Confessions of a failed Volkswagen mechanic

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Welcome to this View from America column, thanks for dropping in. Since you're here I'll come clean: I was wrong once. Shocking, I know. I figure it's part of the value-add I bring - one advantage Europeans have is they can watch Americans make a great deal of mistakes, then choose to avoid them.

Like you, I didn't grow up dreaming of CRM. I write about CRM because:
(a) the Rolling Stones already had a lead singer, (b) nobody would invest in the microbrew Ron and I started - and ended - in his Somerville kitchen, and (c) I couldn't take apart a Volkswagen engine and put it back together without having parts left over. So I write about CRM.

Not so unique a career trajectory, really - you there in the brown wingtips work for IBM because you couldn't hit a baseball out of the infield. The navy power suit had to decide between her college rock band or Wharton acceptance letter, and the guy who just made VP is married to someone who doesn't share his passion for leading wilderness adventures in New Zealand. All to say we're making up CRM as we go along and we should learn from our mistakes. Such as mine.

I wrote a column a while ago advising companies to throw all the self-help tools they could think of online, which would piece off the standard time wasting questions - "Can I get the four-slice model in mauve?" And I still maintain that putting FAQs and any self-help tools you can on your website is A Good Thing - just not in the obvious way.

That I had more to learn was clear from an under-publicized study by Doculabs' President James K. Watson Jr. and Senior Technical Writer Joe Fenner in a recent Information Week. They studied financial services firms who created self-service websites to provide better service at lower cost. The firms wanted to give customers the information they demanded 24/7, and in return would see lower call-center volume.

This is what I suggested companies do. To be fair, so would have every single CRM writer on the planet, but this is my mea culpa. Which just goes to show why CEOs follow business journalists' advice about as often as the coach turns to the newspaper reporter and says "Ted, you think we should run or pass more in the second half?"

The companies Watson and Fenner studied were providing more self-service capabilities - but seeing the volume of calls increasing. Figuring they hadn't gone far enough they provided even more robust content to online customers online. Boom, both volume and complexity of calls went up even higher.

Shelving plans to turn their call center into a wet bar and massage parlor, they sat down to figure out what the Sam Hill's going on here. We did what Sims told us to do, what gives?

Here's how the numbers were supposed to work: if Acme Anvils had been fielding a million calls per year, and moved 20 per cent of those inquiries to a customer self-service website, that's 200,000 fewer calls to handle. If an average call costs $11 to process, and if each web inquiry costs only $3 to service, Acme should be $1.6 million to the good, right?

Wrong. Watson and Fenner found that half of the inquiries starting at a self-service website end up as a call to the customer service center anyway. On top of that, the rich web content prompts more questions - "Yeah that answers my question, thanks. Hey you seem to know your ass from your elbow, and since I've got you on the line here there's this on your website saying..."

Take questions about detailed options in a financial-services plan, requests to transfer funds to outside parties, or advice on investment options. These are certainly not to be handled online, and they're too complex for generalists to handle. Answering these questions about high-end products gets pricey, because you need a pricey specialist to sit his pricey bum in a pricey chair and answer them. You're not getting the "Hey, you guys do mortgages?" any more.

Do the math: if of those 200,000 customer contacts you've offloaded to the web half of them call anyway, it costs $1.1 million to process them at eleven bucks a call. But since they're more sophisticated questions, they're going to cost - let's be conservative - at least $16 apiece. There go your cost savings.

Now the good news is if you're getting these pricey questions, you're probably moving a pricey product. It's the old issue of spending $16 to service a $1,000 order being preferable to spending eight bucks to service a $500 order. And financial services is really a worst-case scenario for all this.

Bottom line is you're going to have to answer a certain amount of expensive questions to get anywhere anyway. Sure go ahead and offload as much as you can to the web, keep the online FAQs up to the minute, mine incoming questions to beef up the customer-facing databases, reply to all e-mails within an hour or two - but don't look to rent out your call center space just yet.

By David Sims

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