Profitable Sus Rev Growth

White Paper profitable, sustainable revenue Growth
is a Goal of every Company

During periods of economic good fortune, the most innovative and efficient organizations
achieve growth rates in excess of their industry average. In less favorable times, those same
organizations amaze us all with their ability to continue attracting new customers to their
products and services. But what happens during a truly recessionary environment? Sector data
from prior recessions shows that companies best positioned to succeed when economic growth
resumed held their revenues and profits relatively stable, despite lower consumer spending
and limited paths to profitable operations. They did so by focusing on their existing customer
accounts, identifying and capturing every sale, maintaining a strong awareness of the importance
of service quality, and reducing the cost to serve. The result was a more efficient route to
healthier revenues and an improved bottom line. In this article, each of these four key points is
examined in depth with recommendations and guidelines for success in your organization.

Mining Known Territory: Revisiting Your Current Accounts
Attracting and keeping new customers is an ongoing mission for every successful firm. Top
companies never stop working to expose potential new customers to the benefits of their products
and services, regardless of the economic climate. But during challenging economic periods,
consumers have a strong tendency to stay with the brands they know unless there is a powerful
price incentive to change. When acquiring new customers becomes difficult, serving your existing
customer accounts to their fullest potential is a powerful means to building revenue and profit.

Unfortunately, efforts to grow revenues from existing customers all too often take the form of
a percentage-off-everything e-mail or an overly structured telemarketing call. These tactics
might produce a mild one-time sales benefit, but over the course of the current recession, your
organization will likely need more than that. Quality revenues begin with quality relationships – and
those begin with a clear understanding of your customers’ buying behaviors, and a commitment
to empowering talented sales representatives with the tools to generate revenue over the long
term.

Putting it into Action:
Communicate appreciation of an existing customer relationship. Before beginning any sales
enrichment program with existing customers, it’s first important to remind those customers that
their business – and continued loyalty – is valued. Customers who feel important are more likely
to listen to a promotional offer later – and act on it. Packaging an appreciation communiqué with
an appealing offer relevant to the customer can accomplish multiple goals with a single message.
Comprehensive Customer and enterprise solutions ©2010 teletech holdings, inc. - all rights reserved. 1

White Paper profitable, sustainable revenue Growth is a Goal of every Company

Invest in tools and partnerships that maximize the quality selling time of skilled customer
service associates. Focusing the best-performing associates on peak-potential accounts is a
proven formula for revenue growth in challenging times. Make sure that your qualifying systems
are putting the best current-account opportunities through to your top associates. At the same
time, examine your outsourcing options for managing your sales ‘funnel’ to existing customers.
Consider using traditionally passive tools, like web-enabled ‘call me’ functions, in a more active
way to put experienced sales professionals in touch with customers assembling large or complex
orders in an e-commerce environment.

Target your promotional offers to an ‘audience of one.’ A recessionary climate elevates price
sensitivity, to be sure, but customers are still looking for value – not just a percentage reduction
in prices across the board. Be sure that customers are receiving offers tailored to the products
and services that they have already purchased from you – and those that would be natural
follow-on sales.

Capturing Every Sale: The Invisible Cost of Conversion
Sales conversion rate and cost per action are ‘top of the dashboard’ metrics for organizational
sales and marketing executives, and for good reason. Monitoring the efficiency and cost of
turning consumer interest into booked revenues is vital to generating profit and cash flow. But
many firms’ metrics in these areas are inflated, because the easiest sales to garner are often not
being captured. When website visitors receive a chat prompt before they abandon a shopping
cart, or when new customers receive a short post-sale call with accessory, upgrade, and service
options, cost per action is driven down and sales conversion rate is driven up. Efficient up-
selling and cross-selling during live customer interaction further enhances the cost of generating
revenue dollars. More importantly, converting every sales opportunity increases lifetime customer
value in addition to reducing costs. Deloitte (2008) data shows that lost conversions and reduced
customer loyalty are closely related over the long term. As a result, it is not just today’s revenue
that is at risk. It is tomorrow’s revenue, and next year’s revenue, that is also jeopardized when
sales are not pursued.

Confident your organization is converting every possible sale? There might be even more revenue
still on the table. In a study performed by the Mystery Shopping Providers Association in the area
of customer service trends, nearly half (46%) of the field research force cited up-selling as the
area in which businesses were most lacking – across a variety of vertical markets and industries.

Putting It Into Action:
Look at your customers from an operational point of view… In any conversion efficiency
improvement work, understanding how, when, and why your customers buy is crucial to
success. If your segmentation and analytic platforms were deployed in the early part of this
decade, you can benefit from new technologies and systems that can improve your data
resolution by orders of magnitude. It’s important to ensure that your customer management
associates have the ability to contribute their experience and expertise to those systems, too.



…then look at your operations from the customer’s point of view. Before revisiting concepts
like up-sell/cross-sell efficiency, customer outreach, and targeted promotional deployment, it’s
important to see your current systems in these areas the way customers see them. Business
Process Outsourcing (BPO) providers with expertise in customer experience design, like
TeleTech, can be valuable allies in identifying areas that can be tuned to peak efficiency.

