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					                                                       A BT and Nortel White Paper



Fragvergence
Changing consumer attitudes to diverse contact channels:
what are the opportunities for organisations to use Voice Self-Service?




By Marcus Hickman
Contents

Executive Summary                                                                        2

Introduction                                                                             3

Methodology                                                                              4

Fragvergence: the emerging world of customer contact                                     5

Voice Self-Service: favoured by consumers for efficiency improvements                   12

What are the opportunities for organisations?                                           14

How to implement Voice Self-Service: avoiding the IVR PR Problem                        16

Conclusion: implications for business by solving nine key challenges in customer contact 19




                                                                                          1
Executive Summary

Fragvergence                                                           What is the opportunity
Fragvergence describes two trends in the marketplace which             for Voice Self-Service?
are converging and fragmenting. As communication devices,              There is an accelerating communication channel called Voice
networks and software converge in capability, consumer use of such     Self-Service. This provides opportunities for organisations to balance
technology is increasingly fragmented – in the channel chosen,         cost control with the needs for customer service and to address the
the occasion of interaction and how the device is used. While some     issue of the Demand Delta identified by BT in 2005. This research
experts state that consumers will migrate to use one all powerful      shows that Voice Self-Service is much preferred by consumers to the
channel for all customer contact – eg the Internet with VOIP or        offshoring of call centres. Rates of dissatisfaction with offshored
a fully enabled mobile handset– research evidence suggests             call centres are particularly high (78%) among the UK consumers
that fragmentation is the more likely future outlook.                  in our sample. Voice Self-Service is also chosen by the consumers
The traditional argument for ‘convergence’ relates to                  as one of the favoured ways for organisations to reduce costs.
these developments:                                                    Our research found that consumers are able to identify which types
• Devices are converging in their capability (eg TV on the Internet    of interactions are suited to Voice Self-Service. This was explored
  and mobile, Internet/interactivity on the TV and mobile, VOIP        across four different sectors with participants responding positively
  on the Internet, e-mail on the TV and mobile) and some predict       to undertaking tasks such as checking bank balances or getting
  that this will all converge to one mobile handset device in time.    store opening hours in this way. Another interesting finding is that
  This means people can increasingly complete all interactions         customers appear happy to accept outbound Voice Self-Service when
  through one device                                                   they consider it to be justifiable, e.g. to confirm the delivery of goods
• Organisations should focus on call centres and Internet              (80%) or to receive information about utility supplies (77%).
  Self-Service for everyday communication with customers, in an        Voice Self-Service is part of a wider phenomenon in the emerging
  attempt to migrate customer transactions, customer service and       world of customer contact: Fragvergence. While organisations may
  account management to one, lower cost channel: ‘You can do it all    hope they can force customers to use one channel because it is more
  through the call centre/Internet’.                                   efficient (like Ryanair), the reality is that more complex channel
The counterpoint of ‘fragmentation’ says that different consumers      offerings will be needed to meet the demands of customers who
want to use different devices and methods of communicating with        appear to vary their approach according to purpose. As part of the
organisations depending on:                                            analysis, we categorized the UK and US online communities according
                                                                       to their attitudes to customer contact. The key findings were that
• Personal preference: some do not use the Internet, some
                                                                       while 30% preferred the phone to e-mail, 27% claimed to be equally
  prefer the phone, some e-mail, some face to face
                                                                       at ease with the phone and Internet services. A further 24%, on the
• Need: is the interaction or contact complex, emotional
                                                                       other hand, preferred the Internet to the phone. The remaining
  or simple and often repeated?
                                                                       19% also indicated a preference for the Internet but felt that
• Occasion: where is the consumer physically, how are they             ultimately, the method of contacting an organisation should be
  feeling, what are they doing?                                        their choice.
• Timing: what is the time of day and how much time does               Consumers say that over the past 3-5 years, service and price have
  the consumer have?                                                   become more important to them when dealing with organisations
Our research has revealed that new methods of communicating with       while brand is less valued.
organisations are adding to this complexity. Consumers are making      This poses real challenges for organisations to extend their channel
fewer but longer calls to organisations as Internet use rises, quick   offering but also to maintain limits on costs. Organisations need
checks of bank balances are being made on mobile phone, products       to adopt a range of techniques to manage the evolving world of
are being price scanned on to mobiles, outbound SMS messages           Fragvergence. The report concludes by identifying the nine key
are being sent to remind consumers of events and people are            challenges they face.
collaborating on the internet to solve product and service issues.
A world of Fragvergence in customer communications is evolving
and this entails more complexity and cost for organisations.




2
  Introduction

  The purpose of this white paper is to identify opportunities                                                                    We therefore used consumer research for this white paper to
  for both business and government to use new customer contact                                                                    understand the needs, attitudes and behaviour of people who
  communication channels, as well as to benefit in terms of efficiency                                                            are increasingly technology-confident.
  and customer satisfaction. The catalyst for the research was the                                                                The work is a follow up to BT Global Service’s Demand Delta research
  emerging technology of Voice Self-Service – which is fast becoming                                                              completed in 2005. The Demand Delta identified that consumer
  much more effective as a contact channel with consumers. For some,                                                              demand for communication and service outstrips organisations’
  Voice Self-Service is now considered an alternative to offshoring                                                               ability to deliver that service. This manifests itself in the consumers’
  contact centres, which has not always been a successful strategy                                                                rating of the service provided by organisations, where people must
  in terms of customer satisfaction.                                                                                              wait in queues on the phone or deal with annoying IVR systems
                                                                                                                                  offered by call centres. Only 17% of people in the UK and 33%
  78% of UK and 53% of US consumers rate offshored call centre                                                                    inthe US rate the service they receive from call centres to be
  experience to be poor or terrible                                                                                               excellent or good.
                                                                                                                                  If call centre experience is the area that consumers are most
                                                                                                                                  dissatisfied with, what are the opportunities to improve service
  The world is increasingly defined by the growing power of consumers.
                                                                                                                                  standards? What new communication technologies offer hope
  Whether through their ability to research via the Internet, switch
                                                                                                                                  of better service and also lower costs?
  suppliers when dissatisfied or organize and petition government
  electronically, people are more demanding of organisations.




