|
|
| Home - Industry Article - May 05 Issue |
Increasing Revenue This Quarter: 4 Pragmatic Strategies |
By Greg Gianforte, CEO and Founder, RightNow Technologies, Inc.
Most firms have significant untapped potential to increase revenue quickly and yet do not act. Why? The four field-proven strategies for increased revenue described in this article require a new player sitting at the table; customer service. In most companies, customer service has more customer interactions than any other department and yet has no formal role in deepening client relationships. Defining a revenue generating role for customer service results in more revenue quickly and often with minimal effort.
RightNow handled over 500 million customer interactions on behalf of our customers in 2004; that is a lot of emails, phone calls and chat sessions. Plus, a lot of customer intelligence that can be acted upon to better serve (read sell) to those same customers.
We have seen an increasing trend by companies to leverage customer service to drive revenue. Below I present four field proven strategies and implementation examples you can use if you are looking for more revenue.
The strategies are:
1. Aggressive mining of customer service data
2. Context-sensitive online promotions
3. Real-time lead generation and referral
4. Real-time transactions
As the case studies provided clearly demonstrate, these strategies work. They also differ from each other in ways that make them suitable for different business situations. Many companies actually apply multiple strategies, as new market challenges arise and as the contact center grows into its role as a revenue driver
By applying these proven strategies, you’ll ensure that your company makes the most of every customer interaction. As a result, you’ll do an even better job of meeting your customers’ needs—while substantially improving your company’s top-line performance.
From Cost Center to Profit Center
Customer service has always supported corporate growth by keeping customers happy and ensuring their ongoing loyalty. But the challenges of today’s business environment demand that customer service take advantage of its unique capabilities and opportunities to make a more substantial contribution to the top line.
Here are the three reasons why:
Selling to existing customers is profitable
It’s always more expensive to acquire a new customer than it is to sell to an existing one. That’s why it’s critical for your company to develop new strategies for generating more revenue from its current customer base. When customer service supports this objective, it does more than just increase sales. It also increases your company’s operating margins.
Your customer service department must be more than just a cost center
Most customer service departments are overworked and under-funded. But that’s the inevitable fate of any cost center. Customer service will always be pressured to do more with less, unless it can show upper management that it is more than just a cost center—and that investments in the customer service department can actually yield additional quantifiable revenue. Cost centers are also more likely to be outsourced. So, to win budget increases and avoid the outsourcing axe, it is essential for your customer service department to transform itself.
Your customers are demanding a relationship-based engagement
Customers know there are many companies competing for their buying power. That’s why they expect and demand a high level of personal engagement before they part with their money. Your customer service organization is uniquely positioned to provide this level of engagement. They possess a wealth of data about the customer, and their interactions with the customer often revolve around very specific, individual problems or issues. These interactions provide tremendous opportunities for them to directly and indirectly generate revenue.
Your customer service department can drive sales, shed the cost-center stigma, and make customer relationships more profitable. The key to successfully making this transition is to execute the right strategy and choose the right tools.
Strategy 1: Aggressive Mining of Customer Service Data
One strategy you can use to boost revenue is to aggressively mine your customer service data to pinpoint and capitalize upon specific sales opportunities. With the right tools, you can uncover a wide range of such opportunities—including accessories, add-ons, up-sells, cross-sells, service contracts, training, etc.
This strategy may be attractive as a first step, because it is the least intrusive. You don’t have to re-train your customer service staff or modify existing contact center processes. With this strategy, the sales cycle itself is initiated and fulfilled by other parts of the company. Customer service simply provides the data necessary to generate the revenue opportunities.
Here is a typical example of how this strategy works. A customer calls a software company with a technical question. While gathering the information needed to solve the problem, the customer service representative notes that the customer is using an older, somewhat obsolete version of the software. The service rep completes the call as usual. Over the course of the month, customer service receives many such calls. So, at the end of the month, the company sends a special upgrade offer to every customer who called in and was found to be using an older version of the software.
There is actually a triple benefit with this type of strategy:
1. The company realizes additional revenue from the upgrade sale
2. Customers are more satisfied, because they have a better product
3. Customer service costs are reduced, because older products have more problems and are more
expensive to support.
A similar approach can be used to proactively capitalize on time-based market opportunities. For example, a toy company typically gets lots of calls in January about toys received as Christmas presents. With the right software, such a company can create a list of customers who asked questions about a toy for a two-year-old in January—and send them an offer for toys appropriate for three-year-olds the following holiday season.
This toy company example points out just how valuable the data captured by customer service can be. Because their products are primarily sold through independent retailers, these types of companies may have little or no data about the people who buy their products. By capturing that data via service interactions, such companies can build stronger and more profitable relationships with their customers.
Lessons from the Real World
Skechers Converts eService Encounters to Etailing dollars
As athletic footwear leader Skechers began doing business with customers via the web, it also discovered that the Internet was a great channel for customer service. And, as part of its eService strategy, it initiated a variety of “recovery” policies to turn customers with problems into customers who were highly engaged and highly satisfied.
