® Interactions: The Foundation of Business Relationships www.egain.comInteractions: The Foundation of Business Relationships Executive Summary Business relationships have always been based on interactions. Until now most of these interactions have been through conventional means, such as the telephone. But now more and more of your business interactions are over the Internet, and this trend will continue for the foreseeable future. Are you ready to handle this change? This paper introduces a new category of products and services that help you manage your business interactions over multiple channels on the Internet and other points of contact. The Changing Nature of Business Interactions All business relationships, indeed all relationships, are initiated, developed and enhanced through a series of interactions. We make our prospective customers and partners aware of our products and services, we answer their inquiries, we ask them questions to qualify their interests, we exchange information to seal the relationship, we fulfill our obligations, we provide them service and support during the course of the relationship, and we continuously work on ways to enhance the relationship. We undertake these interactions every day, and the way we undertake them is an integral part of the way we conduct our business. In fact, they are so commonplace we don't even think twice about them. But we should, because the landscape has changed. Think about it. It used to be that most interactions were through a limited number of ways, such as face-to-face, letters and later the telephone. And most of the interactions were with the same people—the account executive and the service representative—so it was easy to maintain continuity of both style and context in interactions. It was also a more relaxed environment-an interaction could span days, if not weeks. The methods of managing these interactions matched the nature of the interactions. So we had account executives maintaining notes in personal journals, service departments with a paper file for each customer, and so on. Now look at the landscape today. We interact in so many different ways, on different communications channels. Not only do we have face-to-face, letters and telephones, we now have email, Web-forms, and live chat over the Web. As the Internet becomes increasingly more pervasive, more and more of our interactions will be over the Internet, rather than through traditional media. A recent study estimates that email interactions will increase by 111% between 1999 and 2002.1 1 eGain Communications INTERACTIONS 1 Hagen, Paul R., "Tier Zero Customer Support," page 7, Forrester Research, December 1999.2 Reichheld, Frederick F. "The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value," Bain & Company, Inc., 1996, page 13. 3 Tinger, Herbert L., "Consumers to Online Retailers: We Want Better Service," C.E. Unterberg, Towbin, October 23, 2000, page 3. 4 E-satisfy.com on behalf of International customer Service Association, Survey, March 2000. 5 Hurst, Mark, "Holiday e-Commerce '99," Creative Good, 1999. 6 Hagen, Paul, "Tier Zero Customer Support," page 7, Forrester Research, December, 1999. This is not the only change in the landscape. Organizations today deal with a larger customer base with fewer customer-facing employees. It is the exception rather than the norm to find account executives and service representatives working with the same people in the customer's organization over the lifecycle of the relationship. There are a number of reasons for this: new tools have made customer-facing personnel more productive; competitive pressures mean margins are lower and companies have to handle more interactions with fewer resources; and customer interactions are now around the clock, rather than during normal business hours. The last reason above is related to the third big change in business interactions: the expectation of immediacy. The concept of time isn't what it used to be. People want and expect fast if not immediate responses to their inquiries, and will readily go to a competitor if they don't get quick attention. This is part of the reason that many customers are perfectly willing to help themselves if you make what they want readily available and easily accessible. So much so that the study cited earlier also projects that Web self-service will increase from 37% of interactions in 1999 to 87% in 2002. And finally, while good business have always understood the importance of good relations with customers, studies in the past few years have quantified the benefits of long-term relationships with satisfied and loyal customers. Examples abound: • A shift in retention of as little as 5 percentage points seems to account for more than a 20 percent improvement in productivity, which in certain industries can increase profit by 50 to 100 percent.2 • If consumers do not receive email responses within their targeted timeframe, 64% are somewhat or very unlikely to continue doing business with that merchant.3 • Nearly 40% of customers never get a response to their e-contact, and poor handling of econttact creates 30-48% lower customer loyalty.4 • One dollar spent on advertising yields less than $5 in incremental revenues, compared to one dollar invested in creating a good customer experience, which can yield over $60 in incremental revenues.5 Clearly it is very important to keep your customers satisfied and loyal, and even more so in a world where the competition is one click away and the costs of switching are even lower. By 2002, over 87% of business interactions will be over the Internet.6 Are you ready to manage your business interactions over the Internet? Remember, every interaction leaves an impression in the mind of your customer--the interaction either enhances the relationship, or it erodes the relationship. It’s time to address customer interactions over the Web. 2 eGain Communications INTERACTIONSEnterprise Interaction Management Systems If you are like most forward-thinking executives you have invested in customer relationship management (CRM) systems, such as sales automation tools and customer service tracking systems. These are excellent tools for organizing and managing the data you collect over the duration of your relationship with your customers. You can collect all sorts of information, and with some sophisticated analytics you can leverage this information to further enhance your relationship and extend the duration of the relationship. Over time this will result in more revenues for your organization, as your customers automatically look to you as their trusted supplier. Customer retention and loyalty is the promise of CRM tools. But important as most CRM tools are, they were designed for use primarily by internal users such as account executives and service representatives. An account executive uses a sales automation tool to capture and track opportunities. A service representative uses a customer service tracking tool to capture and track problems and questions reported by a customer, primarily over the telephone. But what should your customer do if he has a problem in the middle of a Web transaction? Call a service representative in your contact center, because that's the process your CRM system imposes on you? Talk to an agent to get information that can easily be made available through your Web site? Obviously these are not desirable options. To the extent possible you want to continue the interaction in the medium your customer has selected. Any break in the interaction that requires a switch in the communication medium is an opportunity for your customer or prospect to go somewhere else. And, online purchase abandonment rates are high. In fact, surveys indicate that as many as 74% of online shoppers will abandon their purchases if they do not receive prompt answers to questions.7 Your frontofffic tools are of marginal utility to you, because they do not help you manage the interactions you have with your customers, or promote self-service. This is the gap filled by products and services in the interaction management space. Interaction management systems are enterprise solutions that provide an easy-to-use and consistent way to manage customer interactions over the Internet. They provide the infrastructure that bridges the gap between your customer, and your internal systems such as contact center, CRM and e-commerce systems (see Figure 1). 