggering telesales campaigns

bENEFIT implies a reason to call that brings true value to the customer through the so-called win-win relationship. The person who just bought an apartment will be satisfied if he or she gets the call from a sales representative from a company that deals with arranging documentation for property registration. In addition to the true value for the customer, calls may be considered acceptable when referred to “public good” such as humanitarian work or survey for market or social research. It is important to keep in mind that an organization whose existence depends on selling their products or services on the market, should not afford to make “dummy” outgoing calls. Each disturbance can instantly contribute to the negative positioning of the company’s brand in customer’s mind.

dEBT in the triangle indicates situations in which the customer is indebted to the organization. An example would be delay in bill settlement. Friendly warning or a reminder will not be taken for bad. For debt collection even telephone machines are often being used. However, the preferred form of the “debt angle” is the one in which the customer “feels obliged” towards the organization because of the high level of satisfaction with the experienced products or services.

pERMISSION implies customer’s consent to be contacted. The permission may contain the desired time frame of a call, possible reason (content) and the desired (permitted) communication channel. Permission based marketing, opt-in marketing or consensual marketing are among the terms that mark the only excuse that you can use to choose the content that you will communicate to your customers, as well as the how you will do it. Permission given by a customer is a passport to overcoming all the limitations put through legislative, cultural or professional boundaries to customer relationship.

How to get a permission? Strategic imperative of modern businesses is their capability to communicate directly with customers. In such communication, customers should be able, through various means, to opt for communication channels and content. Also, a customer should be empowered to change his or her mind at any time, to change the preferred way of communication or the type of content that will be delivered.

Obviously, for successful outbound telephone campaigns several criteria should be fulfilled: calls should be triggered at times that match the timing of a need incurred, and should target periods that will not be perceived as a threat of privacy.

The recipe for a successful implementation of outbound campaigns is called Marketing Optimization (MO). MO comprises a number of technological and organizational means that enable automated creation and communication of content that is suitable for a particular consumer. Comprehensive CRM systems often support MO as its integral functionality, providing technological support for managing processes and business relevant data.

Proper implementation of outbound pro-active telephone calls successfully combines ethical and cultural norms with the legal framework and detailed customer information such as profitability, demographics, past behavior and the behavior of consumers with similar characteristics. An organization that successfully manages to juggle these challenges by orchestrating their people, processes and technology, will be gaining significant advantages through marketing of relationships and cooperation.

If you will use this text for publishing or academic pursposes, be so kind to cite the author and source: Alen Gojceta, Liderpress, 11/2005. Thank you!

My article on IVR systems – PART 1 (translated to English), Banka magazine, May 2002

This is the English translation of an article published in Banka magazine in 2002. The article is about Interactive Voice Response devices (IVR). IVR systems find their “best fit” within call center environments where they represent the “finest compromise” of a CRM strategy. This is the first part of the article, addressing pretty universal topics of CRM, IVR and call centers, and therefore still actual, despite its origin from 2002.

IVR – technology for a great compromise – PART 1

If you will use this text for publishing or academic pursposes, be so kind to cite the author and source: Alen Gojceta, Banka, 05/2002. Thank you!

CRM – the concept of technologycal compromises

One of the basic postulates of any CRM (Customer Relationship Management) strategy is to make customer’s interaction with the organization easy and accessible. Taking an ideal situation from the financial industry as an example, it would mean that each of us had his or her personal banking clerk on full disposition. In accordance with our wishes, let’s call him Super personal banker. He would appear at our office or apartment shortly after we called him. In a pleasant atmosphere, he would carry out the necessary transactions, advise on investing our money, and help us select the optimal insurance policy or recommend the best plan to close our loan. Of course, in this ideal case, the client would not need to pay considerable financial amount for such a great service.

It is obvious that the ideal case for a bank is not the same as the ideal case for its clients. That’s why the CRM strategy is usually characterized by multiple win-win challenges, where such wins-wins are necessarily converted into (winning) compromises-compromises.

Managing customer relationships is basically oriented to managing such compromises. By balancing between the cost of advanced customer service and provided total added value to the client, healthy development of a successful CRM strategy is assured.

