profitable sus rev growth

1

White Paper

Comprehensive Customer and enterprise solutions ©2010 teletech holdings, inc. - all rights reserved.

profitable, sustainable revenue Growth is a Goal of every Company

During periods of economic good fortune, the most innovative and efficient organizations

achieve growth rates in excess of their industry average. In less favorable times, those same

organizations amaze us all with their ability to continue attracting new customers to their

products and services. But what happens during a truly recessionary environment? Sector data

from prior recessions shows that companies best positioned to succeed when economic growth

resumed held their revenues and profits relatively stable, despite lower consumer spending

and limited paths to profitable operations. They did so by focusing on their existing customer

accounts, identifying and capturing every sale, maintaining a strong awareness of the importance

of service quality, and reducing the cost to serve. The result was a more efficient route to

healthier revenues and an improved bottom line. In this article, each of these four key points is

examined in depth with recommendations and guidelines for success in your organization.

Mining Known Territory: Revisiting Your Current Accounts

Attracting and keeping new customers is an ongoing mission for every successful firm. Top

companies never stop working to expose potential new customers to the benefits of their products

and services, regardless of the economic climate. But during challenging economic periods,

consumers have a strong tendency to stay with the brands they know unless there is a powerful

price incentive to change. When acquiring new customers becomes difficult, serving your existing

customer accounts to their fullest potential is a powerful means to building revenue and profit.

Unfortunately, efforts to grow revenues from existing customers all too often take the form of

a percentage-off-everything e-mail or an overly structured telemarketing call. These tactics

might produce a mild one-time sales benefit, but over the course of the current recession, your

organization will likely need more than that. Quality revenues begin with quality relationships – and

those begin with a clear understanding of your customers’ buying behaviors, and a commitment

to empowering talented sales representatives with the tools to generate revenue over the long

term.

Putting it into Action:

Communicate appreciation of an existing customer relationship. Before beginning any sales

enrichment program with existing customers, it’s first important to remind those customers that

their business – and continued loyalty – is valued. Customers who feel important are more likely

to listen to a promotional offer later – and act on it. Packaging an appreciation communiqué with

an appealing offer relevant to the customer can accomplish multiple goals with a single message.

2Comprehensive Customer and enterprise solutions ©2010 teletech holdings, inc. - all rights reserved.

profitable, sustainable revenue Growth is a Goal of every CompanyWhite Paper

Invest in tools and partnerships that maximize the quality selling time of skilled customer

service associates. Focusing the best-performing associates on peak-potential accounts is a

proven formula for revenue growth in challenging times. Make sure that your qualifying systems

are putting the best current-account opportunities through to your top associates. At the same

time, examine your outsourcing options for managing your sales ‘funnel’ to existing customers.

Consider using traditionally passive tools, like web-enabled ‘call me’ functions, in a more active

way to put experienced sales professionals in touch with customers assembling large or complex

orders in an e-commerce environment.

Target your promotional offers to an ‘audience of one.’ A recessionary climate elevates price

sensitivity, to be sure, but customers are still looking for value – not just a percentage reduction

in prices across the board. Be sure that customers are receiving offers tailored to the products

and services that they have already purchased from you – and those that would be natural

follow-on sales.

Capturing Every Sale: The Invisible Cost of Conversion

Sales conversion rate and cost per action are ‘top of the dashboard’ metrics for organizational

sales and marketing executives, and for good reason. Monitoring the efficiency and cost of

turning consumer interest into booked revenues is vital to generating profit and cash flow. But

many firms’ metrics in these areas are inflated, because the easiest sales to garner are often not

being captured. When website visitors receive a chat prompt before they abandon a shopping

cart, or when new customers receive a short post-sale call with accessory, upgrade, and service

options, cost per action is driven down and sales conversion rate is driven up. Efficient up-

selling and cross-selling during live customer interaction further enhances the cost of generating

revenue dollars. More importantly, converting every sales opportunity increases lifetime customer

value in addition to reducing costs. Deloitte (2008) data shows that lost conversions and reduced

customer loyalty are closely related over the long term. As a result, it is not just today’s revenue

that is at risk. It is tomorrow’s revenue, and next year’s revenue, that is also jeopardized when

sales are not pursued.

Confident your organization is converting every possible sale? There might be even more revenue

still on the table. In a study performed by the Mystery Shopping Providers Association in the area

of customer service trends, nearly half (46%) of the field research force cited up-selling as the

area in which businesses were most lacking – across a variety of vertical markets and industries.

Putting It Into Action:

Look at your customers from an operational point of view… In any conversion efficiency

improvement work, understanding how, when, and why your customers buy is crucial to

success. If your segmentation and analytic platforms were deployed in the early part of this

decade, you can benefit from new technologies and systems that can improve your data

resolution by orders of magnitude. It’s important to ensure that your customer management

associates have the ability to contribute their experience and expertise to those systems, too.



…then look at your operations from the customer’s point of view. Before revisiting concepts

like up-sell/cross-sell efficiency, customer outreach, and targeted promotional deployment, it’s

important to see your current systems in these areas the way customers see them. Business

Process Outsourcing (BPO) providers with expertise in customer experience design, like

TeleTech, can be valuable allies in identifying areas that can be tuned to peak efficiency.

