Why cutting customer service is a false economy

Why cutting customer service is a false economy

Published on: July 06, 2012
Author: Epticablog

In an era where organisations are looking to reduce expenditures wherever they can, it is vital that they don’t make cuts that actually lead to increased costs – or cause valuable customers to take their business elsewhere.

This is particularly true when it comes to customer service – after all it is easy to believe that cutting corners in the contact centre won’t affect how your brand and organisation is viewed by consumers. Surely people will put up with a bit of aggravation and will remain loyal, with any churn being minimal?

While this is an extreme view it is a strategy that many organisations have been following, despite the risks it brings. A new report from Forrester reiterates the importance of not skimping on customer service – and that cutting frontline support actually increases costs.

Forrester’s new Playbook for Customer Service Excellence outlines three areas where poor customer service negatively impacts revenues:

  1. Bad customer service decreases loyalty and makes customers more likely to go elsewhere in the future. Customers tell their friends if they’ve had a bad experience – both through word of mouth and increasingly via social media. In fact Forrester believes that a ten point improvement in a company’s customer experience score can translate into more than $1 billion of additional sales.
  2. Escalating customer service complaints adds to costs. When customers can’t get a satisfactory resolution through one channel they are likely to move to another, adding massively to service costs. Invest to resolve issues first time and this unnecessary expense disappears.
  3. Customers will simply move elsewhere. In a competitive market loyalty has to be earned – if just a fraction of those that have a bad experience move elsewhere it will hit revenues.

So why is customer service so bad in so many companies? Forrester points out the increasing complexity of customer service organisations, responsible for more and more channels and, in many cases, relying on a complex technology ecosystem that has evolved over time rather than being strategically planned.

At Eptica we work with hundreds of customers across the world, and our experience is very similar to that of Forrester. What companies need is a consistent, centralised platform that can ensure that customers get fast, accurate service, whatever channel they are using. Information is up to date whether provided by web self-service, contact centre agents or through new channels such as social media or mobile so customers always have the best possible experience.

A great example of this is Eptica customer Ageas Insurance Services (AIS). AIS is one of the UK’s leading personal lines insurance brokers, operating under a multitude of brands. Its eStream project, built on Eptica technology, has integrated web, email, telephone, fax, letter and SMS customer contacts into a single platform, delivering faster, more efficient customer service across all channels.

Customer contact is managed through a central workflow that digitises paper-based correspondence and uses Eptica’s meaning-based processing technology to analyse enquiries and automatically route them to the right personnel. It includes self-service capabilities that allow both customers and contact centre agents to ask questions in everyday language to receive fast, relevant answers, meaning that now just 1.7% of customers then go on to submit email enquiries.

The benefits have been spectacular - eStream has transformed AIS’s customer service, driving an improved First Contact Resolution rate of 95.8%, a 50% reduction in customer handling time and a 23% reduction in inbound calls. This has both increased efficiency and delivered a brilliant customer experience at the same time. Click here for the full case study.

While the tendency in a recession is to cut costs at every opportunity, simply slashing customer service budgets really is a false economy. Companies need to update their processes, invest wisely in technology and deliver a consistent experience across multiple channels – that way they’ll not only boost the bottom line but delight customers now and in the future.

Tags: Ageas, AIS, contact centre, Customer experience, Customer Service, Eptica, First Contact Resolution, Forrester, Insurance, Social media
Categories: Analysts, Contact Center, Customer Service, Email Management, Finance, Multichannel Customer Service

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