IVR – the simplest service making the greatest savings, 24×7

The existence of a call center as supporting tool for an advanced CRM strategy also represents a compromise of its own. Whatever our position on cost is, a call center is a pretty expensive tool for any service provider, looking on a short or long term. The reason is simple – the price of labor makes up to 70% of the total call center cost. Exactly for this reason, there are machines that substitute different functions in the Call Center. These machines are called Interactive Voice Response (IVR) devices.

When talking about telephone communication, IVR devices represent one of the most common compromises of advanced customer relationship management. IVR is, in its principle, a computer that performs certain activities automatically upon caller’s requests, given by phone.

IVR functions can be divided into two basic groups.

First, filtering phone calls based on who the caller is and what is the purpose of the call, and finally attaching such attributes to the call. Based on those, calls are further processed within the call center routing algorithms. Processing herein means operations such as identification of caller’s segment, call routing to a particular agent or group of agents, triggering certain applications to enable agents solving caller’s requests. All of it based on the attributes that IVR has attached to the call.

Second, automatically solving telephone inquiries, usually via dial tone or voice recognition. IVR can read the data, both dynamically from a database, or just play predefined recordings from static voice boxes. Responses to inquiries can be using voice, by fax, or via e-mail. Usually the answers are numbers synthesized by a computer, from pre-recorded sequences. There are several providers that offer IVR solutions with messages in Croatian language. Known examples of IVR solutions in Croatia are widely adopted various forms of automated telephone banking in different banks, popular Infozap and devices for activation of prepaid services for GSM operators.

IVR applications are mostly being easily made and changed by special tools. There are cases when those can not be changed. Such machines are usually intended for specific areas of application as complete solutions.

IVR role in call center environment

In the Computers and business insert of the last issue of Banka magazine (03/2002), there was a Gartner’s estimation that IVR systems within call centers will be one of rare segments of the IT market that will record higher growth rates than average. This is not unusual. In the EMEA (Europe, Middle East and Africa) region there is an average of 5 new call centers a day. Different analysts predict growth of the number of call center agents in Western Europe between 400 and 500% for the period 1999 – 2004. Although IVR systems can function as standalone solutions, their real value is shown when implemented within call center ecosystems.

The growth of the total number of employees in call centers and growing number of transactions and CRM processes that rely on telephone communication causes growth of the related work force cost. IVR solutions are among the most effective vehicles to reduce this cost. Of course, such solutions are driven by compromises introduced earlier in this text. IVR lets service providers to provision simple information to its users in an inexpensive and efficient manner, 24 hours a day and seven days a week. Customers have the ability to access frequently requested services and information, in a relatively simple manner, with guaranteed quality and availability. The compromise is reflected here in the lack of human contact and unpopular scrolling through predefined dial tone menus.

There are two factors where IVRs significantly reduce labor costs in Call centers: reduction of the needed number of agents due to the calls managed by the IVR, and reduced turnover of agents who are released from boring, repetitive and uncreative activities.

Statistics say that, usage of an IVR system reduces the average call length for 18%, which cause reduction in related labor costs. In today’s call centers around 12% of calls are resolved within IVR systems without any interaction with “live” agents. In some industries, such as financial services, entertainment and tourism, this share ranges even between 16 and 18%. Moreover 35% of total calls, before being routed to agents, are received to the IVR system.

Health Risk Management – an example of a successful IVR implementation

This case study has been extracted from a Lucent white paper. The source document is available today (January 2010) at: www.goldsys.com/…/21-Gold%20Systems%20Health%20Risk%20Case%20Study.pdf

Health Risk Management Inc. (HRM) is a company from Minneapolis, United States, which since 1977 provides health care services and health risk management. As a part of the U.S. health care system, the HRM takes care of the medical insurance coverage for health treatment expenses. They assess health risk and serve as an intermediary between health institutions and health insured.

Like other companies in the industry, HRM already owned an IVR system which provided restricted functions to callers, such as checking the status of their requests. In order to reduce traffic and offloading call center representatives, HRM decided to introduce two IVR applications: the eligibility of patients for medical services and health insurance benefits. In addition, the existing application, that checked statuses of requests for refund of medical services, was enhanced.

While the old application was limited only to communicating the status of a request, the new one has added information about reasons of delays. In addition, the insured was able to get the information about the amount of health services covered by the insurer and the remaining of the amount to be paid. As part of advanced customer relationship, support for Spanish language was introduced. Some HRM customers had up 15% of the Spanish-speaking insured. The new application eased their access to information through their native language.

