Making self-service pay off

Self-service is a pretty simple concept: Enable your customers to accomplish their goals without human intervention. You don’t spend dollars on phone calls; your customers find what they need themselves for pennies and don’t have to wait in a phone queue. It’s a win/win situation. You make your customers happy, and everything else falls into place.

So, why are so many companies failing miserably at self-service? In a recent survey by Cambridge, Mass.-based Forrester Research Inc., 62 per cent of respondents said self-service is their most important customer initiative, yet 41 per cent have seen no return on investment. No wonder: Lots of self-service sites are awful so awful that 62 per cent of online shoppers have given up at least once, according to Creative Good Inc., a New York-based consulting firm that specializes in customer experience.

The companies that make self-service easy succeed, and success can mean millions in savings. Here’s how they do it.

1. Focus on Your Customer

“Customers don’t want to understand e-business; they want e-business to understand them,” says Mark Carpenter, director of Web strategy and operations at AARP Services Inc., a for-profit subsidiary of AARP in Washington.

The My AARP site lets members customize services by answering questions about their interests. Members interested in health care and vacation spots, for example, will find those topics front and centre when they log on. The hope is that the site will be so useful, members won’t need to call the company for the information.

“It sounds too fundamental, but we struggled to discover who our customer is,” says Mark Farrell, director of the individual annuity call centre at Columbus, Ohio-based Nationwide Financial Services Inc., the third-largest provider of individual annuities and 401(k) plans in the U.S. Nationwide’s customers include retail investors, brokers and third-party administrators. Farrell identified what each set of customers wanted to achieve and customized the site for each.

For example, brokers wanted sales materials, while retail customers wanted information about their investment accounts. Based on the number of phone calls deferred, Farrell estimates that the site has saved 8 per cent to 15 per cent of the total contact centre budget, though he’s still improving ROI metrics.

2. Design to Skill Level

Rich Harkwell, vice-president of customer experience solutions at Nexstar Financial Corp. in St. Louis, knows that customers who come to Nexstar’s site with financial inquiries tend to do so from their offices, where they have multiline connections, so he correctly predicted that they would use a chat option. AARP’s Carpenter knows that his customers tend to use home PCs with limited capabilities, so his site doesn’t use multiline features.

Understand that even a great site won’t work for every customer. Chris Martin, senior manager of the strategy group for Americas Online at Dell Computer Corp. in Round Rock, Tex., works with Dell’s Premier site, which provides services to IT professionals who support business users. Martin has saved US$15 million to US$20 million by shifting 60 per cent of those contacts from the phone to the Web.

As IT professionals, Martin’s customers are probably more amenable to using the Web than other self-service target groups. But even so, Martin says, letting customers choose is key. “You need to give customers choices Web, e-mail, phone then make low-cost choices at least as attractive as the rest,” he says.

3. Keep It Simple

According to Creative Good, the Internet user base doubles every 12 months, so there’s a 50 per cent chance that a given visitor to a site is a relative novice. Therefore, says Carpenter, “don’t make critical things dependent on bells and whistles.” AARP uses 128-bit encryption that doesn’t work with the older browsers used by 10 per cent of AARP members. So when the site detects an older browser, it automatically downgrades to 40-bit encryption, an accommodation achieved at very little cost to AARP.

4. Start Small and Improve

Senior Vice-President and CIO Tricia Trebino knew that each day, more than 500 members of Tufts Associated Health Plans Inc. were calling about the status of their claims. That was one of a few “can’t miss” features built into the first iteration of the Waltham, Mass.-based company’s self-service site. “Then, as people gained familiarity with using the site, we got a lot of feedback and suggestions for more things to incorporate, so we’ve increased functionality, release by release,” she says.

Sears, Roebuck and Co. in Hoffman Estates, Ill., has also been guided by customers, says Kevin Callahan, a vice-president at the retailer. Feedback indicated that 15 per cent of customers at Sears’ Parts Direct site wanted to order parts online but pick them up locally. “Our customers are ahead of us. We’re trying to catch up” by letting them tap into the inventory of 500 local service centres, says Callahan.

5. Befriend Your Call Centre

Many it veterans agree that management buy-in at the call centre is critical to self-service success. But getting buy-in can be tricky. “Contact centre managers may feel threatened by the goal of cutting phone call volume,” says Rob Nelson, senior manager for global e-business operations, effectiveness and integration at Motorola Inc. in Schaumburg, Ill. He suggests explaining to managers that offloading calls lets agents focus on more challenging issues and even shift into revenue-generating activities, such as cross-selling.

Motorola Direct, the company’s retail self-service site, was phased in during the past year and has already saved 8 per cent to 10 per cent of the total contact centre budget.

