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Trends in Customer Contact Channels and MediaTrends in Customer Contact Channels and MediaIn this section we investigate changes in media usage in the UK and United States, and from our own research provide some insight into what companies say about their future use of media. The overall message is one of a healthy observation and testing of new media but no big change for the foreseeable future. Telemarketing, direct mail and television advertising are by far the most important media in terms of expenditure and will continue to be so for at least the next year, and probably longer. These traditional media continue to flourish even with the introduction and growth of the new media. In the UK telemarketing accounts for around 25 per cent of overall expenditure, followed by direct mail with about 20 per cent and television advertising with about 17 per cent. In terms of intentions over the next five years, spend on interactive digital media is forecast to grow sharply and is likely to erode telemarketing and mail spend, but we expect to see steady, rather than dramatic, change because the adoption of interactive techniques will not be widespread for some time. In any event, the interactive dialogue is likely to generate telephone and direct mail usage as part of the sales cycle. In the United States, a similar trend is emerging: the traditional media continuing to grow steadily. The Web and e-mail are growing rapidly and beginning to challenge spend on traditional media. In our research, companies were asked which channel or media they see having most impact on sales in the next 12 months. Personal selling (face-to-face via sales people, dealer, agents, retail outlet, branch) was number one in most industries except consumer insurance, mail order and telecommunications, where the telephone was the number one selling medium. Direct mail and telemarketing normally came in as the number two or three most important medium. The Web has an increasingly important role in pre-purchase information searching. The use of online media for customer servicing is still not widespread. The implication here, again, is that media use is not changing quickly. Despite the arrival of new media such as the Internet, e-mail, interactive television and the short message service (SMS), the impact so far has not lived up to the hype. Mail is still the second most important medium in terms of spend and is still growing in both the UK and the United States. Our research confirms that 'new media' are not yet significant components of the communications element of the marketing mix. Companies expect direct mail volumes to grow in line with other media. The US Direct Marketing Association (DMA) census states, 'direct mail continues to confound predictions of its decline in the electronic age. In fact, it has shown particularly strong growth in the face of increased competition.' In the United States, the DMA suggests [6] a cautious approach to new media on the part of the traditional US direct marketers. The reasons are twofold. First, Christmas catalogue mailings are planned and budgeted up to 14 months ahead, Second, the DMA predict Internet-driven direct marketing sales will grow 50 per cent a year to US $84.4 billion by 2004, catalogue sales will be greater at US $125 billion (6.1 per cent growth per annum), and direct mail will do even better with US $723.8 billion (8.6 per cent growth). Traditional marketers will not ignore the Internet, but they will also continue to refine and retune both catalogue sales and direct mail. A paper [7] produced by the DMA gives insight into the future of e-commerce media: 97 per cent of DMA members have a Web site in comparison with 90 per cent a year ago (1999).
The Web is becoming an important medium for international transactions, as it respects no frontiers.
US marketing companies [8] are cautious about e-mail marketing and so use it mainly for customer retention rather than for prospecting. One approach is to use 'permission marketing' and only send e-mails to those who have opted in to receiving them. According to Forrester Research, 77 per cent of marketers send e-mail to customers who have asked for it. This is the opposite of 'spam'. Forrester estimates that by 2004 US marketing companies will be sending 210 billion e-mails a year. Seth Godin [9] describes organizations using what he refers to as 'interruption marketing' to get people's attention. Interruption marketing, Godin argues, is the enemy of anyone who wants to save time. Godin proposes 'permission marketing' as an alternative, which offers potential consumers the opportunity to choose to be marketed to. Volunteers are more likely to pay attention to the message. Permission marketing encourages people to take part in interactive long-term campaigns and be compensated for paying attention to the message. Godin says, 'imagine your marketing message being read by 70 per cent of the prospects you send it to (not 5 per cent or 1 per cent). Then imagine that more than 35 per cent respond. That's what happens when you interact with your prospects over time, with individual messages, exchanged with their permission over time. Permission marketing is anticipated, personal, relevant'. One company that uses 'permission marketing' is Omahasteaks.com, which sells beef and other food products online. Since 1995 it has built up a list of 500,000 names from people who have ordered from the site, requested information, taken advantage of on-site giveaways, and from purchasing opt-in names from list builders. Less than 1 per cent of these self-targeted consumers opt out. The advantage of both e-mail marketing and direct mail is that they are less intrusive than telemarketing. Consumers can decide for themselves if and when to read messages. Every six months the Hewson Consulting Group and eGain conduct