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Customer self-service is finally catching on with consumers — and saving businesses a bundle in the process.
John Edwards, CFO Magazine
July 1, 2005
Ask engineers to name the great scientific innovations of the past 20 years, and you'll probably end up with a list like this:
1. Packet switching
4. 64-bit microprocessors
5. Computer-aided design/manufacturing
Ask consumers the same question, and the list would probably look more like this:
2. Cell phones
4. Digital cameras
5. Those machines at the airport where you can change your seat.
Admittedly, the consumer list may seem superficial. In the grand scheme of things, ticketing machines at an airport hardly compare with devices that operate at a subatomic level. Nevertheless, frequent fliers who have repeatedly found themselves in the middle seat of a 12-letter row on a 15-hour flight will no doubt vouch for Number Five — assuming, that is, they get through the security line in time to use it.
The truth is, in the day-to-day exercise known as living, small gains in convenience are usually the advances most appreciated by humans. That simple fact may explain the corporate obsession with customer self-service. Over the years, companies have spent millions rolling out cutting-edge CRM systems, including automated phone programs and, later, Web-based systems. The dream: improve customer care while reducing the cost of providing it.
The dream didn't pan out. Automated phone systems were confusing, forcing callers to navigate a maddening series of menu options. Web-based programs, which promised quick answers, often left customers waiting hours for a response to a simple question. Says Esteban Kolsky, customer service research director at Stamford, Connecticut-based IT advisory firm Gartner Inc.: "There's no question that at some point self-service developed something of a bad reputation."
That reputation appears to be changing. Indeed, customer self-service is quietly and steadily gaining acceptance with consumers. Some of that acceptance stems from a change in demographics, with younger customers preferring to do for themselves. Mostly, though, the sea change in C-service stems from a dramatic improvement in the self-service technologies themselves. Voice-response systems, the onetime bane of banking customers, have improved so dramatically that many patrons now prefer them to live customer service representatives. And intelligent instant messaging (IM) "'bots" — computer programs that "chat" with users — can provide real-time responses to even complicated questions.
The result? Self-service is beginning to fulfill its initial promise of providing easy and personalized customer interaction while substantially cutting support costs. Says Laura Preslan, vice president for CRM at AMR Research, a technology research company located in Boston: "Self-service is one of the highest-reward, lowest-risk investments across the entire customer management spectrum."
To wit: a recent AMR survey found that a large company that invested $400,000 in self-service technology could expect to reap nearly $900,000 in savings from the outlay. "Companies are not maximizing the value of self-service," notes Preslan. "There is at least a six-figure benefit waiting for most."
I've Got Algorithms
Executives at American Savings Bank will no doubt attest to those projections. Managers at the Honolulu-based bank decided early on to focus the company's self-service efforts on an automated phone system. That's because "when people want to do something quickly and easily, they tend to reach for a phone rather than a keyboard," explains customer service manager Renee Lum.
In May 2004, the bank launched an interactive voice response (IVR) system developed by Dallas-based InterVoice Inc. The system allows customers to check balances, transfer funds, and handle a variety of other tasks by talking in a natural voice to an automated assistant. Unlike early IVR systems, which often sounded like robots with sinusitis (and which routinely missed or misinterpreted user responses), the bank's system eerily approximates a human service rep. The digital customer rep — whose voice is supplied by a local Hawaiian voice talent — even greets callers with local salutations, such as "Aloha" and "Mahalo."
Advanced speech algorithms enable the InterVoice system to recognize the phrases and sentences people use in everyday conversation. And like the highly popular "Julie" system at railroad operator Amtrak (see "Ernestine, Meet Julie," Techwatch, January), a "barge-in" capability allows callers to interrupt the system, meaning experienced users can quickly get the information they desire. The system's speech-recognition engine, which understands more than 100,000 words, can also separate a significant utterance from coughs, sneezes, dog barks, and other random background noises.