  In your experience of contacting organisations including companies and government,
  overall how would you rate the service? (% agreeing good or excellent)

                               100%                                                                                    Good              Excellent

                               90%

                               80%

                               70%
% agreeing good or excellent




                                                                     32 %          35%

                               60%
                                                       14%                                                                               16%
                                                                                                                                                                   13%
                               50%                                                                                                                       9%
                                             6%                                                                             9%
                                                                                                8%
                                                                                                          15%
                               40%
                                                                                                                                                                                                                                               3%
                               30%
                                           46%         50%           53%           51%         41%        36%               44%          49%             47%       47%                                                         46%
                               20%                                                                                                                                                                                           2%
                                                                                                                                                                                                                                               30%

                               10%                                                                                                                                                                         2%
                                                                                                                                                                                        1%                                   14%
                                                                                                                                                                                        6%                 8%
                                0%
                                             UK          US            UK            US         UK         US            eU
                                                                                                                             K
                                                                                                                                          eU
                                                                                                                                             S
                                                                                                                                                      il U
                                                                                                                                                          K
                                                                                                                                                                    il U
                                                                                                                                                                         S                UK                 US                UK                US
                                        st          st            ce            ce          M          M               it               it           a             a                tre                tre               tre               tre
                                      Po          Po             a             a          AT         AT             bs               bs           -m            -m               en                 en                en                en
                                                              oF            oF                                   e                e                            E                                   C                                ll C
                                                           et            et                                     W                W               E                           ll C            all                  ll C
                                                          c
                                                                     Fa
                                                                        c
                                                                                                                                                                       sC
                                                                                                                                                                          a                C                 Ca                Ca
                                                       Fa                                                                                                                               /s
                                                                                                                                                                   O/               O




                                                                                                                                                                                                                                                      3
Methodology

The consumer research methodology we used involved five steps:            • A workshop with BT Global Services and Nortel to identify
• Publication review, where we identified the issues                        consumer trends in customer communications and the needs
  already researched and existing knowledge in the                          of business and government
  area of customer communications                                         • Quantitative research with 1,018 consumers, split between the
• Depth interviews with eight UK and US citizens to explore                 UK and US. We used an online research panel, with a 20 minute
  attitudes to organisations, use of technology and experience              survey on a representative sample of consumers in terms of age,
  of interacting with business and government. These included               sex, region and income
  trials with each consumer of applications of Voice Self-Service         • Analysis included identification of trends in behaviour,
  technology to provide an understanding of what is possible and            differences in consumer attitudes and behaviour and a
  to distinguish the emerging technology from more basic voice              segmentation of consumers.
  technology already in use with IVR applications



Definitions of Voice Self-Service
Our definition of Voice Self-Service was as follows:



                 IVR                                     A computer detects basic voice and touch tones using a normal phone call.
    (Interactive Voice Response)                   The IVR system can respond with pre-recorded messages or route a caller to a live agent.
                                                                           This uses DTMF or ‘grunt’ technology.

               NLVR
     (Natural Language Voice                               A computer understands the words being said by a caller and can carry
                                                                               out a basic conversation.
          Recognition)

      Voice Self-Service
(ASR – Automated Speech/AVR                                       A computer understands the words being said by a caller.

     – Voice Recognition

                                                            Voice portals are the voice equivalent of Web portals, giving access to
            Voice Portals
                                                                information through spoken commands and voice responses.



       Voice authentication /                               A computer detects a person’s voice for identification purposes, rather
          Voice biometrics                                                than to understand what is being said.




     ‘Fragvergence’ term
     The term Fragvergence was originally coined by Schlegelmilch and Sinkovics in 1998 to explain fragmentation or divergence
     in cultures. More recently, it was also used by Sam Smith of the BBC to describe emerging needs in media research.




