The great thing about this business is that we get to learn so much every day. And working in the small to mid-sized companies sector we get to meet so many exciting people doing interesting things and pass the info along as information to you.
This week I got to spend two hours on the phone talking to a client and reaffirmed how powerful the business case can be around combining multichannel and infrastructure optimization in a smaller business (Customer Results model no less!). You can fill in your own industry and business model here and even use your own technologies and solutions providers (although I cannot imagine you not using Customer Results) .. the concept is the same .. I was asked to summarize it for some folks on Friday so thought I would publish it instead.
For those (like me) with a short attention span the “moneyball” formula is:
- for a $5m revenue company making $525,000 in net income
- $72,200 increase in annual spend on new multichannel technology and video conferencing
- delivers $176,200 in benefits
- 5 month payback and more importantly transforms their customer experience allowing them to gain increased competitive advantage
- sales leaders believe will accelerate their growth 27% from $1.8m in additional revenues a year to $2.3m a year delivering $52,000 per year in extra net income not accounted for in the “moneyball” formula
- moves payback from 5 months to 3 months.
Scenario
Client is a small but rapidly growing healthcare services company that provides various coordination services for self insured companies including physician coordination, pre treatment preparation, post treatment care coordination, wellness and support services for home care agencies and elder care facilities. They have grown from startup to $5m in revenues in just 3 years having acquired 35 clients and 50 employees including 5 sales people and 5 people in customer service.
A client delivers an average of $12,000 a month in revenues or $144,000 a year and they make about $15,000 per year in net income per client with some clients generating as much as $23,000. Most clients sign up for a 3 year contract after a 90 day right to cancel trial.
They have a typically complicated customer “ecosystem” including the VP HR, VP Sales and VP Service of the company retaining them (who want service level reporting to ensure they are getting value for money), the medical practitioners (nurses, hospital administrators, care coordinators, home health professionals, therapists, physician etc) the end patient and their family..
They are spending about $40,000 per customer service agent in fully loaded cost although their growing service complexity and associated certifications is expected to drive this to $60,000 or more) and they need to add a new customer service person for every 5 new clients, which means one new agent every quarter on current growth of more than 1 new client a month.
Current growth is adding $150k in annual revenues every month ($1.8m in annual revenues signed each year or $187,000 in new net income per year).
Their agents are answering a diverse set of enquiries like “When is my physical therapist going to get here” or “do you provide this service” from the end patient, medical practitioner enquiries such as “Where am I going today”, “I am lost .. what are the directions to the patient home”, “where are my supplies” and client executive enquiries such as “how many of my employees were covered this month”, “what is the satisfaction level of my employees in your post treatment survey”, “I need to ask you some questions about the bill”.
Most customer service enquiries have come by landline in the past 3 years but an increasing amount are coming by email, sms text message and instant messages from their websites. “We have cobbled together a set of tools to support our growth and it just isn’t working anymore, we need better tools to continue to grow and stay out of trouble” (a quote from the company VP Operations)
They have historically used 35 inbound phone numbers with IVR options on each, 35 different inbound email addresses going to different Microsoft Exchange accounts (based on the customer) which “agents” examine every hour and pick the emails to respond to. They have Liveperson and Skype for instant messaging but customers have direct email and IM access to their personal agent and the inbound flow is very “bursty” (their term) so one agent will have no Instant messages and then suddenly get 20 all at once.
Their email turnaround and instant messaging responsiveness is suffering as they grow which is having an impact on customer service. They recently lost two potential new clients because they had found some bad feedback on social media sites about poor customer satisfaction. The VP Operations (who also owns sales performance) estimates they will lose 1 prospect a quarter or 4 per year if they don’t fix this, she said “we are getting lots of attention in our market as the number of self insured midsized companies is growing, that is bringing all kinds of good and not so good things with it, I need to solve this but don’t have a lot of spare cash”
Business Case
Requirements
- Integrated email and web chat and phone capability providing a unified queue so that interactions are routed to the best agent without needing know who that is going to be
- Enterprise reporting of handle time by client and agent, delayed responses etc.
- Capability to support growth with incremental licenses.
- Self service knowledge base integrated into their websites and maybe even social media to reduce number of customer enquiries would be nice (they create a portal for each customer).
- Support mobile devices (smartphones and tablets) for their sales professionals and agents
- Support mobile devices for customers.
- Would love to have video conferencing with their clients (maybe even to mobile) and ability to do webinars for education purposes
- SaaS solution if they can get it because they don’t have spare IT staffing capacity.
- Support home and mobile workers and in office to increase hiring and employee flexibility
- Minimize cash outlay
Current Model
Adding 1 new customer service agent per quarter is 4 per year or $160,000 in increased annual costs
Spending $226,000 in voice and data costs or $18,833 per month
- Annual cost of 1-800 numbers (35 numbers active for 4752 minutes each per month)
- Voice telephony costs for 50 employees – $36000
- Data infrastructure $80 per employee $48,000
- Mobile phone spend $110 per month x 50% of employees or 25 = $33,000
The Proposed Solution & Impact
- Eptica integrated multichannel interaction platform with knowledge base providing integrated and unified web chat/IM, email management, web and mobile self service
- 25% of calls move to self service freeing up 1.25 agents to absorb more growth ($50,000 per year in savings)
- Reduce number of agents to be hired by 25% or $160,000 or $40,000 per year in reduced cost of agent hire
- Belief that agent productivity will increase by 10% or $20,000 of current $200,000 service agent spend due to better distribution of emails and IM’d nut not included in benefits statement because VP felt it was to uncertain
- Rearchitect the data and voice communications capability budget to better services and better packages saving 10% of spend or $22,600 savings per yea
- Add 5 video conferencing accounts
The “Moneyball” summary
- for this $5m revenue company making $525,000 in net income
- $72,200 increase in annual spend on new multichannel technology and video conferencing
- delivers $176,200 in benefits
- 5 month payback and more importantly transforms their customer experience allowing them to gain increased competitive advantage
- sales leaders believe will accelerate their growth 27% from $1.8m in additional revenues a year to $2.3m a year delivering $52,000 per year in extra net income not accounted for in the “moneyball” formula
- moves payback from 5 months to 3 months.
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