an Online Service survey of UK organizations who advertise their presence with either an e-mail address or a Web site address. The results for the fifth survey [10] in May 2001 showed for the first time an improvement in service, with the Internet 'black hole' (where enquiries are not responded to) shrinking by 74 per cent. Now only 9 per cent of sales leads are being ignored entirely. The report says, 'Getting online service right is not a philanthropy but a hard-nosed business imperative with a high pay back. Much evidence indicates that good online service increases sales: both initial and repeat. For example, in the US financial services market, potential investors receiving an accurate e-mail response within one hour appear to be some 75 per cent more likely to purchase.' The report finds that only 1 in 20 companies are offering levels of online service that are likely to increase sales. Hewson states there is now hard evidence of how poor online service affects offline business adversely. They quote Jupiter Media Metrix who recently reported that inadequate online customer service can cause 72 per cent of US online customers to reduce their spend in retail outlets, as well as to refuse to buy online. The survey shows that the biggest opportunity in online marketing for most companies is based on focusing on the early stages of the customer lifecycle: for example, by improving pre-sales service to hot prospects. Wendy Hewson, Research Director of Hewson Group, says, 'the current state of play in the UK is so feeble that the 1 in 20 companies who manage online sales leads well have an opportunity to win business in a channel with little real competition'. One of the biggest changes we are likely to see over the next few years is in the management and organization of call centres. The stated rationale for setting up call centres is usually to improve customer service and reduce costs. However, instead of creating value, call centres may actually destroy value by increasing costs and reducing customer service. Call centres will receive increasingly adverse publicity. Customers cite long waiting times, incessant music, operatives who are not empowered, incompetent advice, and low call-closure rates: all these yield a negative experience and leave customers feeling bad about the service they have received. Apart from having a material effect on satisfaction and no doubt retention, poor call centres also increase the cost to serve (because several calls have to be made to answer one problem) and decrease the likelihood of cross-selling to the customer. One of the common roles for a call centre is to handle queries and problems, which as far as customers are concerned are normally one of the 'moments of truth' by which they judge a company. The call centre therefore has a high impact on the creation or destruction of value. Our research confirms that good (competent customer managers) companies are likely to set up good call centres (good in the eyes of the customer), and bad companies, bad ones. In these 'bad' companies, although call centre managers may talk about service, their prime concern, encouraged of course by their bosses, is often cost (that is, the call centre is intended to lead to increased efficiency and cost reduction). Examples of this are the measures that staff are subjected to: for instance the number of calls taken or made, time per call, break time taken, call wrap-up time, call preparation time, and occupancy per cent. Although these are obvious measures for measuring productivity, they are also measures that get in the way of customer satisfaction and employee motivation. John Seddon [11] states, 'this is to argue for economies of scale, a feature of scientific management thinking which led to the development of large scale mass production systems at the turn of the 20th century. It would appear that the same thinking is adapting the technology of today to the same design - that of the factory.' Scientific management thinking was developed by F W Taylor and used by Henry Ford for mass production to reduce the costs of manufacturing automobiles. Many call centres are run on this principle. Call centres were introduced to provide differentiation, but when measured on operational measures can result in commodititization. Many 'bad' call centres have become little more than low-skilled 'sweat shops', with high employee attrition rates and poor morale. This is because they have been designed and managed according to F W Taylor's principles of 'mass production' - they are factories. However, there is evidence that world-class organizations have moved away from mass production thinking towards the concept of systems thinking, which demands breaking down vertical functional silos so that all units collaborate and work together as one system. John Seddon of Vanguard Consulting argues that if customers experience what they require and no more and no less, service and efficiency will be optimized. Providing good service really does cost less. Seddon differentiates between 'value demand', the things you are there to do for the customer, and 'failure demand'. These are calls the customer has to make because the organization has not done something or has not done something right for the customer. The Vanguard report argues that the best way to design a call centre is to use a systems thinking approach. Management can do this by looking at the organization from the outside in and using methods that focus on value to the customer rather than production and units of work. Customers do not like having to wait a long time for the telephone to be answered, being kept waiting in a queue, then being greeted by a seemingly uninterested operator. Outside-in thinking leads to an understanding of the real nature of demand and precisely why customers call in. 187
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