4
Fragvergence: The emerging world of customer contact

In this section we examine how consumers’ use of customer contact      The emerging world of customer contact is one of Fragvergence.
channels is changing in the UK and the US before discussing the        Fragvergence describes the phenomenon whereby consumer use
opportunity for Voice Self-Service.                                    of communications technologies is increasingly fragmented, even
A goal for many organisations over the last 10 years has been to       though devices, databases, networks and software are converging
encourage customers to communicate using one low-cost channel.         in their capability. Different consumers want to use different
The appeal of this is one of simplicity, efficiency and low cost.      methods of communicating with organisations depending on:
Some organisations, such as Ryanair and Dell, have been successful     • Personal preference: some do not use the Internet, some
in transferring customer contact almost exclusively to the Internet.     prefer the phone, some e-mail, some face to face
But now, low cost airlines are starting to use text messaging to       • Need: is the interaction or contact complex, emotional
communicate with customers and Internet-only organisations               or simple and often repeated?
are adopting the use of direct mail and phone-based channels to
                                                                       • Occasion: where is the consumer physically, how are they
improve sales.
                                                                         feeling, what are they doing?
The traditional argument for ‘convergence’ works at two or three
                                                                       • Timing: what is the time of day and how much time does
levels in a customer communication arena:
                                                                         the consumer have?
• Organisations should focus on call centres and Internet
                                                                       This picture of fragmentation is being complicated by developments
  Self-Service for everyday communication with customers in an
                                                                       in customer communication technology, networks and software:
  attempt to migrate customer transactions, customer service and
  account management towards lower cost, channel: ‘you can do it       • The phone may be used less frequently, but for longer periods
  all through the call centre/Internet’                                • Quick checks of bank balances on a mobile phone
• Devices are converging in their capability (eg TV on the Internet    • Research for products online, but price checking
  and mobile, Internet/interactivity on the TV and mobile, VOIP on       via a mobile phone
  the Internet, e-mail on the TV and mobile) and some predict that     • Interacting with advertisements on TV
  this will all converge to one mobile handset device in time.
                                                                       • Alert messages sent to a mobile to remind/inform
  This means people can do everything through one device
                                                                         a customer of events
• Databases – more and more customer interactions that
                                                                       • Two-way texting with organisations
  occur through different channels are being integrated into
  one database so the entirety of activity can be seen.                • Video and VOIP calls on the Internet
                                                                       • Collaborating with other consumers on social networks
                                                                         to challenge a company.
                                                                       How are the individual channels being used? What are the trends
                                                                       in customer behaviour and attitudes in the UK and US today?




                                                                                                                                            5
Web in the living room
Use of the Internet in many homes has evolved so strongly that it now                     BT Global Service’s Dr Nicola Millard has stated that we are living in the
challenges the TV for attention in the living room. The TV had itself                     age of the research shopper. People now use the Internet extensively
displaced the radio and fireplace. Some still prefer the TV, while in                     to identify the best prices for products from a wide range of suppliers.
other households it has become wallpaper or background noise.                             92% of UK and 89% of US consumers agree with the statement
                                                                                          “I always shop around before making a purchase to get the best price”.
“She (partner) watches TV at night while I sit on the other side of the                   Our research shows that different consumers have alternative
room on the Net”                                                                          preferences for channels when it comes to customer contact. In the
                                                                                          UK we now find that e-mail is the number one channel for contacting
US Male, 25-34, Landscape Gardener
                                                                                          organisations across all online consumers. However, people show
                                                                                          strong preferences for using a variety of channels in communicating
                                                                                          with organisations.



What are the top three communication channels you expect to use in the
future when dealing with organisations? (select three)

             80                                                                      UK          US


             70    68
                                64      65
                                              62
             60          59

                                                     53
             50
% agreeing




             40
                                                                  32            31
             30                                                                           27
                                                           22
                                                                        19                       20
             20
                                                                                                      14
                                                                                                                 12                    13
             10                                                                                              7                                       8
                                                                                                                               5             6
                                                                                                                           1                               1       2
              0
                        65         64           57           27            25               23          10            11           9             7             2

                   E-mail to Phone call to Face to face Interacting Phone call to Post/Direct Phone call to ATM/Kiosk          Web chat     Text/SMS        Video
                  organisation a call centre in store   using a Web automated        mail     call centre in      in                        message      conferencing
                                                            site      phone                     another      store/street
                                                                      service                   country




When in doubt, phone… or e-mail
Is the phone still the channel of reassurance in the emerging world                       Use of the phone is shifting towards the more complex queries and
of customer contact? Our research revealed that e-mail is emerging                        is preferred to FAQs on websites for example.
as being just as important for dealing with difficult queries, complex
issues or the need for reassurance.
                                                                                          “Frequently Asked Questions, page after page, dead ends and
                                                                                          you can’t find what you want. It’s lots better to call up and get
“I usually e-mail if there’s a problem… They always get back to me –                      the answer straightaway…”
particularly ones like E-bay or Dell or even the local council”                           UK Male, 35-44, Head Teacher
UK Male, 45-54, Bookmaker




6
Preference for use of the phone when complex interaction required. % agreeing with the statement…

                                                                                                      Agree slightly            Agree strongly

US – The calls I make to organisations are more complex as
I am doing simple things via the website                                                              43                                      24



UK – The calls I make to organisations are more complex
                                                                                                     40                                  24
as I am doing simple things via the website


US – If I have a problem I would rather phone than use a                                        32                                  33
list of frequently asked questions (FAQ) on the Internet


UK – If I have a problem I would rather phone than use a                                        33                              27
list of frequently asked questions (FAQ) on the Internet

                                                                                 0         10        20         30        40             50        60     70            80
                                                                                                                      % agreeing



Our research questioned some of the traditional assumptions about young versus older consumers. The often heard ‘my 17-year-old is
so advanced with technology’ suggests that younger people will self-service in the future. However, our research showed that younger
consumers are actually more likely to want to use the phone in the future than their older counterparts.




What are the top three communication channels that you expect to use in the
future when dealing with organisations?