The call centre staffers will have to undergo an evolution in skills to support self-service channels effectively. They may be great on the phone, but they’ll also need to develop writing, typing and technical skills. They’ll need to not only solve traditional customer problems, but also to extract callers from Web site glitches and instruct them on how to get it right next time, according to Farrell, who allocates about 4.5 per cent of his budget to such training.

6. Buy, Don’t Build

If your situation allows it, buying beats building. In-house development takes longer, and it can leave you with integration problems.

“There are so many potential modules that the complexity of integration will be greater and greater,” Nelson says. “Go with a company that can help you integrate new things online as they come along.”

7. Trust, But Verify

Approach vendors warily. “Build a business case for self-service, and beware of vendors who want to sell you more than your business case requires,” Nelson says. For example, if your business isn’t likely to generate sales using chat, resist that vendor pitch.

8. Integrate Your Channels

Avoid channel silos. “Look at the entire process from end to end in all the impact areas,” says Nelson. For example, if customer channels are running from different back-end systems, you may find different inventory status, pricing or shipping charges. Use a cross-functional team to iron out the back end so that all channels are presenting one story and one face to the customer.

Integrate the contact centre as well, so you can shift workloads among agents.

9. Market Your Site

“You have to educate people and really demonstrate value,” Trebino says. Tufts sells its site through wholesale advertising, articles in provider bulletins, recordings that play while customers wait in phone queues and through phone agents themselves. If a provider expresses interest, Tufts sends a support team to explain the site’s benefits and demonstrate its use.

You may also want to experiment with an incentive like waiving delivery fees or discounting prices on Web purchases. But if you do, make it clear that it’s an incentive, not a failure in communication between channels. One way to do this is to use other channels, such as phone representatives, to advertise Web discounts.

But even with marketing, “you can’t count on changing behaviour overnight,” says Trebino. “Initially, you don’t see any ROI. We got more calls because people were trying to understand how it worked.” After a year online, Tufts is just starting to sense a drop in calls, although hard measurements have yet to be taken.

10. Use What You Learn

What you learn through your self-service site can make a difference in customer satisfaction and other areas, but only if it’s passed along to the right people. Motorola Direct recently got lots of calls about a 56Kbps. modem. That information was passed along to manufacturing, and a previously unseen glitch in the product was found and corrected.

“Establish processes for information flow and communication, so you can get that information back to the functional owners who can do something about it,” Nelson says.

11. Build Relationships

One of the central paradoxes of self-service is that the better it works, the more distant the customer relationship becomes. “You’re trying to get away from the cost associated with contact, but when you miss out on the contact, you’re missing out on important information about who your customers are and what they want,” says Yale Cohen, a group manager at Polaroid Corp. in Cambridge, Mass. “You have to use [self-service] to build the relationship, not to sever the connection.”

Polaroid is addressing that by using customer data to evolve its self-service sites into centres for cross-selling and upselling. For example, a customer with a service need might also be a candidate for an upgrade, so the system will invite him to purchase or switch to another channel for more information, increasing interaction, personalization and revenue.

12. Measure Your ROI

“You absolutely need an ROI analysis,” says Nelson. “You have to clearly identify deliverables that you can measure.”

You can estimate the cost of a phone call vs. a site visit and measure how much volume you move from the phone to the Web. You can figure out what constitutes a successful Web encounter and measure the success/failure rate of self-service.

“If you can’t measure it,” says Nelson, “don’t do it.”

Measuring Success

Metrics-conscious companies like Polaroid track the cost incurred for support on every product they sell. For example, support for Polaroid’s digital cameras cost US$4.50 per unit in 1999. Last year, after the inauguration of its self-service site, that cost fell to US$1.50. The savings may be attributable to other factors, but last year, Polaroid sold 1.3 million digital cameras and saved US$3.9 million in support costs over 1999.

Polaroid also looks at the tricky question of what percentage of Web visitors are successful in getting the information they need. Last year, there were about 700,000 visitor sessions on Polaroid’s self-service site. About 35,000, or 5 per cent, were followed up with questions via e-mail, indicating that the customers hadn’t found the information they needed on the site.

“It could be that 95 per cent of our Web sessions were successful,” says Yale Cohen, general manager, “but we don’t buy that.” Through customer surveys, Cohen has estimated more conservatively that 40 per cent to 50 per cent of online sessions are successful. So, estimating that 250,000 of the 700,000 sessions save a phone call at US$8 per call, that’s about US$2 million in savings. (Polaroid filed for Chapter 11 bankruptcy protection in mid-October, after this story was reported.)

The final factor is revenue generated by service contacts. When a customer goes online to ask why his batteries run down so quickly, the automated answer will inform him that he can buy rechargeable batteries and that he can “click here” for more information. Cohen says he believes that sales from this kind of initiative will be an increasingly important part of the site’s ROI, but the site’s not integrated with sales well enough yet to measure its success.