Cost of Quality
We all know it is more cost effective to keep an existing customer than find a new one. This is especially true in today’s economic times where customer acquisition is becoming harder and harder.
Which begs the question; why is quality of call not included in the ‘success matrix’ of the telemarketing score card at most organizations?
While some companies look at quality of an inbound call, it is often underweighted, behind the almighty dollar. How long the call takes to resolve is always number 1. Short calls may come at a cost much higher than the price of the call; many of your customers will feel like they are being cut off, that their concerns aren’t being heard – that they are just another number. If you’re lucky, they will call back to get a sense of satisfaction from another agent. If you aren’t so lucky, they won’t call back - they will just find someplace else to spend their money. A customer’s satisfaction with the way a call is resolved should be the top priority. Some companies say this is addressed through 1st call resolution rates, my question is “how do you gauge those people who don’t call in a second time”, if they simply choose to find another company to work with?
If your cost to acquire a new customer is 3 or 4 times more (and sometimes higher) than to maintain your existing customer, shouldn’t the level of quality during the call be a priority?
Outbound telemarketing numbers can be much more staggering. I was recently part of an analysis that looked at the long term value of customers that were acquired. Due to the length of the initial calls, Organization A’s costs were $250,000 for the campaign; Organization B’s costs were $350,000. Initial response rates were almost identical. On the surface, everyone would say it is an easy decision - go with Organization A every time, as we are getting the same response for 60% of the cost. Responses were generating regular purchases every month on an ongoing basis. But once we started to look at the data and follow the trends, those that were acquired by Organization A were dropping off by as much as 24% per year, while those by Organization B were dropping off at 5% per year.
Customers acquired by Organization B felt valued during their call; the length of time spent with them on the phone was more than by Organization A – they showed an affinity toward the organization. As these customers were tracked over a number of years, the acquisitions of Organization A contributed just over $4,000,000. Acquisitions of Organization B contributed over $5,700,000. What looked like an easy decision based on initial costs, has ended up costing the company $1,600,000 over 5 years.
Maybe the decision wasn’t so easy after all.
