Striking a balance – cost vs customer engagement
In recent years, the battle for new customers across many sectors has been based upon price. However, as markets reach near-saturated levels, and the dominance of established brands is threatened by new disruptor brands, a brave new world has emerged that is forcing companies to find an alternative way to operate.
The impact of price competition across these sectors has seen the narrowing of margins and as a result, an increased focus on cost reduction as a means to protecting valuable margins. Price battles are becoming increasingly unsustainable and this pressure on pricing and costs has helped propel new channels such as robo advice and AI into the limelight offering, a panacea for organisations looking to deliver engagement at a dramatically reduced cost.
However, while these types of channels tick the box in terms of cost reduction, they also reduce the level of engagement that the customer has with a brand. Of course, that isn’t necessarily a bad thing. Customers don’t always want engagement, for example, if they only want to check a bank balance or conduct a simple transactional journey. In fact, many studies show that customers prefer the self-serve route for these sorts of journey, as it enables them to generate an outcome in a fast, convenient and pain-free way.
On the face of it we seem to have found a way to deliver service at a reduced cost. However, while that might be true for simple journeys, organisations who have pushed customers down these low engagement routes for more complex journeys have started to see a negative impact in terms of drop off rates, that more than eliminates any cost benefit gained.
Take for example a mortgage journey. A complex and highly emotional journey involving multiple parties, complex paperwork, compliance and a number of stages in the process. The possibility for the customer journey to deviate from the expected path means that providing a completely humanless experience, that will circumvent all potential difficulties, is unlikely to be achieved.
But even if we are to put this issue aside, organisations must also consider whether their customers want such high emotion complex journeys to be self-serve. It can come as no surprise that Accenture’s research showed that 71% of consumers prefer to deal with a person rather than digital channels when seeking this sort of advice. In this scenario, a person is unlikely to rely solely on robo advice to choose the right mortgage or be able to complete the mortgage journey through a 100% self-serve route. Rather, the guiding hand of human interaction is often a requirement to answer uncommon questions or put them back on the customer journey if they reach a break point.
Research from Gartner highlights that up to 89% of companies now rely on customer experience as a source of competitive advantage. Organisations such as Amazon and Apple have set the bar in terms of delivering outstanding customer service to generate sales and build brand loyalty. But with businesses torn between driving down costs and differentiating on experience, how do companies manage the cost and engagement dichotomy?
One size does not fit all
The simple answer is that there is no ‘one size fits all’ solution. Endless debates about human vs robo will never reach a conclusion and proponents of the ‘age of the call centre is dead’ argument will have deceased long before call centres are extinct. Why? Because all customer journeys are different and trying to deliver a journey to check a bank balance in the same way that you would to deliver complex wealth advice is clearly not going to have the same outcome.
The devil is in the detail
Finding the balance between cost and engagement lies in the detail of the customer journey. Granular analysis of the customer journey will highlight fracture points, delays and even break points. Journeys with these friction points generally require a higher engagement approach. Even for journeys that can be completed in large part as self-serve journeys, there will also be those that fall off the ‘happy path’ and need some sort of human intervention to get them back on track, for example, a failed credit check on a loan journey. Organisations that fail to provide alternative channels for those who have failed in the self-serve route will ultimately see the benefits of cost reduction off-set by a reduction in sales.
Striking the balance
What is clear is that there is no simple answer. Customer journeys must be considered on a case-by-case basis to assess the level of engagement required. The future is not an either/or scenario. Rather, it’s much more blended than that, offering customers a low cost low engagement channel when the journey and the customer allows it, and providing a high engagement option when the customer and the journey demands it. Those organisations who will be the most successful will be those who can move customers seamlessly between high and low engagement channels when relevant, without disrupting the customer experience.
Bill is the CEO of Vizolution. He has over 12 years’ experience in managing a software business in the financial services sector. He was CEO of Trigold, a leading provider of mortgage sourcing, compliance and electronic transactions software to the UK mortgage market.