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August 8, 2006

© TAP 2006

The Impact of Self-Service on Customer Loyalty

SpeechTEK

by John Goodman, Vice Chairman

2© TARP 2006

Agenda

Key Questions: What are the key benefits of customer self-serve? What are the downsides? How do you decide which transactions to allocate to self serve How do you measure the impact

Who is TARP? Customer behavior, expectations, and preferences Quantifying the impact Key actions to make voice driven self-service effective

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About TARP

Founded in 1971—35 years delivering dramatic impact USA’s customer service (instigated 800#s) Malcolm Baldrige (influence criteria; TARP has a Senior/Alumni

examiner on staff ) Assisted 5 Baldrige Winners and 43 Fortune 100 Companies Initiated concept of “word of mouth” (TARP/Coca-Cola 1978 Study) and

“word of mouse” (eCare and Click & Mortar studies 1999)

Offices in Wash., D.C. and London

Optimization of cross-channel experience

Industry leader in customer experience measurement and management

Deliver insightful and actionable financial impact and tracking

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The Key Issue

YOU CAN’T SAVE YOURSELF INTO PROSPERITY!

ONLY SAVE MONEY WHEN YOU CAN’T MAKE MORE MONEY!

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Benefits of Self-Service

Lower cost due to no need for personal interaction Broader hours of support at low cost Is attractive to certain segments (e.g. antisocial “New

Yorkers”) Does provide opportunity to position human support as a

higher priced option Clearer characterization of customer perspective and

desires if you offer self-logging of issues and desired response time

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Why Transaction Surveys Don’t Tell The Whole Story And Can Actually Mislead

Too Specific Too General

Relationship survey

Issue-based survey

Transactions Survey

“My most serious problem is…”

“I would like you to….”

Could you modify the policy by doing x…?

“You delighted me by breaking the rules…”

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Identifying Issues Inappropriate for Self Service

• Differentiate between basic transactions and more complex issues

• Identifies risk and opportunity associated with issue by type of customer

• Quantifies non-complaint rate

• Identify opportunities to delight customers

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Limitations of Self-Service

Precludes leveraging transaction Limited opportunity to “connect” with customer Limited opportunity to cross-sell or up sell Limited opportunity to delight Little opportunity to explain policies Little opportunity to gather additional data

Pre-supposes that customer will decide when to get service – misses idea of proactive communication

Harder to understand motivation for customer actions

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Key is to segment transactions and customers

Leverage opportunities Delight, educate, up-sell using empowered reps Spend time with those segments that want it Spend time with influencers

Efficiently handle those transactions that have no upside Simple transactions Segments that don’t want a social experience Segments with no future payoff

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Barriers to Using the Web and Voice Self Service

One unsuccessful attempt confirms all of the above Not as personal, but human-like interaction Implied actions

Measure whether tried website and why left website Better communication on what voice or Web process can do Rotating education on no more than two items at a time Education while waiting, even for 15 seconds

“I won’t be able to do what I want to do.

“I won’t be able to find the answer I need easily.”

“If I have a problem, I’ll have to call a live person anyway.”

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Customer Behaviors Impacting The Bottom Line

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Key Factors Driving Satisfaction

No Unpleasant Surprises If Trouble Encountered

Accessibility☺ Taking Ownership☺ Apology Clear Explanation☺ – critical: based on customer current perspective Timeliness☺ Courtesy Keeping Promises☺

Handle on First Contact

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Causes of Customer Dissatisfaction

- Products and services don’t meet expectations-Marketing miscommunication- System fails- Units fail to coordinate

- Fails to follow policy

The majority of dissatisfaction is not caused by employee errors or attitude.

Customer20%-30%

Company 40%-60%

Employee 20%

- Wrong expectations- Customer error

-Fails to follow policy-Attitude

- Products and services don’t meet expectations- Marketing miscommunication- Broken processes

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Personal Interaction has 20 Times More Impact than Advertising and Sponsorships (Retail Finance Customers)

Specific positive experience

% Having positive

experience

% With greatest impact

Avg. # told about pos. experience

1. Great service transaction at the retail location 60% 29% 4.3 2. Great service interaction with customer service

representative 48% 21% 3.4

3. Did not feel pressured at the dealership 56% 18% 3.2 4. Dealership followed up to ensure that I was satisfied

with the vehicle/service 64% 16% 3.2

5. Monthly statements 18% 4% 1.4 6. Access to account information online 12% 4% 2.9 7. Online bill payment 7% 2% 1.5 8. Advertisement 13% 1% 3.4 9. Automated phone system 7% 1% 2.2 10. Representative rectified a problem I was unaware of 5% 1% 4.0 11. Representative told me about a new product offering 4% 0% 5.8 12. Sponsorship 3% 0% 5.4 13. Finance planning tools 2% 0% NA 14. Other 6% 4% 3.8

How many of those told took action on your referral? 1 out of 4 !!!