Start with targets for both revenue and expense metrics. The goal of sales conversion

optimization is not just to grow revenue or reduce the expense of converting sales; it is to do

both. Driving a revenue goal without considering the expense metrics tied to it, or focusing

exclusively on reducing conversion cost without addressing revenue realities, limits the total

potential for improvement on both fronts. Installing targets that incorporate both metrics produce

the right results – smart, efficient revenue growth with the bottom line in mind.

Managing the Cost to Serve: Efficiency Evolved

The easiest way to cut down on the cost to serve customers is to reduce the number of staff

available to handle customer interactions. Unfortunately, it’s also the wrong way. Overworked

staff offer poor service and can actually contribute to customers churning away. Asking more of

an associate population, without providing the right tools, processes and technologies to make

that workload manageable, is a formula for burnout, churn, and lost customer management

expertise. Conversely, deploying those tools, processes and technologies, with efficient and

informative training on their correct use, can improve an associate’s workday, reduce the cost to

serve customers, and serve as an employee retention tool.

How expensive is associate overload? The Robert Francis Group estimates that replacing an

associate costs between $10,000 and $15,000 at a minimum. The group’s report on call center

turnover noted that even at the lower range of its average turnover rates – between 25% and 40%

annually -turnover costs a call center with 100 associates $250,000 per year. At the upper end of

that range, and at the higher cost estimate, the cost can top half a million dollars annually. That’s

just to maintain 100 occupied and trained associate positions – to say nothing of the lost expertise

and experience in handling the unique demands of a particular company’s customer base.

While a variety of solutions exist in such an environment – outsourcing partnerships, new

technology, and workflow redesign among others – the best choice is one that enables

customer-facing associates to work smarter, not harder. Making every moment of an associate’s

workday an efficient one allows organizations to reduce the work before reducing the workforce

– a critical point of differentiation.


Take a baseline measurement of workflow volume and associate satisfaction. The first

of these two important metrics often receives all the attention – but without understanding

the satisfaction and motivation levels of your existing associates, workflow mapping and

measurement is an academic exercise.



Develop a specific cost to serve, segment by segment… The ‘cost to serve’ metric should only

be an aggregated average when the customer management process is designed correctly. That

overall figure is made up of individual interaction cost targets for every customer segment – from

the lowest-value transactional accounts to the ‘prime’ revenue and profit contributors. Using one

global service cost target overvalues the former and undervalues the latter.

…then address the economic realities. Redesigning a customer management function can

often yield impressive cost savings. But if an improved design still does not fit within tight

organizational budgets, the effort is wasted. Instead, start with a budgetary figure – then build

a business case for the projected cost savings from associate churn, improved revenue and

profitability derived from higher customer satisfaction levels, and long-term value of stronger

customer relationships. An experienced customer management partner can help to develop that

business case with you.

The Role of Service Quality: The Strong Foundation

The idea that service quality is more important than price has nearly reached the status of

universally accepted wisdom in many industries. Several recent studies have cited Harris

Interactive’s 2006 survey in which consumers indicated that service quality was more important

than lowest price by a score of 52% to 38%, respectively. But those data points predate even the

first rumblings of an economic downturn – let alone the turbulent recessionary climate the global

economy now finds itself in. Is service still a more important factor than the lowest possible price?

The answer appears to be yes – with a major qualifier. Analyzing top performers among the

American Customer Satisfaction Index (ACSI) during the past eight quarters, it is true that

companies with exceptional service have thus far been more insulated against the effects of the

economic downturn than their lower-performing peers. More encouragingly, the benefits of a

strong customer satisfaction position are continuing, despite the worsening economy. While that

has not always translated into revenue growth for every top-performing company on a quarter-to-

quarter basis, the performance delta between high-satisfaction and low-satisfaction companies

has endured. The most visible differentiating factor, however, is a clear satisfaction superiority for

the benefiting firm. When a large number of competitors score equally well, or within a few points

of one another, the benefit vanishes. The data suggest that establishing a clear service leadership

position can be a powerful insulating factor against the challenges of a recessionary economy.


Balance discounting actions with clear, visible investments in customer service. Pricing

actions are often necessary to navigate a recessionary economy. But remember that brand

equity is at stake for the long term. Price leaders come and go in every market, but service

leadership is a sustainable source of competitive differentiation. Be sure that customers are

aware at all times of your route through the current economic challenges. Use clear, multichannel

communication of your value delivery and service quality commitments.



Don’t surrender the high ground based on your current position. If your organization trails

the segment leader in customer satisfaction, a recessionary economy is an ideal time to close

the distance. In both of the most recent economic downturns (1991-1993 and 2001-2003),

companies trailing the customer service leaders in their segments made up ground by embracing

a short-term challenge to build a long-term leadership position. Even small investments in service

quality improvement now will yield considerable dividends when economic growth resumes.

Focus on the associate-customer relationship. Information technology investments can make

a difference in the efficiency of customer management associates. But investing directly in

human capital makes a difference in the quality of the customer relationship. Both are good

strategies, but the latter makes a larger and more noticeable difference during periods of brand

ambivalence. High-impact associate training, innovative compensation management programs,

career path development for top performers, and other human capital-centric investments can

improve customer satisfaction and loyalty now.

ContaCt teleteCh:

[email protected]

1.800.TELETECH or

+1.303.397.8100 (outside the U.S.)

www.teletech.com

profitable sus rev growth

Documents