Calls to check eligibility of a policy holder for a particular health service where performed by physicians and medical institutions. IVR application used to return the information about the status of an insured, services covered by health policy and its expiration.

When integrating applications for medical benefits, the major challenge was how to communicate complex, accurate and understandable information from a wide selection of options in a reasonably short time. HRM was able to overcome this obstacle by achieving the most important compromise of IVR systems – releasing people of simple tasks, thus making a machine provision easy and fast automatic self-service, enforcing customer satisfaction.

HRM’s success was complete. IVR system was very well accepted. It used to completely resolve 58% of 50,000 calls dialed during the first three months. More importantly, the surveys among users showed no objections to such self service “information supplying system”.

TO BE CONTINUED IN PART 2… My next post will be the last two paragraphs of this article: “The future of IVR” and “Voice portals”. My plan is to post it on January 11 2010.

My article on call centers translated to English, Banka magazine, February 2002

Call centers represent the very hearth of a CRM strategy. Why do we need call centers? How do we choose it and what is the experience of those who decided to modernize their customer interaction environments? These questions and more I tried to answer in this article, published in 2002 in Croatian Banka magazine. I have translated it to English for the convenience of all English speaking visitors of this blog.

Call centers in the mission of customer satisfaction – the thing is (not) about technology

If you will use this text for publishing or academic pursposes, be so kind to cite the author and source: Alen Gojceta, Banka, 02/2002. Thank you!

Call centers today are unavoidable part of a successful strategy of advanced customer relationship management, known as CRM (Customer Relationship Management). In brief, CRM is set of rules, technological procedures and applications that companies implement, on large customer base, to simulate close relationship, which is usual between customers and small corner shops. Large customer base, in this case means thousands, hundreds of thousands or millions of users.

CRM strategy was built during early nineties in economies where keeping the existing customer base became a priority due to high penetration of products or services and existing strong competition.

Looking from this perspective, the CRM strategy is a natural process that can be recognized already on economic models of ancient world – when the logistics and human resources where not capable for new conquests (which where very often the means of economic growth), fortification and preservation of existing properties used to take place.

Concept of CRM today suggests technology as being in the “first line” of relationship with the customer. This technology include applications for managing marketing, sales and provision of user services, including communication channels that allow managing interactions with individual persons, belonging to a large customer base, who influence buying decisions or is involved in use of products or services.

The heart of CRM strategy

Call center, as technological solution for efficient and effective telephone communication with a large customer base, most often represents the very heart of a CRM strategy.

Choice of the most appropriate call center solution depend on the form and level of integration of business processes, number of daily calls, intensity of marketing campaigns, ratio between inbound and outbound calls and integration of different communication channels that would be used. As higher the quantity of calls (interactions) is, the more advanced Call Center technology has to be for management of inbound and outbound calls.

Users want to do business with organizations in a simple way. Take as example a bank customer that wants to know how and under what conditions to refinance a housing loan. By dialing a free phone number of the bank, he quickly gets the right person with the right information and, preferably, a solution to the problem in a form of revised contract received at his home the next day. Interactions as described are proved to assuring increased customer’s commitment to a bank that provides such fast and efficient service. Study conducted in 1998 by the JD Power and Associates on a sample of 10400 users of services of five leading U.S. credit card issuers, revealed that price was not decisive. The study showed that the quality of service was the key to retention and customer satisfaction. In this type of business, the service is reflected in three major elements: the quality of call center contacts, transparency in payment processing and perceived financial strength and confidence about these companies.

Exactly due to the need for fast and quality interactions, some invisible items of call center operations can be critical to success. As larger the call center is (proportional of the number of daily contacts) as important becomes technological side of the solution to enabling the business success.

Success factors

There are two magic formulas that indicate the success of a call center supporting CRM strategy: service levels, and customer satisfaction.

The level of service is measured in percentage of calls that are received and processed in a certain time frame compared to the total number of calls. The level of service of a call center is directly connected with intelligent call routing capability. This would ideally mean that the system automatically recognizes the phone number and the individual customer, anticipating his or her reason of call, and addresses the most appropriate call center agent to handle the call. If the most appropriate agent is busy, the system will, in order to preserve the required service levels, make a compromise and forward the customer call to the following most appropriate available agent. Thus, the system will try not to let customers wait too long or ultimately hang up the call. You certainly have that experience when, after your call, you keep hearing the famous “Wait a minute …” phrase for some minutes more than you can stand.