             80
                                                                                                73
                                                                                                                               71                        70              71
             70                68                            69                                                                                                    69
                  65 64             64             65                            66                             65                             65                                  65
                                         62                       63                                                                      62
                                                                            60        60                   61             61                        60
             60                               59                                           58
                          57                                                                         56                                                       56
                                                                       55
                                                        53                                                           53                                                       53
             50
                                                                                                                                    45

             40
% agreeing




             30

             20

             10

              0
                   Total            UK             US         Male          Female           16-24         25-34          35-44               45-54      55-64               65+

                                               E-mail to organisation                 Phone call to a call centre          Face to face in store




                                                                                                                                                                                        7
Collaborative consumers
Consumer collaboration is increasingly a defining force in the provision
of service, as consumers help each other to solve problems when                     “It’s good to see how other people rate things… like Trip Advisor”
using products and services. This trend has long existed with software
                                                                                    Student, Male, 18-25
collaboration, but now with the growth of social computing and Web
2.0, consumers are showing greater willingness to collaborate on
issues of service. The role of word of mouth recommendations has                    Our data shows that this is now extending beyond friends and
been a long-established phenomenon in making purchase decisions,                    family to include recommendations from online reviews. Some
often helping to deal with the wide array of choice when buying.                    people have questioned the value of these online recommendations
                                                                                    but our research shows that only around 1 in 5 people do not find
                                                                                    them useful.



The new world of word of mouth recommendations. % agreeing with the statement…

                                                                                                 Agree slightly         Agree strongly

US – I feel there is so much choice that increasingly I rely on other
people’s recommendations before purchasing products                                      34                 10
UK – I feel there is so much choice that increasingly I rely on other
people’s recommendations before purchasing products
                                                                                                 41                 7
US – People recommend products to me, but I often don’t act on their
recommendations                                                                         31                 11
UK – People recommend products to me, but I often don’t act on their
recommendations                                                                              37                 8

US – I use reviews of products and services on the Internet to check quality                     43                               42

UK –I use reviews of products and services on the Internet to check quality                      42                            40
US – Most of the online recommendations I read on the Internet are
not very useful
                                                                                   16        6
UK – Most of the online recommendations I read on the Internet are                 18        3
not very useful

                                                                               0   10        20       30     40         50   60        70   80   90
                                                                                                            % agreeing


In service delivery, collaboration between consumers is taking place                The emergence of proactive service –
both at the behest of organisations and independently. While some
brands are encouraging their customers to exchange views online,                    Fragvergence extended
other groups of consumers form lobbying or self-help partnerships                   Customer communication channels have multiplied and become
independently. Almost daily we hear of another Facebook group set                   more complex as a result. The emergence of the PC based Internet
up to help geographically disparate consumers to talk to each other                 as a major communication channel is now being met with fledgling
about issues of concern.                                                            text, mobile Internet, social networking and Voice Self-service
                                                                                    technologies.
Nearly 30% of UK online users and 40% of those in the US say they                   One new strategy being adopted by many organisations is that of
enjoy using social networking sites like Facebook and MySpace                       Proactive Service. With the potential to improve both customer
                                                                                    satisfaction and also contact centre efficiency, Proactive Service is
                                                                                    designed to harness a raft of new technologies to solve service issues
In all, 23% of UK and 27% of US online consumers said they would be
                                                                                    proactively. Proactive Service is doing things for customers before
interested if companies and government offered their products and
                                                                                    they contact the organisation.
services to customers on social networking websites like MySpace
and Facebook – eg sending and receiving messages and providing
personal details to organisations. When it comes to marketing,                      “You don’t want to wait in all day for a delivery – they can text me to
33% of UK and 38% of US online consumers said they would be                         be home”
interested in being rewarded with discounts and vouchers if friends in              UK Women, 25-34, Manager
Facebook/My Space automatically received recommendations when
they purchased products online.




8
  There are many forms of Proactive Service. A few examples are                                      A new segmentation of online consumers:
  listed below:
                                                                                                     customer contact preferences
  • 69% of UK consumers and 51% of US online consumers would be
    interested in SMS/text messages from organisations to provide                                    The fundamental point of Fragvergence is that different consumers
    updates on appointments, deliveries or order status for services                                 will choose alternative channels and methods of contact on different
  • 65% of online consumers would be interested in a service where                                   occasions. In response to these differences we have built an
    you can access information on your mobile phone relevant to your                                 attitudinal segmentation using K-Means clustering. As a result, the
    current geographic location, eg restaurant reviews and directions,                               online communities of the UK and US have been divided into four
    shop locations or taxi numbers when you’re out and about                                         groups depending on their attitudes to customer contact. The four
                                                                                                     groups comprise:
  • 23% of online consumers would be interested if organisations
    offered customer service for their own products and services in                                  The Phone Protectionists (30% of the online population) prefer
    online games like Second Life, World of Warcraft or Runescape                                    using the phone to e-mail for customer contact, but are dissatisfied
                                                                                                     with current levels of service and are the least in favour of change,
  • 78% of online consumers would be interested in co-browsing
                                                                                                     whether it is offshoring or Voice Self-Service.
    pages on an organisation’s web site whilst one of their customer
    service representatives is speaking to you on the phone, eg to help                              The Contact Centre Realists (27% of the online population) are
    fill in forms, explain information & help you navigate the site                                  equally comfortable with phone and Internet services and are willing
                                                                                                     to go along with organisations’ efforts to drive efficiency or change
  • 42% of UK and 50% of US online consumers would be interested
                                                                                                     methods of contact.
    in using animated characters known as Avatars on web sites which
    answer queries by spoken responses and illustrations on a web site                               The Self-Service Collaborators (24% of the online population)
                                                                                                     prefer Internet and e-mail to the phone and are particularly willing
  • 44% of online consumers would be interested in a mobile/cell
                                                                                                     to collaborate with other consumers in the provision of service.
    phone application which would enable them to do banking while
                                                                                                     In this sense they could well be the vanguard of customer service
    out and about – including making small payments, checking
                                                                                                     collaboration.
    balances and transferring money from mobile/cell phone handset
                                                                                                     The Multi-Channel Professionals (19% of the online population) have
  • 54% of UK and 50% of US online consumers would be interested
                                                                                                     the strongest preference of all the groups for Internet and e-mail
    in the ability to download instructions for products and services
                                                                                                     use, rather than the phone. They are most likely to self-serve and use
    in video format on to mobile/cell phone, (eg connecting to
                                                                                                     FAQ on the Internet. But they are keen that when they do contact
    Broadband, assembling furniture, setting up a dishwasher)
                                                                                                     organisations, it is through a channel of their choice.
  • 65% of online consumers would be interested in a barcode reader
    on a cell/mobile phone which could be used to scan prices in
    shops, store them and then compare them with prices on the
    internet and then purchase directly over the web
  • Some 54% of UK and US online consumers say they would be
    happy to be identified by a voice biometrics system if it meant
    they did not have to provide their account details.


