Customer Service, or Customer Retention?
Faced with a number of people earnestly competing for upgrades to First Class seats, the airline gate agent called for attention and made a succinct announcement. “These four people,” he said, and read off the names, “have a chance for the available upgrades. All others should board the aircraft. Be aware that if another upgrade becomes available, I won’t be able to go into the aircraft to find you — the only way you can be considered is if you are still out here at the gate.” Is that airline a Product-centric or Customer-centric business? The gate agent’s words left no doubt in the minds of the customers. Which is more strategic, in your company; products, or customer relationships?
One of the most visible and fundamental changes that Software As A Service is bringing will be a necessary redefinition of the role of customers and a concomitant rethinking of the corporation. The end of the overwhelming emphasis on The Hunt for the traditional “new” customers, with their exciting infusion of bulk profits, is hard for those trained in the old paradigm to contemplate. Addictions are unhealthy, and withdrawal pains for those who have allowed themselves to become dependent are severe. When customers are replaced by more reliable subscribers, what will happen to companies whose global strategies, organizational structures and how they perceive themselves are profoundly out of alignment with the change?
History is full of examples of what ultimately happens to those who cannot adapt to changing circumstances. The end of the dinosaurs. The buggy whip and carriage manufacturers of the early 1900’s; where are they now? The USS New Jersey class battleships and the Japanese Navy’s Yamato and Musashi — these ships were awesome weapons platforms in their time, as finely built as any traditional Swiss watch — but what role do battleships and their admirals have today? How about mainframe computer people; do you know of any highly-paid openings for senior COBOL programmers this week? The lesson is clear and inexorable: those who can recognize paradigm shifts and adapt tend to survive. Those who can’t, don’t. To which class do you belong?
Every day, every hour, customer support / service contact center reps exercise one of the few powers they unquestionably possess — the power to lose a customer. What’s worse, their use of that power is invisible, for no one is ever held accountable for the loss. Who gave the Support team members such authority? How did they come to have such a significant impact upon the company’s profitability? For the answers, we have to look well above the pay-grade of anyone in the center itself.
A major computer manufacturer just announced the closure of another one of its customer support contact centers. 1,100 more people will be out of a job, to join the 900 from the last such closure who are suddenly looking for new employment. The company spokesman said that “the decision to close the call centre was about cutting costs to stay competitive.” That statement is an accurate indication of how Support is typically regarded by Senior Management teams across the industry, and it ought to be prominently posted on the office wall of every Support executive. Despite the trade-show talk of running Support on a P&L basis, when the pressure is on, the discussion will be only about the costs to be cut. While you might be tempted to hunker down and hope to ride out the storm, there’s a much better way to improve your chances for prosperity.
The price of a gallon of gas has steadily been going up, and the impact is spreading. Is the prospect of paying $5 per gallon in the near future beyond imagination? The average person has little control over the price paid at the pump. If cost is all that is considered, the prospects look bleak. But here’s a key question: if your car got 100 or more miles per gallon, would the price for a single gallon of gas be as significant?
The average company loses 10% of its customer base every year — sometimes more; sometimes much more. So long as management focus is only or predominantly on short-term bulk injections of profit, and those new-sales injections continue, the true impact of a 10-20% yearly loss rate from the customer base will largely be ignored. The implications of the acceptance of this loss pattern, however, ought to be ominous, particularly for a SaaS vendor interested in maximizing their sustainable profitability. There are two key points to be made in this scenario. The first is that the arrival of a serious competitor could be a very significant event in the life of a company that doesn’t pay attention to its customer retention rate. The second is that there is an opportunity for individuals within companies to make a substantial impact upon both their firms and their own careers.
What’s the difference between a short-term policy and a long-term strategy? All too often, it’s the difference between some limited revenues and sustainable profitability. Folklore has a very apt phrase for it: “Penny-wise, pound foolish.” In more corporate terminology, “The exclusive focus on immediate gains may put long range profits at risk.” In an era where companies constantly talk of the need for 360-degree views of the customer, Customer Relationship Management and of the importance of customer retention, why is it so easy to find myriads of examples wherein valuable customer relationships are mismanaged and lost?
One of the more significant challenges that a company or department technology selection team faces is to know which Customer Support/Service Technology (CCTECH) tool vendors and products ought to be considered during the evaluation process. With well over 80 different possible sources just for case management systems, it can require a significant amount of research time just to put together a beginning vendor/product candidate list. Which of the main functions of a given class of tools does a specific vendor’s product actually offer? What else does it do that might be of interest? To assist selection project teams in the creation of their initial evaluation list, The HotLine Magazine will provide a series of Product Overviews.
“Caveat Emptor” — Let the Buyer Beware is an old approach to Sales which places all of the responsibility on the customer for determining whether or not the product being purchased actually works or is in fact suitable for the intended use. A related ploy is what is known as a “tar-trap,” in which the more the target touches the trap, the more difficult it becomes to extricate themselves from its sticky embrace. While a customer may be seduced into buying and then held by dint of being locked-in afterwards, they soon will see the situation for what it is and begin to actively look for an escape. If a competitor came on the scene tomorrow to offer your customers equivalent functionality, an equal price and a painless transition of all their data and customizations, how many of them would take it? With what effects on your company’s profitability over the next six months to a year?
A new name, a new look, and a new focus has come to The HotLine. Re-launched as The HotLine Magazine, the new layout and graphics have strongly increased the accessibility of the articles and content. But the crucial difference is more fundamental. The focus has changed from optimizing center operations over to producing strategically significant, and sustainable, levels of contributions to overall corporate profitability. And the same needs to happen to the old role of Support / Service and the customer contact center. It’s indeed time for something new.