For example, customers who came to the Skechers web site because of an error in their order were subsequently offered a deep discount on some related Skechers products. This way, in addition to solving the customer’s original problem, Skechers could tangibly demonstrate that it was interested in maintaining his or her business over the long term.
What started out primarily as a recovery strategy, however, soon proved to be a powerful revenue generator. In fact, over the past few years, Skechers has generated about $200,000 annually in sales through these post-incident discount offers.
“When a customer comes to you with an issue, you actually have a great opportunity—after you first solve the problem, of course—to initiate a highly engaged relationship with that customer,” declares Geric Johnson, who led the implementation of this strategy at Skechers. “So you can realize incremental revenue at the same time as you convert unhappy customers into highly loyal ones.”
Strategy 2: Context-Sensitive Online Promotions
There is another effective strategy for generating revenue that does not require your customer service staff to modify their work processes at all. It does, however, require some modification of your online service channels. This strategy is based on the use of context-sensitive online promotions.
Customers often look for answers to their questions on your company’s web site.The web self-service channel has become extremely popular as Internet connectivity has become pervasive and as companies do a better job of making answers easily accessible online. As customers ask these questions online, however, they also provide companies with clues about the products and services they need. That’s why smart companies are capitalizing on these clues to make relevant—and perfectly timed—offers to targeted site visitors.
For example, a power tool company may get questions from customers about working with specific types of materials such as plastic or sheet metal. At the same time this company answers such questions online, it also makes sense to inform the customer about specific tools or attachments specifically designed for these materials. To encourage these customers to make an immediate purchase decision, it may even be a good idea to offer them a discount or other special offer on the specific product they need.
Similarly, a telephone company’s customers may come to its web site looking for information about where to pay their bills. In this context, it makes sense to advise the customer about the company’s online payment options. This may not generate additional revenue per se, but it will increase the profitability of the account by eliminating the cost of processing a mailed check.
Such highly relevant, context-sensitive offers should not be confused with “pop-up” ads, which are generally neither well-targeted nor well-timed—and can be annoying to customers. Instead, context-sensitive offers are presented as part of your online answers and/or in response to a keyword entered by the customer, appearing to the customer as an advised solution, rather than an unsolicited promotion
Lessons from the Real World
British Airways Drives Bookings and Cuts Abandonment Rates
The Internet has radically transformed the air travel market buyers can go online and quickly compare their prices and itinerary options. So, with the competition only a click away, airlines have to do everything they can to drive bookings and avoid abandonment by online shoppers.
That’s why British Airways has enhanced its online customer service system to maximize the number of customers who book flights on its site. When customers get the answer to their question on the company’s site, they are also presented with a strategically placed hyperlink that directs them to book the flight they’re researching or manage their active bookings. This ensures that all online service interactions are fully leveraged to drive revenue.
“A certain percentage of customers who get distracted from the main flow of the online purchasing process by a question will wind up abandoning that purchase,” explains BA technical editor Chris Carmichael. “The links we’ve placed with our online answers counteract this tendency and thereby keep site visitors headed towards a completed transaction—which helps us increase our total online sales.”
Strategy 3: Real-Time Lead Generation and Referral
This third strategy generates highly qualified sales leads in real time by taking advantage of the information that customers provide your agents during a service interaction. Specific customer attributes qualify different customers as sales leads for different products and/or offers. With appropriate integration between your customer service and sales automation systems, these qualified leads can be quickly acted upon by your sales organization.
You determine which attributes qualify customers as leads for which corresponding products and offers. In some cases, you may decide to offer a special limited-time discount to virtually every caller. In other cases, you may narrowly define the type of customer who will be sent as a qualified lead to sales—and do so without any accompanying discount or other incentive.
You can define your qualification criteria based on all sorts of attributes: the type of problem the customer calls about, their previous purchase histories, demographic parameters such as age and/or gender, ownership of a competitor’s product, etc.
Unlike the two previously described approaches to revenue-enhancement, this strategy requires the active participation of your customer service staff. It also requires that your staff have a lead qualification application on their desktops—especially since both offers and qualifying criteria are likely to change on a fairly dynamic basis. Modification to training and incentives may also be required, since the imperative to get customers off the phone quickly will have to be balanced against the extra time it takes to ensure that customers are appropriately qualified.
However, while this strategy requires your customer service representatives to actively note specific customer attributes and/or ask qualifying questions, it does not require them to close a sale. Ideally, your CRM software will automatically forward the leads to your sales or marketing group. Typically, your service reps will ask a question such as “May I have someone call you about Product X?” or “May we send you some information on Product Y, along with a coupon that’s worth $40 if you make a purchase within the next 90 days?” If the answer is “yes,” your software will capture the lead, route it to a salesperson for follow-up, and initiate the appropriate sales automation workflow.
One of the great things about this strategy is that it makes it possible to precisely quantify the amount of business generated by leads originating in customer service. These leads can be closely tracked as the customer proceeds through the rest of the sales cycle. So, at the end of the month or the quarter, customer service can say with certainty that it sent $250,000 worth of leads over the wall to sales—or that the leads it generated led directly to $150,000 in incremental sales.
|
|
|