3 eGain Communications INTERACTIONS 7 Herbert L. Tinger and John C. Eline, "Consumers to Online Retailers: We Want Better Service," C.E. Unterberg, Towbin, p. 4, October 23, 2000.Figure 1: Interaction Management System The key elements of an enterprise interaction management system are: • The ability to manage interactions over multiple channels of communications • The ability to collect, organize, publish and disseminate knowledge that can be leveraged across multiple contact points, including self-service • The ability to easily integrate with e-commerce, analytics, contact center and CRM systems in which you have already invested • The ability to scale as your business grows, in both transaction volumes and growth in global markets with localization requirements MULTIPLE CHANNELS OF COMMUNICATIONS The first key element of an enterprise interaction management system is the ability to manage interactions over multiple channels of communications. At a minimum the interaction management system should help you manage your business interactions over both the telephone and all Web channels: self-service, email, Web forms, real-time interaction or chat, and voiceovverIP. The system should provide the means for you to make it easy for your customers and partners to interact with you using their preferred communications medium. The system should maintain context across communications channels so that an interaction that starts on one channel can continue on another, and the system should make it easy for you to categorize and save these interactions for future reference and use. You should also be able to route the interactions to the proper points of service, which may include automated-or self-service. A good interaction management system will also provide tools and utilities for customization, so that the look-and-feel of interactions is cast in the way you want, to maximize your differentiation. 4 eGain Communications INTERACTIONS Interaction Management System Customer Interaction Methods Analytics Data Warehouse Back Office e-Commerce Financials Contact Center CRMKNOWLEDGE MANAGEMENT The second key element of an enterprise interaction management system is the ability to collect, organize, publish and disseminate knowledge that customers can use for self-service. The culture of Internet-savvy users is one of self-reliance. These users often want to find information for themselves, but quickly and efficiently. Your interaction management system should therefore have a knowledge management subsystem that makes it easy for you to collect all the information your customers may potentially want to see, and to organize, publish and disseminate it in a way that your customers can easily find it when they want it. The advantage of being able to do this is that your own service representatives can also leverage this knowledge management subsystem when they are working on interactions with customers that choose not to use self-service. Another big advantage is the potential for tremendous cost savings. A self-service interaction can cost as low as just over $1. Interaction with an agent using email or a web form is about $10, or less if you leverage your knowledge subsystem. By comparison an interaction by telephone will cost about $33 on average .8 INTEGRATION The third key element of an enterprise interaction management system is the ability to easily integrate with e-commerce, analytics, contact center and CRM systems in which you have already invested large amounts. A large portion of interactions over the Web are to check on the status of business transactions or to query or update account information. Customers want to know the status of an order, or to find out an account balance, or to see if anyone is working on a problem they reported to the contact center, or to update a shipping address and so on. Each of these interactions requires data stored in your e-commerce, CRM or contact center systems (or even other applications such as your back-office systems). A good interaction management system will make it easy to integrate with all these applications, and extract and present the data to your customers. You could certainly expose each of these applications to your customer for their direct access, but that would be an expensive solution and would not give your customers the consistent look-and-feel of a well-designed Web site. Another advantage of easy integration is that you can combine all the interaction data in your interaction management system with the data that are available in your other systems, and subject the combined data to sophisticated analysis. This can give you valuable information on customer interaction patterns for each product line, behavior of different customer segments, issues with product features, potential issues that may cause customer defections, and so on. Without a strong integration capability the best you can hope for is an incomplete analysis of all your customer data. 5 eGain Communications INTERACTIONS 8 Hagen, Paul R., "Tier Zero Customer Support," page 7, Forrester Research, December 1999.eGain Communications INTERACTIONS SCALABILITY The fourth key element of an enterprise interaction management system is the ability to scale as your business grows, in both transaction volumes and growth in global markets with localization requirements. Clearly you would not be investing in an enterprise interaction management system if you did not intend to grow your business. The volume of interactions will grow as your business grows, as will the number of your employees that use the system. The system must therefore be able to grow with your needs, and utilize the latest software and hardware technologies to make this growth easy. A good enterprise interaction management system will be designed to leverage the flexibility and power of Internet technologies-it will be scalable, allow remote access and administration, and lower the overall cost of ownership compared to older technologies. Given the global nature of the Internet, your business is also likely to grow internationally. This means you have to plan for the day you will interact with your customers not only in the communication method of their choice, but also in the language of choice. You should therefore be able to easily localize your interaction management system to offer your customers an easy way to interact with you. It is also important that you be able to support multiple languages on the same system, rather than run one instance for each language. This allows you to leverage your investments. Summary Enterprise interaction management systems are crucial to developing and maintaining customer relationships on the Internet. They give your customers a consistent way to interact with you, and they give you a bridge to all your internal 'legacy' systems. This allows you to increase the length and improve the quality of your relationships with your customers, and so maximize revenues over the life of your customer relationship. 6 © 2001 eGain Communications Corp., All Rights Reserved. 400009 4/01 World Headquarters eGain Communications Corp. 455 West Maude Avenue Sunnyvale, CA 94086-3517 T. 408-212-3400 F. 408-212-3500 Toll free: 1-888-60-eGain (888-603-4246) www.egain.com sales@egain.com ® Gain Customers Sustain Relationships