Article by Jim Novo, originally published by CustomerThink.com, 2005
Some people think of contact centers as the place where all the bad news flows into the business. Trouble calls, missing packages, defective products, service problems—all head straight for the contact center. But if you take the time to really understand the business through analyzing all these contact transactions, you may be able to turn your contact center into a revenue generator.
In one particular cable system I was responsible for, new connects and disconnects were about even each month. The regional general manager told me there was “no growth,” because new customers were not coming on fast enough, which was because there were not enough sales calls each month. I asked her why she was concentrating on growing new connects instead of reducing disconnects. My reasoning was that, if you could reduce disconnects, you would get net growth and reduce marketing expenses at the same time. She told me that was impossible and that I had to hire more salespeople to work the area.
This approach didn’t square with me. Why was the churn rate so high? What was the root cause of all these disconnects? In my view, if we didn’t reduce churn first, all the effort to bring on new customers would be wasted.
I went to the front line to look for answers. After I listened to a few disconnect calls in customer service, I had part of the answer to the churn problem. The reps weren’t trained to handle disconnects properly.
I then trained the customer service reps to handle these disconnect requests differently, to probe the customer a bit to ask, “Why do you want to disconnect?”
So, instead of responding to a request for disconnect by the rep asking “Is Thursday 4 PM OK?”, a new type of conversation took place:
Rep: I’m sorry you want to disconnect your service. Do you mind if I ask why?
Customer: Too expensive.
Rep: Are there any channels you like?
Customer: Oh, I’m going to miss Discovery and A & E
Rep: Did you know you can get rid of your HBO and your other movie channels and reduce your bill by $40 a month but still keep Discovery and A & E?
Customer: No, I had no idea they could be separated and I could keep basic cable. Let’s do that, instead.
That’s a customer retention program, and now we are reducing disconnects. It works because the reps are not “selling”; they are engaging the customer and helping them in a positive way. The impact of this program was dramatic, immediately cutting disconnects by 30 percent.
I had slowed the bleeding. But what was the source? What caused the customers to think they couldn’t pick and choose which channels to subscribe to? What in the process of acquiring these customers was creating new customers who would be likely to disconnect their service?
On a hunch, I ran disconnect rates by salesperson and compared them with disconnect rates overall and for the phone reps as a group. And there it was: the source of the disconnecting customer.
The mid 1980s were early days for cable, kind of where the web is today, and the average person simply didn’t know much about the “technical” aspects (sound familiar?). They believed what they were told, in this case by the salespeople, and some of the salespeople generated new customers with disconnect rates far higher than average. Customer acquisition by way of the direct salesperson was driving customer defection. In other words, this particular acquisition marketing campaign was increasing overall customer churn rates.
So I fired the salespeople generating the highest churn rates and trained the phone reps–who already created new customers with much lower defection rates–to be really good salespeople and to sell the customer what was right for the customer. This sales approach reduces churn before it happens. I also started paying them commissions on these sales. The pay schedule was about one-tenth of what the direct salespeople got for the same sale. But with reps who were making minimum wage, this was a pretty popular idea.
The regional GM gave me six months to make it work. It does take a while for the effects of this kind of change in marketing strategy to take hold, as customers sold “the old way” roll out and are replaced by new customers sold “the new way.” This cable system, which had flat to negative growth for years, became the fastest growing cable system in the New England region for the company that year. At the same time, marketing costs (which include commissions to sales people) fell by 50 percent, so the increase to system cash flow was quite dramatic. The financial leverage in retention programs is huge once the programs get rolling.
Think about your business. Is there something the contact center reps could do faster, less expensively or better than another channel? Don’t assume they can’t—or don’t want to—a little training and some incentives can go a long way.
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