When pursuing to provide better customer experience and to save on contact centre costs, companies have tried to reduce inbound customer contacts by developing new digital service channels. The end result is often different from the goal. The number of customer contacts have remained the same or actually increased significantly. And to be honest, a conversation with an AI driven chatbot doesn’t ultimately offer the best customer experience either.
According to a recent Censuswide study of 1000 contact centre leaders in the UK, US and Australia, companies are downright battling against rising contact volumes: as many as 59% agreed that contact volumes are spiralling beyond their capacity to handle them.
The results were quite shocking:
- 64% UK contact centres reported increase in chat volumes
- 60% reported increase in call volumes
- 65% reported increase in agent attrition
- 68% reported escalating customer churn
- 67% reported that dealing with frustrated customers has impacted the mental health of frontline customer service employees in the last 12 months.
Needless to say, call centres are close to breaking point.
The current economic uncertainty calls for cost savings but at the same time requires also great service experience to minimise churn. No wonder if companies are struggling to meet these contradictory goals.
The laws of industrial economics do not apply in service organisations
Hermanni Hyytiälä, the Nordic leading expert in failure demand, has for a long time been explaining why efficiency or cost to serve are the wrong kind focus for producing service and measuring its success.
The industrial economics has taught us to increase efficiency by increasing supply. This works well when manufacturing goods, but not when providing service. “Same for everybody” rarely works in the service business where success comes from listening and answering to the often-nuanced needs of each customer, Hermanni explains.
Optimising the supply/demand is often more difficult than just simply increasing supply. Therefore adding new digital service channels might seem like an easy way to tame the increased contact volumes.
However, if the new service channels do not meet the needs of the customers, the end result actually is more customer contacts from more service channels producing even more costs. Not to mention the other unfortunate results highlighted in the Censuswide study.
When supply and demand do not meet, failure demand arises
Hermanni Hyytiälä argues that failure demand is the cause for many of the challenges service organisations, both public and private, are facing today: increasing contact volumes, capacity overload, increasing costs and dissatisfied customers and employees.
Failure demand accounts for customer contacts where a customer must unwillingly and reluctantly return to their service provider, possibly through different channels, to resolve their problem or to receive the service they need.
Failure demand is the result of the organisation failing to serve the customer (where and when they need it) and therefore forcing them to return to their service – usually with additional requirements. This all leads back to companies not really understanding what their customers need, how they need it and why they need it. Nevertheless, “customer first” is the primary goal of the strategy of most companies.
Academic research shows strong evidence of the volume of failure demand in all customer contacts in different industries. Aiwo has received similar results with its AI-powered customer contact analysis.
- Media 79%
- Telecommunications 72%
- Services (hospitality, utilities etc.) 41%
- Healthcare 55-80%
- Banking, Finance or Insurance 60%
- Retail 55%
- Ecommerce 55%
Now imagine if you found out 70% of all your customer contacts could be categorised as “failure demand” – your customers coming back to you, frustrated after having the wrong kind kind of service, partial service or no service whatsoever.
You would probably want to know what causes this and how to fix it.
And that’s where Aiwo can help you.
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