From Contact Center to Profit Center: Retailers that Invest in Customers Reap Benefits that Extend far Beyond a Healthy Bottom Line

By Sam Bloomfield, senior vice president of professional services, ClientLogic

Without question, evolving business needs have enabled the traditional, transaction-based contact center to shed its service-oriented platform. Companies in every segment of the retail industry are wise to embrace the changing face of the contact center and the opportunities this presents for the organization as well as the consumer.

The shift away from the traditional contact center involves using technological and human resources to better understand and service the customer and, in turn, to measure the ROI companies are making in their customers. One phone call, one e-mail or one chat session can lead to significant, potentially long-term value for all of the principals involved.

The service-dominated contact center is recognized not only as a key channel for customer service and technical support, but also for creating and delivering value through full sale and service customer interactions. Companies are not satisfied with simply reducing costs; they expect to utilize this powerful channel for customer communication to improve their return on the investment they make in the call center.

Profitability is a function of the relationship between cost and revenue, and return is the larger-picture economic benefit derived from the overall investment. Reducing cost or increasing revenue each appear to be compelling objectives, but if they are the only goals for the contact center, they may lead to undesirable outcomes, including loss of customers or short-term unprofitable operations.

If contact centers are only committed to reducing costs and/or increasing revenue, companies are missing a tremendous opportunity to execute more strategic initiatives, including those that relate to increasing shareholder value, a concept that is typically of utmost concern to corporate management and its constituents. What's more, contact center strategies that focus on maximizing return on customer investment inherently embody an effective blend of cost-reducing and revenue-generating activities.

To better understand the concept of return on customer investment, companies must examine the relationship between three essential drivers: cost, revenue and return.

1. Cost
In order to realize revenue from products and services, most non-commoditized organizations must invest in building a brand with customers, acquiring new customers and servicing all customers. Investments in brand and marketing acquisition are made because of the expectation of direct immediate revenue or its short-term potential. The costs associated with service are typically viewed as an indirect investment and it is perceived generally as par for the "cost of doing business."

Across the retail industry, the typical organization has little to no expectations for deriving true cost-center value by delivering customer service or technical support. Costs are not viewed as investments, but as economic factors that must be minimized either through live agent interaction restrictions or automated solutions. There is no expectation that the service contact center can provide organizations with profitable customer relationship building.

2. Revenue
The expected outcome of brand and acquisition investments is new, profitable customer relationships. Contact center service is starting to be viewed as providing direct revenue potential whereas it has traditionally been perceived to provide little direct revenue opportunity.

Not all customers that retailers have are profitable, and not all service interactions will result in direct revenue. However, the ability to recognize the existence of opportunities can transform a contact center from a cost center to a cost-neutral business process or ultimately, to profit center. Organizations are also looking at how differential investment in customer segments opens up new possibilities of revenue and return. The ability to implement these new approaches to customer interactions takes dynamic technologies and skilled personnel that must be constantly evaluated and updated.

Because not all customers are of equal economic value to an organization, it makes most sense to regard customers based on a perceived value relative to their past, present and projected future transactions. Differential service investment in customers individually or by segments defines the core of the return concept.

3. Return
Obtaining customer profitability is the ultimate goal of all for-profit enterprises and the contact center can play a significant part in achieving this outcome. Within the contact center, investments are typically made in agents and their management, technology and customer experience processes:

Agents and Their Management: By recruiting and staffing more experienced agents and managers or increasing the ratio of managers to agents, companies that deliver and directly support the customer interaction are ultimately most able to maximize the customer value.

Technology: Many companies have vast amounts of usage and behavioral data about customers. Using this information to supplement each interaction can help to achieve the profitability that often remains untapped. Technologies exist that allow clients to provide different levels of service to different customer segments, thus reducing cost of service to less profitable segments and providing higher service levels to more profitable segments.

Customer Experience Process: An effective training program and a positive learning environment for customer service and technical support associates--as well as for first-line supervisors--are essential to facilitate the transformation of a service-only culture into a service and sales culture. This includes communicating with customers so that the true value of each customer and individual interaction is captured and cultivated.

Companies across all segments of the retail industry continue to pour countless dollars into building powerful brand images, but they often overlook the value of customer investments. One of the most effective channels through which an organization can improve its customer relationships is the contact center. Every customer interaction can, in some way, directly affect the company's bottom line.

By re-evaluating call center strategies and associated processes, retailers can establish customer-centric metrics that ultimately lead to truly effective customer relationships and positive economic results.

Sam Bloomfield is senior vice president of professional services at ClientLogic. He can be reached at [email protected].