                                Phone                                Contact Centre                              Self-Service                         Multi-Channel
                         Protectionists (30%)                        Realists (27%)                          Collaborators (24%)                    Professionals (19%)



                 – Prefer phone to Internet               – Equal preference for phone               – Prefer Internet and e-mail           – Strongest preference for Internet
                 – Rather use phone for complicated         and Internet                               to phone                               and e-mail compare to phone
Technology




                   queries and instead of websites FAQs   – Rather use phone for                     – Most likely to enjoy using social    – Most likely to use web site FAQ
                 – Least likely to use social               complicated queries                        networking sites                       rather than phone
                   networking sites                       – Most relaxed about o/s call centres,                                            – More demanding of orgs. in
                                                            navigating IVR and using mobile                                                   providing customer contract
                                                            phone for contacting orgs
Security




                 – Somewhat worried about                 – Somewhat worried about                   – Somewhat worried about               – Least worried about security
                   security online                          security on the Internet                   security on the Internet               on the Internet


                 – Least overwhelmed by product           – Shop around to get best price but        – Feel there is too much choice. Use   – Shop around, most likely to
Buying




                   & service choice                         less than most                             other people’s recommendations         use online reviews and also
                 – Least likely to use online reviews     – Feel there is lots of choice in            and online reviews to help choose      to value their quality
                                                            products & services

                 – Want 0800 services                     – Highest acceptance of cost cutting       – Highest acceptance of encouraging    – Want 0800 services
Cost reduction




                 – Least in favour of offshoring,           by organisations                           customers to self-serve &            – Less likely to favour offshoring
                   AVR & limiting length of calls         – Highest approval contact centres           collaborate to help each other         & limit length of calls
                 – Not in favour of channel shift           offshoring, limiting length of calls &   – Also happier to see limit to         – Least likely to favour customer
                   or customer collaboration to             not offering 0800 to reduce costs          length of calls & use of AVR           collaboration to help each other
                   reduce costs


                 – Oldest segment, slightly more men      – Slightly more men and incidence          – Slightly more women                  – Slightly greater incidence in UK
Dem.




                                                            in the US



                                                                                                                                                                                  9
 What are the top three communication channels that you expect to use in future when dealing with organisations?

              80                                                                                                                   78
                                       73
                                                                  70                            70
              70
                              63
                      60                                59                 59                                                               59
              60                                                                                         55
                                                                                                                   52                                 52
 % agreeing




              50

              40
                                             34
              30                                                                                                            25
                                                                                    22
              20
                                                                                                                                                               12
              10

               0
                      Phone Protectionists             Contact Centre Realists                       Self-Service                       Multi-Channel
                                                                                                     Collaborators                      Professionals

                              E-mail to organisation        Phone call to a Contact Centre           Face-to-face in store       Post/Direct mail




 Future channel preferences provide a good example of the differences between the four segments, with the Phone Protectionists
 showing a stronger preference for more traditional channels such as the phone and face-to-face.
 There are also strong differences in terms of preferences to some of the newer channels for interacting with organisations.




 What are the top three communication channels that you expect to use in future when dealing with organisations?

                   Phone call to automated phone service                            Interacting using a Web site
                   Phone call to Contact Centre in another country                  ATM / Kiosk in store / street
                   Web chat                                                         Text / SMS message
                   Video conferencing
              35
                                                                                                                                       33
                                                                                                    31
              30
                                                       28

              25    24                                                                         24
% agreeing




                                                             22
                                                                                                                                  20
              20         19


              15                                                                                              14                            14
                                                                                                                                                      13
                              12                                  12
                                                                                                                   10                            10
              10                                                       9        9
                                   8                                                                     8              8
                                                                           7
                                                                                                                                                           6
              5                        4
                                                                                     3                                       3
                                                                                                                                                                2
                                            1 1
              0
                      Phone Protectionists             Contact Centre Realists                       Self-Service                       Multi-Channel
                                                                                                     Collaborators                      Professionals



 Equally, the groups show strong variation in attitudes to voice biometrics systems.