Such behavior is unacceptable for a service provider who wants to build long-term relationship with satisfied customers. Customer satisfaction is a direct consequence of the level of service, and other processes that affect the speed, quality and efficient customer service. Advanced call center technologies ensure that your call is not infinitely rerouted among agents and departments.

Also, after a caller establishes communication, the agent has to be enabled to perform the desired transaction, provide information or to start a process. Customer satisfaction depends not only on call center technologies. In addition, it is supported by a whole set of CRM applications and processes, including internal company organization. It is therefore important, when deciding about call center technologies that the platform is open and capable to integrate with different CRM applications.

Despite the fact that it is hard to intuitively perceive measurable results of usage of advanced call center technologies, the experience is positive. On larger call center solutions that engage fifty or more agent seats, advanced technology may affect increase of service levels to from 20% to 95%. It means that the number of calls not solved would be reduced from 80% to 5%.

Problem solving solutions

Faced with deregulation of the market in Eastern Europe and aggressive new competitors who where realizing multiple growth rates, one of the leading telecommunications company in its region find itself in situation of redefinition of their business model, including managing of relationships with existing customers. After decades of enjoying the benefits of monopolist position, the company was forced to change the approach.

Given the relatively low market penetration, the challenge was twofold: to attract new customers and preserve the existing ones. Preservation of the existing customer base was the task of the customer care department. For the first time in their history, they started to measure the effectiveness of the existing call center. The results were disappointing. In some periods, almost 80% of the calls happened to be lost or otherwise unresolved. Users where giving up because of infinite redirections of calls. The existing system was not capable to support traffic peaks, so it simply used to refuse the calls or let them for long waiting.

A decision was made to implement a call center solution with advanced technologies and intelligent call routing, where agents where divided into dynamic groups based on their expert knowledge and skills. Transformation that followed was amazing – calls where positively solved within first attempt in 90% of cases. Users were satisfied and, combined with the efforts of the marketing department; the service provider has adopted growth rates comparable with the new competitors.

This is just one of dozens of similar examples. One well known case concerns Capital One, the credit card issuer. PricewaterhouseCoopers brings this case in their book on the CRM (Stanley A. Brown, Customer Relationship Management). After strong growth rates of customer acquisition, based on aggressive pricing policies and marketing approach, Capital One has lost its pace showing below market average growth rates.
After measurement of customer satisfaction, they realized that the ineffectiveness of their call center significantly increased with the enlarged customer base. Due to the increased diversity of their products and services, the need for segmentation and customized approach became more important.

With the introduction of technologically very advanced call center in combination with advanced CRM technologies, the level of customer satisfaction increased significantly. The average length of calls as consequence of increased efficiency fell to one third of the previously measured.

The cost reducing factor

Modern Call center technologies do not only bring the benefit of satisfied customers. The same solutions that contribute to increased customer satisfaction reduce the costs of call center management, where human resources cover 60 to 70% of its total costs. Five to ten thousands of daily interactions make a very common number for a market of Croatian size. Such amount of calls can be generated by customers of a company which is among market leaders and puts strategic focus on modern channels of communication with customers.

Assuming an average call time of four minutes, saving thirty seconds per call, on pattern of 5000 calls a day, would mean saving more than forty man-hours per day. For the same functionality it would take five agents less. In the same way savings in network costs and other call center costs occur. This calculation is very approximate and does not include the distribution of calls during time, queuing, traffic peaks and a host of other factors. But the message is clear. Significant are savings than can be achieved by changing the business channel model. Good integration of business processes within the call center can significantly unload or even replace the traditional and costly forms of interaction with users, such as “brick and mortar” offices.

Call centers are a paradox of today’s business philosophy that is focused on close customer relationship. From organizational perspective they look like sophisticated, automated mass production factories, while their end product is intimacy of corner stores and, consequently, user satisfaction.

In the next issue of Banka magazine’s Computers and business, we will address technologies that enable automatic service provisioning, without direct client’s contact with the call center agent, such as IVR (Interactive Voice Response) and CTI (Computer Telephony Integration).