Start with targets for both revenue and expense metrics. The goal of sales conversion
optimization is not just to grow revenue or reduce the expense of converting sales; it is to do
both. Driving a revenue goal without considering the expense metrics tied to it, or focusing
exclusively on reducing conversion cost without addressing revenue realities, limits the total
potential for improvement on both fronts. Installing targets that incorporate both metrics produce
the right results – smart, efficient revenue growth with the bottom line in mind.

Managing the Cost to Serve: Efficiency Evolved
The easiest way to cut down on the cost to serve customers is to reduce the number of staff
available to handle customer interactions. Unfortunately, it’s also the wrong way. Overworked
staff offer poor service and can actually contribute to customers churning away. Asking more of
an associate population, without providing the right tools, processes and technologies to make
that workload manageable, is a formula for burnout, churn, and lost customer management
expertise. Conversely, deploying those tools, processes and technologies, with efficient and
informative training on their correct use, can improve an associate’s workday, reduce the cost to
serve customers, and serve as an employee retention tool.

How expensive is associate overload? The Robert Francis Group estimates that replacing an
associate costs between $10,000 and $15,000 at a minimum. The group’s report on call center
turnover noted that even at the lower range of its average turnover rates – between 25% and 40%
annually -turnover costs a call center with 100 associates $250,000 per year. At the upper end of
that range, and at the higher cost estimate, the cost can top half a million dollars annually. That’s
just to maintain 100 occupied and trained associate positions – to say nothing of the lost expertise
and experience in handling the unique demands of a particular company’s customer base.

While a variety of solutions exist in such an environment – outsourcing partnerships, new
technology, and workflow redesign among others – the best choice is one that enables
customer-facing associates to work smarter, not harder. Making every moment of an associate’s
workday an efficient one allows organizations to reduce the work before reducing the workforce
– a critical point of differentiation.

Take a baseline measurement of workflow volume and associate satisfaction. The first
of these two important metrics often receives all the attention – but without understanding
the satisfaction and motivation levels of your existing associates, workflow mapping and
measurement is an academic exercise.



Develop a specific cost to serve, segment by segment… The ‘cost to serve’ metric should only
be an aggregated average when the customer management process is designed correctly. That
overall figure is made up of individual interaction cost targets for every customer segment – from
the lowest-value transactional accounts to the ‘prime’ revenue and profit contributors. Using one
global service cost target overvalues the former and undervalues the latter.

…then address the economic realities. Redesigning a customer management function can
often yield impressive cost savings. But if an improved design still does not fit within tight
organizational budgets, the effort is wasted. Instead, start with a budgetary figure – then build
a business case for the projected cost savings from associate churn, improved revenue and
profitability derived from higher customer satisfaction levels, and long-term value of stronger
customer relationships. An experienced customer management partner can help to develop that
business case with you.

The Role of Service Quality: The Strong Foundation
The idea that service quality is more important than price has nearly reached the status of
universally accepted wisdom in many industries. Several recent studies have cited Harris
Interactive’s 2006 survey in which consumers indicated that service quality was more important
than lowest price by a score of 52% to 38%, respectively. But those data points predate even the
first rumblings of an economic downturn – let alone the turbulent recessionary climate the global
economy now finds itself in. Is service still a more important factor than the lowest possible price?

The answer appears to be yes – with a major qualifier. Analyzing top performers among the
American Customer Satisfaction Index (ACSI) during the past eight quarters, it is true that
companies with exceptional service have thus far been more insulated against the effects of the
economic downturn than their lower-performing peers. More encouragingly, the benefits of a
strong customer satisfaction position are continuing, despite the worsening economy. While that
has not always translated into revenue growth for every top-performing company on a quarter-to-
quarter basis, the performance delta between high-satisfaction and low-satisfaction companies
has endured. The most visible differentiating factor, however, is a clear satisfaction superiority for
the benefiting firm. When a large number of competitors score equally well, or within a few points
of one another, the benefit vanishes. The data suggest that establishing a clear service leadership
position can be a powerful insulating factor against the challenges of a recessionary economy.

Balance discounting actions with clear, visible investments in customer service. Pricing
actions are often necessary to navigate a recessionary economy. But remember that brand
equity is at stake for the long term. Price leaders come and go in every market, but service
leadership is a sustainable source of competitive differentiation. Be sure that customers are
aware at all times of your route through the current economic challenges. Use clear, multichannel
communication of your value delivery and service quality commitments.



Don’t surrender the high ground based on your current position. If your organization trails
ContaCt teleteCh: the segment leader in customer satisfaction, a recessionary economy is an ideal time to close
solutions@teletech.com the distance. In both of the most recent economic downturns (1991-1993 and 2001-2003),
1.800.TELETECH or
companies trailing the customer service leaders in their segments made up ground by embracing
+1.303.397.8100 (outside the U.S.)
a short-term challenge to build a long-term leadership position. Even small investments in service
www.teletech.com
quality improvement now will yield considerable dividends when economic growth resumes.

Focus on the associate-customer relationship. Information technology investments can make
a difference in the efficiency of customer management associates. But investing directly in
human capital makes a difference in the quality of the customer relationship. Both are good
strategies, but the latter makes a larger and more noticeable difference during periods of brand
ambivalence. High-impact associate training, innovative compensation management programs,
career path development for top performers, and other human capital-centric investments can
improve customer satisfaction and loyalty now.


Profitable Sus Rev Growth

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