 10
A computerised voice system that would identify you when you called an organisation
(% agreeing they would be interested in using this service)

             80
                                                                        70
             70                                    65

             60
                          50
             50                                                                         48
% agreeing




             40

             30

             20

             10

              0
                  Phone Protectionists   Contact Centre Realists   Self-Service    Multi-Channel
                                                                   Collaborators   Professionals




                                                                                                   11
Voice Self-Service:
favoured by consumers for efficiency improvements
In this section we consider initial consumer reactions to Voice Self-                            In our qualitative research with UK and US consumers, the strength
Service, contrasting it with other ways of improving the operational                             of distaste for offshored contact centres should not be under-
efficiency of organisations.                                                                     estimated. Although there was a general appreciation of the efforts
One of the newest channels to become viable for organisations is                                 which agents go to, difficulties in understanding accents and cultural
Voice Self-Service. Many IVR systems are touch-tone and have some                                variations created real barriers to service.
form of voice responsiveness. The advances in speech recognition
and user interface design and personalization have been significant in                           “If it goes though to an overseas call centre I put the phone down …”
recent years, making Voice Self-Service increasingly viable.
                                                                                                 UK Woman, 45-54, Insurance Broker
Although some consumers have had poor experience of voice
recognition, our research shows that consumers strongly prefer
Voice Self-Service to offshored call centres. Organisations have been
seeking ways to reduce cost, and it seems that from the consumer’s
point of view at least, Voice Self-Service is the most favoured option.




Organisations are trying to identify ways to keep their costs down. Would you prefer they did this by using
offshored contact centres or by using Advanced Voice Recognition technology?

                  Offshored overseas call centre         Advanced voice recognition

             80

                                                                                                                                        72            72
             70                                     69             69                                                                                           69
                           67                                                      66
                                     66                                                                     65
                                                                                               61
% agreeing




             60


             50


             40
                                                                                                                          66

             30


             20
                                                                                        14
                                                         9                                           10
             10                            7
                   7            6                                        5                                       4             5                           5
                                                                                                                                             2
              0
                       l
                    ta          UK             US            ale             ale          -2
                                                                                             4
                                                                                                       -3
                                                                                                          4
                                                                                                                     -4
                                                                                                                       4
                                                                                                                                   -5
                                                                                                                                     4
                                                                                                                                                 -6
                                                                                                                                                   4
                                                                                                                                                               65
                                                                                                                                                                 +
                  To                                     M                 m            16           25          35            45            55
                                                                        Fe

Note: Excludes those responding ‘don’t know’ or ‘not applicable’.


Voice Self-Service was also perceived to be more secure than an offshored contact centre in terms of protection of personal data.




12
How secure do you think you personal details are when you are using each of the following
communication channels?

100%

     90%

     80%

     70%

     60%

     50%

     40%

     30%

     20%                                                                                                                                        Very secure
                                                                                                                                                Quite secure
     10%                                                                                                                                        Not secure
         0%                                                                                                                                     Don’t know
              Call Centre   Call Centre   Web site   Web site   E-mail UK   E-mail US    Offshore      Offshore     Voice Self-   Voice Self-
                   UK            US         UK         US                               call centre   call centre   Service UK    Service US
                                                                                             UK            US



Surprisingly, consumers were also willing to accept outbound Voice Self-Service on occasions when organisations were justified in
contacting people. In the qualitative research, these applications of outbound calling were seen as genuinely meeting consumer needs.




Organisations are also thinking about ringing up customers using Voice Recognition phone services to advise
them of particular situations. For which of the following do you think organisations should use these services?

                                                                               80
              80                77                                                                        75
                                                        71
              70
                                                                                                                                     63

              60

                                                                                                                                                      49
              50
% agreeing




              40


              30


              20


              10


               0
                      To advise a large     To let you know if          To confirm the           To confirm an               To let you know     To advise you
                     number of houses your train / plane /             delivery of goods       appointment you               about a national     when unusal
                       when supply of         bus will be late           to your home          have with a doctor              emergency        payments have
                    electricity or gas will arriving or leaving                                   or specialist                                  been made on
                        be resumed                                                                                                              your credit card
                                                                                                                                                   or account




                                                                                                                                                                   13
What are the opportunities for organisations?

In this section we examine how organisations might respond to              Our research shows that price and service is becoming more
consumers’ changing attitudes and their use of customer contact            important to consumers, compared to product quality and brand
channels. We also explore the impact of Fragvergence and Voice             values across a range of product categories including broadband,
Self-Service on business issues like customer service and efficiency.      cars, car/home insurance, clothes, consumer electronics, holidays,
                                                                           mobile/cell phones, personal loans and travel tickets. This seems to
Consumer buying behaviour is changing                                      be the case particularly in the US.

It is important not to develop strategies for customer contact in
isolation. They should be part of the overall value proposition which
                                                                           US consumers more demanding than those
organisations, including government, have for their customers. These       in the UK
other elements – brand, price, product quality and convenience –           Respondents were asked to rate each factor (price, brand, etc) in
meet with contact and customer service as part of an holistic offer to     terms of whether it was more important than 3 to 5 years ago when
consumers which they weigh up against those of competitors.                buying 9 products (holidays, travel tickets, consumer electronics,
                                                                           mobile phone service, broadband, personal loan, car/home
“They’re flooding the market – you’ve got to stand out. You go for         insurance, clothes and a car).
price first.”
UK Male, 45-54, Bookmaker




             60                                                 UK       US
                                57
                                                                                                  55
                                                                                         52
             50                  65                                        49
                  47       64
                                                                                                                46
                                                                 44                                                      44

             40
% agreeing




             30                                    28

                                          22
             20



             10


                                                                                                                          1   2
              0
                       Price           Well known brand      High quality product       Good service           Convenience




Strategically, the goal for organisations must be to find ways
to improve service while at the same time reducing the cost of             Only 21% of UK and 38% of US consumers strongly agree with the
operations so that price competitiveness can be maintained. The            statement “when I find a brand I like, I stick to it”
problem is compounded by the reality that consumers are generally
becoming less loyal to one supplier, as either their expectations are      Consumers are quite uncompromising. Some 63% of UK and 59% of
not met or a new supplier ‘catches their eye’.                             US consumers say that rather than finding ways to reduce operating
                                                                           costs, businesses and government should do nothing and just accept
                                                                           they must continuously improve and provide a good service.