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Impact of Delightful Experience on Top-Box Loyalty by Type of Action

Delight experience Average lift to repurchase or recommend (Top Box)

Service beyond expectation 12%

Assistance during life event 14%

No unpleasant surprises 22%

Friendly 90-second staff interaction 25%

Personal relationship over months 26%

Tell me of new product or service I can really use

30%

Consistently good service 32%

Proactively provide information on how to avoid problems or get more out of your product

32%

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Problems Raise Sensitivity to Price

10%

22%

46%

74%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

No problems 1 problem 2 to 5 problems 6 problems ormore

% D

i ss

ati s

fied

wit

h p

r ice

or

f ees

Percent of customers dissatisfied with price rises with number of problems.

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Calculating The Impact of Customer Experience on Revenue

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Impact of Having a Problem With Voice System or Dissatisfaction With Overall Transaction

Voice system did not understand me – 14-48% impact on willingness to recommend

Hitting voicemail when you have an immediate issue causes 17% damage to loyalty

Average problem has 20% impact on loyalty or willingness to recommend

Complaint rates about technology are low but often a cause of escalation

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Why Do We Care?Response Impacts Loyalty

0%

10%

20%

30%

40%

50%

60%

70%

80%

% v

ery

sa

tis

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d/%

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ly w

ill

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om

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om

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ny

Very Satisfied SomewhatSatisfied

Neither SomewhatDissatisfied

VeryDissatisfied

% Satisfied with Response

Overall Satisfication with Company Intention to Recommend the Company

Satisfaction and Loyalty drops significantly if the

customer is not very satisfied with the

response received

Source: TARP’s 2005 e-care study

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=

=

=

=

x xx

=

3,500

15,313

30,625

78,750

128,188Total Customers At Risk

350,000Customers

withProblems

25%Dissatisfied

70% NotRepurchasing

45% NotRepurchasing

40%Satisfied

5% NotRepurchasing

50% Do NotComplain

50%Complain

35%Mollified

25% NotRepurchasing

Market Opportunity Calculation of Revenue Lost from Customers with Problems

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Why Do We Care?Response Impacts Word of Mouth/Mouse

0

0.5

1

1.5

2

2.5

3

3.5

Av

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Completely Satisfied withResponse

Mollified Dissatisfied withResponse

Number of people told online Number of people told offline

Source: TARP’s 2005 e-care study

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Preferred Contact Method

Preferred contact method Website E-mail

Telephone-Customer Service

Representative

Telephone-Automated Response

System In person

General company information 64% 18% 9% 1% 1%

To ask questions about a product/service/promotion 27% 38% 25% 1% 4%

To give a compliment on product/service 23% 49% 12% 0% 4%

To complain/comment about a product service 19% 44% 26% 0% 4%

Check status or make changes to account 46% 22% 16% 1% 3%

Technical Support 23% 24% 37% 1% 3%

Purchase product/service 33% 16% 21% 1% 18%

Start/activate service/account 33% 15% 26% 1% 10%

Stop/deactivate service account 33% 16% 28% 1% 8%

Which communications method(s) do you prefer when contacting us for each of the following reasons? (from 7442 web users)

Source: TARP’s 2005 e-care study

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Recommendations

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P ress 1fo r A u tom a ted

In fo rm a tion

P ress 2L ite ra tu re

P ress 1F eedback

P ress 2F axbackL ite ra tu re

P ress 3O n line

S e rv ices

P ress 2S a les

In fo rm a tion

P ress 1A d

R esponses

P ress 3G ene ra l S a les

In fo rm a tion

P ress 3P C I S C S I

P ress 2D rives

P ress 1R M A

S ta tus

P ress 6O ther

P ress 5V ideo

P ress 4H a rd D riveC on tro lle rs

P ress 4T echn icalS uppo rt

(800) ASK -4-W D C

Support Phone Matrix

Print Key Word Options Where You Print the Phone Number

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Measure Effectiveness by Type of Transaction by Channel

Transaction which is biggest opportunity for improvement

Problem reports % Recommend Opt Out Rate %

Routine order 98 2

Shipment status 91 5

Product return 93 7

Shipping charges 88 14

Backorder status * 67 38

Call center overall average 91 14

Misuse of resources to intensively measure this transaction

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Be proactive, flexible, and human-like

Identify transactions which can be leveraged and encourage contact rather than self-service

Identify customers and customer segments that want self-service and DON’T want self service

Always provide options! Use simple English and test with idiots Always provide immediate link to live rep using multiple

channels Humanize self-service as much as possible Measure the impact by issue and channel to verify

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Summary

DO IT RIGHT OR DON’T DO IT!

FOR PAPERS AND ARTICLES: jgoodman@tarp.com or 703-284-9253

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