Perfecting Service Management

Issue #22 Tuesday, July 8, 2003

Welcome!

topical index

Welcome to this edition of the Customer Centricity newsletter, where we explore ways you can improve the performance of your service organization.
 

In this issue:

10 Ways to Maximize the Performance of Your Call Center Without Additional Investments in Technology

At the Second Annual New England Call Center Forum Vendor Expo, held on June 24th, Customer Centricity provided visitors with an overview of the "10 ways to maximize the performance of your call center, without additional investments in technology."

If you were unable to attend the expo, and would like a copy of this presentation, feel free to email your request to us at: info@customercentricity.biz.

top


Avoiding the Death Spiral While Reducing Operating Costs - Part 7
(Segment the Customer Base & Provide Appropriate Levels of Support for Each)

By Lauren Weiss

This is the 7th article in the series “Avoiding the Death Spiral While Reducing Operating Costs” covering approaches to reduce operating costs while maintaining customer confidence and increasing customer satisfaction. Topics in this series include:

  • Cease activities that provide no value-add
  • Implement efficient and repeatable processes
  • Focus on existing product quality instead of new features and functions
  • Enabling customers to self-serve
  • Perform elements of the work with lower cost labor
  • Segment the customer base and provide “appropriate” levels of support for each
  • Make informed, not random, cuts
  • Cease big, expensive projects with long-term ROI
  • Renegotiate vendor contracts

In this edition we will cover: Segmenting the customer base and providing "appropriate" levels of support for each.

Does your company treat all customers equally? Perhaps they are equal. However, many firms realize that their customers have diverse needs and expectations. If this is a reality for your firm, and you have not yet performed customer segmentation, you may be overlooking many opportunities to improve customer satisfaction AND reduce operating costs.

The primary reason to perform segmentation of your customer base is to tailor your complete customer relationship model (sales, marketing and service) to meet or exceed the expectations of customers with differing needs. Too often, companies look at ways to improve customer satisfaction and operational efficiencies "across the board" with a "one-size-fits-all" approach. This can be an inefficient application of a firm’s precious resources.

Companies can typically categorize their customers into at least 3 segments. For the purpose of this discussion we will generically label the segments as follows:

  • High-End
  • Medium
  • Low-End

High-End – This segment contains those customers that are "more equal" than others. That is, these customers generate the most revenue for the firm, represent a strategic relationship and/or have the potential for significant growth in the future. This segment, representing only a small percentage of the entire customer base, likely requires a level of service that is high-touch, personalized and relationship oriented. These customers, more so than those in other segments, have "bet their business" on your products and services; they expect you to be a trusted advisor, partner or extension of their firm. These are the customers for whom you will want to continuously attempt to "exceed" expectations.

Low-End – These are customers that deal with your firm on a transactional basis. Typically, customers in this category merely want a low-cost and efficient transaction. To the extent that you can "meet" this requirement, these customers will remain loyal. However, as soon as another provider offers similar products and services for a better price, the customer will consider how they can switch, when their contract is up.

Medium – This segment may actually represent the largest (from a customer count perspective) of the 3 segments, containing customers that are at neither of the extremes (high or low-end). The needs of this segment can be the trickiest of all to address.

I have found that, in advance of segmentation, customer satisfaction scores could be predicted for each segment: Low-end customers would be highly-satisfied and require no additional attention (from a continuous improvement perspective). High-end customers would be "fairly" satisfied needing some additional attention. Medium segment customers would be the least satisfied and need the most attention of all.

In my experience, further analysis often revealed that, after several years of driving continuous improvement efforts directed at the entire customer-base, the low-end customers benefited the most from the one-size-fits-all approach, while most of the high-end customers were already recognized, with programs or senior account teams in place to cater to the needs of customers in this segment. However, it is the medium segment, containing customers just above the low-end, and just below the high-end, that is the least understood segment of all. If this (likely) scenario plays out for your firm, the next step to consider is that of slicing the medium segment into 2-3 logical segments.

Once you have placed your customers into the segments that make sense for your firm, you can consider how to deliver on the expectations of each. This includes how you will market, sell, and provide support to each segment. You might consider the following:

Leveraging partners / VARs to perform Sales and Support for a segment of the customer-base.
Introducing new levels of support and charging appropriately, e.g., charge different fees for 1 hour, 4 hour, 8 hour response, or off-hours support. These must be offered as a new service, previously unavailable, rather than to begin charging for something that was previously free.

One of the most frequently expressed concerns of customers is that the firms they do business with seem to be disjointed, that each contact with the firm feels like a separate company. As such, a customer segmentation initiative should consider EVERY touch-point that the customer has with your firm. If cross-functional coordination doesn’t take place during your customer segmentation initiative, the result may be that you further exasperate this situation.

Segmenting your customer base into groups of customers with similar expectations and aligning your entire organization around the segmentation model will provide your firm with many opportunities to deliver the products and services to your customers more efficiently. Not only can this reduce the cost of service delivery, but it will also improve customer satisfaction and loyalty as you more effectively meet the needs of each customer.

If you would like to discuss further how your firm (and customers) could benefit from customer segmentation feel free to give us a call.

Upcoming newsletter editions will cover additional items on the topic of “Avoiding the Death Spiral While Reducing Operating Costs”.

Previous articles in this series:

Part 1   Part 2   Part 3
Part 4   Part 5   Part 6

top

 

More About Customer Centricity, Inc.

Customer Centricity is a business consulting firm that partners with companies to improve the performance of their service organizations. We leverage our real-world experience to help our clients manage their customer relationships in more effective and satisfying ways.

Customer Centricity delivers on this promise by optimizing the interaction between people, process and technology to achieve higher levels of customer satisfaction and increased operational efficiencies. We provide:

  1. Comprehensive assessments to identify the actions that will yield the greatest return;
  2. Skills Training to enable customer-facing personnel to deliver exceptional levels of customer service;
  3. Design and Implementation of business process techniques to serve the customer in efficient, effective and consistent manners; and
  4. Identification of the appropriate business processes to automate, enabling companies to get the most from their investments in technology.

In addition to our core practices, we also maintain a network of strategic partnerships to provide end-to-end consulting across your organization with a commitment to seamless execution.

Click on the following link to see what our customers have to say.

To learn more about Customer Centricity:

call: 603.491.7948

send e-mail to: info@customercentricity.biz 

or visit our web-site: www.customercentricity.biz

In Closing

If you enjoyed this newsletter and feel that others would benefit from it, feel free to pass it on. If you have received this newsletter from a colleague and would like future editions sent to you directly, please send a message to info@customercentricity.biz indicating your desire to "subscribe".

Thanks, and have a great day!

Unsubscribing - To unsubscribe simply click here and hit send in your email client. Alternatively you can reply to this email with the word "UNSUBSCRIBE" in the body of your message.

 

Copyright (c) 2003 by Customer Centricity, Inc. All rights reserved.