14
Balancing cost and relationship                                             Organisations need to balance cost and relationship requirements.
                                                                            In the UK and US the use of Voice Self-Service is preferred to most
Most executives will feel that it is unacceptable not to try to reduce      of the other options for reducing costs. A previous strategy for
operating costs and improve efficiencies, particularly if consumers         many organisations has been to consolidate customer contact
are demanding even lower prices. To maintain price competitiveness          and take it offshore, but the research shows self-service is
organisations need to drive efficiencies.                                   preferred by consumers.
In our qualitative and quantitative research, consumers did
acknowledge that business and government need to find ways to
improve efficiencies. After all, many of them are working for the
same organisations which seek to maintain profit margins or meet
government targets for efficiency gains. Rather than forcing change
on consumers, they are willing to engage in a dialogue around
changing service for cost improvements.




There are a number of ways in which organisations can try and be more efficient and reduce costs.
Which of the following do you think they should do? (Select all that apply)

                                                                  UK        US
             80
                                     76       75

             70


             60                                                                                                                  57
                                                                  54
                                                          50
             50                                                                                                       47
% agreeing




             40


             30
                                                                                                  25
                                                                                                          22
             20           16
                  15

                                                                                       9
             10
                                                                                 6
                                                                                                                             1
              0
                  Don’t offer         Educate and         Recommend          Offshore call      Limit the length    Use Advanced
                  freephone         encourage more      customers of the    centres to other     of phone calls    Voice Recognition
                   numbers         customers to deal   same organisation       countries
                                        online         to help each other




                                                                                                                                                  15
How to implement Voice Self-Service:
avoiding an IVR PR problem
In this section we consider how Voice Self-Service can be implemented
effectively so as to avoid some of the poor PR coverage and customer
attitudes that met some applications of IVR technology.
How should Voice Self-Service be implemented effectively? There
are high risks that the technology is expected to do things it can not
or does not meet the needs of consumers. The industry now widely
accepts that IVR was implemented poorly in the 1990s, without due
reference to consumer preferences. The consequence was, and is,
systems which are too complex and slow to use and which do not
support the brand values of organisations.
Voice Self-Service will not be an appropriate channel for many
interactions. Dialogues which are uncertain, emotional or highly
complex will be best handled by live agents, even in the context
of an offshored contact centre.


The right applications for Voice Self-Service
Our research in both qualitative and quantitative iterations showed
that consumers in the UK and US do know which interactions are best
suited to Voice Self-Service. Viewed across the four different sectors
of financial services, telecommunications, travel & entertainment,
and government clear preferences emerged. The research showed
that consumer preferences are both particular to the sector and
also the application being used for Voice Self-Service. The provision
of information to consumers is more acceptable than making
transactions, but there are also large numbers of consumers
willing to make payments using Voice Self-Service.
In finance, preferences were high for checking bank balances,
amounts owing on credit cards and to activate a credit card.




Which of the following would be most suitable for using Voice Recognition? (% agreeing)

                                                                 UK      US
             60
                                                        56%                                         55%
                                                 50%                     50%
             50
                                                                   44%

             40                                                                              36%
% agreeing




                  28%    30%                                                           29%
             30
                                        26%
                                 21%
             20                                                                  18%
                                                                                                           13%     12%
             10


              0
                    Stock /      Pay credit     Check account    Check account   Renew car    Activate        Set up
                  share prices     card            balance          owing on     insurance   credit card   direct debit
                                                                   credit card




16
For government, checking on holiday rubbish collections was the top application, although many others such as paying fines have proven
successful in the UK already. Some 84% of UK and US online consumers say that government should offer service levels the same as business.

Which of the types of calls do you think would be most suitable for Voice Recognition? (% agreeing)


             70
                         64%                                           UK       US

             60                            56%

             50
% agreeing




             40                                                                         37%
                                                                                                                   32%
             30
                                                                    29%
                                                                                                                                       25%
                                            26%
             20
                                     21%
             10                                                                                                                    13%

              0

                   Checking holiday rubbish collection          Paying a parking or other fine                     Voting in an election



In retail, there was a high degree of willingness to use Voice Self-Service applications, including for store location and store opening hours.

Which of the following would be most suitable for using Voice Recognition? (% agreeing)

                                                                       UK       US
             70
                     62%
                               59%                                                60%
             60                                                         57%
                                              51%                                                  52%
             50                                           46%
% agreeing




             40                                                                                                35%
             30                                                                                                                              28%
                                                                                                                                 26%

             20

             10

              0
                  Store opening hours       Checking delivery           Store locator              Stock / product         Buying cinema tickets
                                                 times                                           availability / in store
                                                                                                       enquiry


In telecommunications, popularity was high for directory assistance and activation of phones.