After the development work at American Savings was completed, the bank and InterVoice tested the application on customers of various ages, ethnic backgrounds, and occupations, soliciting opinions on its usability. "We wanted our customers to like the system and to turn to a human only when they couldn't get something from a machine," says Lum. She notes that within two months of its launch, the system was handling more than 340,000 calls a month.
Lum says the friendly, Hawaiian-accented voice of the digital service rep immediately places customers at ease. It also helps them forget they're talking to a computer. "It has encouraged them to try the service," she notes. Managers at the bank have received very few customer comments on the system. "That's kind of a good thing," Lum insists. "Any time they don't like something, they're going to scream and yell."
Lots of 'Bots
CRM experts say human service reps remain unsurpassed in assisting customers. Of course, they also cost more. The reality is, many customer-support functions supplied by a person can be replaced — at a fraction of the cost — by a virtual automated service agent (for a comparison of costs of various customer service approaches, see chart, this page). Such automated service agents, known as ASAs, are software 'bots that communicate with customers through a pop-up IM program on a Website.
Harrisdirect, a Jersey City, New Jersey–based online discount brokerage, began using an ASA earlier this year. The system has virtually eliminated the need for rep-to-client hand-holding, while smoothly guiding users through complex investment, regulatory, and taxation issues. The technology for the system was provided by Conversagent Inc., a software developer located in New York and Sunnyvale, California. The company's flagship program, Conversagent Automated Service Agent, is designed to handle routine inquiries, freeing a client's support staff to tackle more difficult cases.
Unlike other kinds of text-based self-service tools (such as FAQs and knowledge bases), ASAs understand natural language. That capability means customers can submit questions in everyday sentences and phrases and receive plain English replies. Says Michael Hogan, Harrisdirect's chief operating officer: "The system replaces the contact center representative with an interactive natural language text chat that provides immediate responses to customers' questions."
Hogan points out that early service-agent programs didn't factor in basic human behavior, such as the tendency to ask illogical questions or blurt out non sequiturs. By comparison, the product from Conversagent handles abrupt subject changes. It also uses context to derive meaning from scattered thoughts. Remarkably, the agent can also take the lead in a conversation, prompting a customer for additional information, offering suggestions, or guiding the user through a complex multistep process.
According to Hogan, the company's ASA can answer most simple queries while servicing about 1,000 sessions per month. "We're looking for this technology to provide enhanced customer service while lowering costs," he says. The vendor claims that, by deflecting calls from human support staffers to automated agents, the cost of deploying its system can typically be recouped in three months.
Portals Get Personal
Unlike ASAs, self-service Websites have been around for years. Known as portals, these virtual back offices help customers get fast answers to pressing problems by supplying an array of research, messaging, and other tools. But the latest generation of customer portals goes a step further. In some cases, companies now allow customers to set up their own personal portals — that is, home pages specifically tailored to the user's needs and preferences.
Several automakers, including Saab and Nissan, have embraced personal portals. Keith Billings, the fixed-operations manager at Arizona-based Peoria Nissan, points out that car sellers increasingly view their service departments as key profit centers — particularly in an era of dwindling brand loyalty. The personal portals, Billings says, boost service-department traffic by acting as customer magnets. "It sticks them to us and keeps them from straying elsewhere," he explains.
When visiting their personal sites, customers can view their vehicles' service history and check recommended maintenance schedules, as well as appointment dates and times. At Peoria Nissan, customers also receive service bulletins and other communications directly from the manufacturer. "There may be information on there before we know it," admits Billings. "We've had that happen a couple of times." Customers can also add their own entries to the site, allowing them to track services purchased elsewhere or even data related to other vehicles, including non-Nissan models.
While a virtual feature like automated maintenance scheduling clearly appeals to customers, it also lessens the dealership's workload. "Internet-savvy customers really love it," says Billings. "Sometimes, we never talk to them on the phone."