Which of the following would be most suitable for using Voice Recognition? (% agreeing)

             70                                                        UK       US

             60                                                                                       58%
                                                         56%                                                                            56%

             50                                                                                                            48%
                                                                                        45%
% agreeing




             40
                                    31%
             30       26%
                                                                    19%
             20

             10

              0
                        Bill enquiries            Topping up mobile phone        Directory number assistance               Activating phone



                                                                                                                                                   17
Lastly in travel, consumers showed quite high desire to use Voice Self-Service.

Which of the following would be most suitable for using Voice Recognition? (% agreeing)

                 60                                                          UK      US
                                  56%
                          53%                           53%
                 50                             49%

                 40
                                                                                                                    35%
% agreeing




                 30                                                                              28%                        29%
                                                                                          26%
                                                                             23%
                 20
                                                                    16%

                 10                                                                                    10%     9%

                  0
                       Check train / plane   Check train / plane   Buy tickets for        Buy cinema   Make a bet   Enter prize
                         bus timetable           bus status        travel / make            tickets                   draws
                                                                    reservation




In terms of guidelines for the implementation of
Voice Self-Service the organisation would need to:
             1. Select situations where customers make repeat calls
             2. Identify areas where call numbers are large and for
                a specific purpose
             3. Pick applications where speed and convenience
                are particularly important
             4. Offer customers the choice of application.


In terms of usability, some key considerations are:
             1. Speed of AVR – “Not too slow and not too fast.
                That was too fast (Train Tracker), I wasn’t expecting it…”
             2. Personality – “You’ve got to know it’s not a person”
             3. Fall out – always provide the option to ‘escape’
                to a live agent
             4. Introduction by an education programme
             5. Test, test and re-test for usability with customers.




18
Conclusion – implications for business by solving nine key
challenges in customer contact
The emergence of Fragvergence in customer communication                  Boardroom support: Offering good service is a more important
contact will be influential for at least the next five years. As more    organisational strategy
communication channels become available, different consumers             • Gaining the support of the board to invest in customer
will use these at different times in different ways. At the same time,     communications remains one of the key challenges. Boards
we will see convergence in the shape of more devices having similar        have a wide range of priorities and opportunities for investment.
capabilities, e.g. the Internet on mobiles or VOIP phone services on       However, the importance of customer experience management
Web pages.                                                                 in driving loyalty is becoming accepted and the case for good
                                                                           service stronger.
85% of UK and US consumers say that organisations should be              Call centres remain the Achilles Heel of many organisations’ service
quicker to provide up to date methods of customer contact                • Once again, call centre service in the UK, US and offshore, came
                                                                           out lowest in terms of customer satisfaction. Yet, over 70% of
For the leaders of customer contact in the UK and the US, there are        online UK and US consumers have contacted a call centre in the
at least nine key challenges which organisations face in delivering        last two months. With more and more calls becoming complex
customer contact. Fragvergence is the context of these challenges,         or emotional, as more simple transactions are completed online,
but Voice Self-Service does offer some real opportunities to address       organisations will need to re-address this weakness.
the challenge we identified in the Demand Delta – that of balancing      Security: customer perceptions are vital for efficient service delivery
relationship and customer satisfaction against the need for cost         • Some 46% of UK and US consumers think their personal details
control and efficiency.                                                    are insecure when phoning call centres. Concerns about security
Companies are struggling to align their value proposition to meet          are key in overcoming the barriers to channel usage by consumers.
changing customer needs                                                  Organisations often want to ‘wow’ customers
• Our research has shown that price and good service are becoming        • Our research has identified that Proactive Service has the potential
  relatively more important to consumers in the UK and the US in           to ‘wow’ customers, by actively remembering important issues for
  comparison to brand, product quality and convenience. More and           consumers. There is great willingness to accept outbound Voice
  more organisations will need to find ways to provide good service        Self-Service calls for a range of emergencies, e.g. 77% would be
  while improving efficiency.                                              happy to have a call to advise them of an electricity outage.
Responding to the Demand Delta – balancing rising service                On-going requirement to monitor changing consumer attitudes
expectations with cost remains difficult                                 and behaviour
• To some extent the fact that 85% of consumers say organisations        • In a fast paced world, consumer preferences for technology
  should be quicker to update their methods of customer contact            and channels are changing fast. A simple phone/Internet split
  tells us that there is no balance to strike: service must improve.       is outdated. Organisations need to consider all the options
  However, the growing confidence of consumers on both sides               of Fragvergence and keeping pace with emerging consumer
  of the Atlantic in the use of the Internet and mobile technologies       attitudes is vital.
  offers opportunities to substitute lower cost channels.
The backlash to offshoring limits the options to cut costs
• Although organisations will continue to offshore operations,
  particularly those of the back office, through our research
  we have identified that Voice Self-Service may offer a credible
  alternative to over-investment in the contact centre. Some
  67% of consumers would select Voice Self-Service over
  offshored call centres and people much prefer this option
  as a way to improve efficiency.
Implementing new interface technology to achieve channel shift
has proven difficult
• Our research has indicated that channel shift is not difficult to
  achieve if it meets the needs of consumers and if the appropriate
  incentives are put in place. Some 67% of UK and US consumers
  believe they should be encouraged to use online channels.




                                                                                                                                                19
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and may be modified from time to time. Services and equipment
are provided subject to British Telecommunications plc’s respective
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any part of any contract.

© British Telecommunications plc 2008
Registered office: 81 Newgate Street, London. EC1A 7AJ
Registered in England No. 1800000.

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