The personalized sites are part of a larger package that Peoria Nissan purchased from Autobytel Inc., a dot-com survivor that has branched out from virtual car selling to dealer-support ventures. The total Autobytel package — called Retention Performance Marketing 2.0 — includes support for personalized Websites, as well as a variety of other CRM tools, such as marketing E-mails and customer-demographic analyses. Billings says the software has more than paid for itself. "We average about $51 in revenue for every dollar we spend on the program."
While portals and IM 'bots offer sizable savings over call centers, some businesses have found an even cheaper way to answer inquiries from customers. They hook them up with other customers.
Circuit-design software specialist Mentor Graphics, for one, directs consumers to a company-sponsored Web forum. Once there, customers can ask fellow Mentor users to guide them through setup struggles, configuration woes, and compatibility conflicts. "Our customers are a readily available information resource," says Tom Floodeen, vice president and general manager of the Wilsonville, Oregon-based company's customer-support division.
Since Mentor's customers are themselves highly knowledgeable engineers and technicians, they have a great deal of insight to share with fellow users about circuit design. Standing behind this volunteer corps is Mentor's support staff of more than 300 engineers in nearly a dozen global offices. These engineers answer some 5,000 calls a month, respond to E-mails, and contribute to the company's knowledge base. They also monitor and field questions posed on the forum.
The forum is one of several CRM technologies at Mentor, along with call centers, E-mail support, and a virtual knowledge base. But Floodeen says the Web forum stands apart as a popular and effective tool for helping customers in need. "The biggest benefit of self-service is that it lets users find answers on their own," he says. The result is higher-quality problem-solving that comes from several minds, rather than a single service rep.
To resolve particularly thorny problems, Mentor engineers often collaborate with one another, as well as with experts within other companies and the user's own organization. "We're able to respond to 90 percent of customer issues within two hours," says Floodeen, "and most of the time within 30 minutes."
Mentor's layer of self-service technologies, sourced from vendors including Siebel Systems, Art Technology Group, and InQuira, contributes directly to the company's bottom line. "We've lowered our phone load by about 20 percent," claims Floodeen. "Without our Web [technology], we would probably have to hire about 5 or 6 million dollars' worth of [customer support] employees annually."
They Pump Gasoline, Don't They?
While do-it-yourself service is no longer an irritation to customers, it is still a long way from perfect. Even backers of the self-service approach concede that advanced assistive tools have practical limits.
Neville Cousins, a technology director at Dimension Data, a global IT services company with U.S. headquarters in Reston, Virginia, warns that fully automated self-service systems should not generally be used in situations requiring the delivery of detailed advice. Likewise, he says companies should rely on tools that link to actual human beings (E-mail and Web forums, for example) when confronted with complex problems.
For his part, Gartner's Kolsky advises businesses to keep their customer bases in mind when considering a move to self-service technology. Outfits with a high percentage of older customers, for instance, might want to stick with a more traditional call-center model. Kolsky also recommends staying in contact with extremely profitable or loyal customers. "You can give them access to self-service if that's what they want, because [by doing so] you can raise the level of customer satisfaction," he says. "But you should also definitely keep a personal touch with them."
Nevertheless, over time, customers not only come to accept self-service, they usually end up demanding it. Forty years ago, who would have thought that drivers would willingly pump their own gas, or that shoppers would gladly ring up their items at the grocery store? What's more, as the technology of self-service grows increasingly sophisticated, the difference between automated support and human assistance will undoubtedly narrow. "The ultimate goal," insists Cousins, "is to make human and machine support virtually indistinguishable from each other."
That goal, like the digitized voice on the other end of the phone, is getting closer to reality all the time.
John Edwards is a freelance writer in Gilbert, Arizona, and a frequent contributor to CFO.
|The Self-service Economy
Web self-service and interactive voice response are cheaper than live reps.
|Automated chat (IM)||27.00||4.50||5.25|
*Customer-support costs per incident