CrowdService: A Clear and Present ROI for Social CRM

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Now here’s the kind of problem a lot of companies would like to have, especially in this sour economy. Infusionsoft executives had set a goal to drive the fast-growing e-marketing vendor to one million subscribers, but then realized their plan didn’t compute. Because handling all those new subscribers using the current customer support processes would mean hiring another 2,500 people.

Oops.

Fortunately, the company could tap the expertise of community manager Joseph Manna, who had joined the company after cutting his social media teeth running message boards and forums at AOL. Infusionsoft decided they needed a social media solution that would enable users to help each other and also work collaboratively with their assisted support processes.

In other words, it was time for “CrowdService”—my term for harnessing the “wisdom of crowds” in customer service and support (CSS). As I’ll discuss a bit later, this is one form of what some call “social CRM.”

CrowdService: Harnessing the wisdom of crowds in customer service and support.

Infusionsoft considered integrating a modern community solution with their existing support systems, much like iRobot has connected a Lithium-powered user community to RightNow’s customer service system (see Building the Social Customer Service Experience). But Manna says they found Lithium was designed and priced for larger enterprises. Salesforce.com, on the other hand, didn’t have all the CSS bells and whistles they wanted, while other community solutions were not focused on customer service.

Thanks to a mutual investor, Infusionsoft was introduced to Helpstream, a new SaaS-based “collaborative customer support solution” launched in January 2008. The idea behind the company, according to CEO Anthony Nemelka, was to bring together into one tightly integrated system both conventional customer support (case management and knowledgebase) and community collaboration (Q&A forums).

Helpstream’s solution has helped Infusionsoft solve its subscriber growth problem by using social media to increase “case deflection.” Manna reports that agents now handle an average of 177 customers each, more than a three-fold increase. Customer satisfaction improved from 77 percent to 89 percent, because customers get their questions answered quickly in an easy-to-use system, with the personal touch from agents when they need it.

Agents are also happy because they can easily monitor community activity and use their time more productively.

The Rise of the Social Economy

CrowdService is just one example of social media’s growing impact on business strategy and operations, which is why I believe we are now entering the “Social Economy.”

In the Social Economy, consumers want to be part of the performance—to “co-create” value in their goods or services through interactions with producers.

Nearly 20 years ago, Joe Pine and James Gilmore argued in The Experience Economy: Work Is Theater & Every Business a Stage that businesses must orchestrate memorable events to add value to their customers and create differentiation. As indicated by the book’s subtitle, their concept is that businesses should “put on a show” for their customers.

But the game is changing. In the Social Economy, consumers want to be part of the performance—to “co-create” value in their goods or services through interactions with producers.

People have always been social, but companies have traditionally operated in a more command-and-control manner. CRM (as commonly practiced by most companies) is an internally focused approach to automate processes and extract value from customers. While CEM is more concerned with delivering value to customers, it still assumes the company is in charge of “orchestrating” experiences.

CRM and CEM aren’t going away anytime soon, but there’s a new business opportunity—and threat—due to the explosion of social media and online networking options.

According to a March 2009 Nielsen report, two-thirds of the world’s Internet population visit social networking or blogging sites, accounting for almost 10 percent of all Internet time. Facebook is the new king of the social mountain (supplanting MySpace), Twitter usage has been growing at astronomical rates, LinkedIn now reaches 16 million people in the U.S. and Ning has helped launch one million social networks.

But what are people actually doing with social media? In CustomerThink’s June 2009 survey, we found that nearly 70 percent of U.S. consumers frequently exchange messages with friends or colleagues and more than half frequently view social content. About one in three say they contribute new content at least weekly through new posts, comments and links.


Happy consumers can create a groundswell of support (think free marketing), which has helped lift online retailer Zappos to $1 billion in annual sales in just a few years. Or, a few mistreated consumers can cause tremendous damage to brands (think “Dell hell”) by blogging or posting a video on YouTube.

Whether you’re ready for it or not, consumers have made this the Social Economy.

Why CrowdService?

Fortunately, as we learned in CustomerThink’s recent global survey of business managers, one in four say their organizations are already using both external social media and company-run communities. Another 20-25 percent plan to implement within the next year. While that’s encouraging, we also found that a full 40 percent indicate that they have no social media plans whatsoever!

Still, roughly half of businesses are participating in the Social Economy now, or will soon. Not surprisingly, marketing is one key area of interest. Based on our survey, around 70 percent of managers believe that external social media can provide better marketing or customer insight, or help them influence prospective buyers.

But consumers are looking for more help, not pitches. About two-thirds of U.S. consumers believe that companies should ramp up social media usage to “identify service/support issues and contact consumer to resolve.” As you can see from the chart below, there is also strong support for companies hosting an online community and participating in consumer-run communities. Monitoring conversations and forming groups on external social media sites got more of a mixed reaction.


CrowdService delivers ROI by using social media to let customers help each other, creating and using a kind of communal knowledgebase where the good answers bubble to the top. Françoise Tourniaire, founder of FT Works and an expert in complex technical support, says she has “no doubt that a well-run community will save (deflect) cases.” Some users will post a question instead of using an assisted support channel and others will search and get answers from existing community content

But Tourniaire also believes that companies are investing in community-based support partly out of frustration. Executives are still searching for ways to cut costs in assisted support, without harming quality of service. Knowledge Management has not lived up to its promise, because it requires organizing the wisdom of those hard-to-find internal experts. Nagging ease-of-use issues have also thwarted end user KM usage, leading to more “I’ll just Google it” behavior.

While your mileage may vary, let’s review a simple ROI example. Say your current customer service operation handles one-third of cases through self-service and the rest through agent-assisted service. If an online community can handle (deflect) another 20-30 percent of cases—which Tourniaire and other industry experts tell me is feasible—that translates nicely into “no brainer business case” based on cost savings, especially for companies with a large base of customers to support.

Aside from agent productivity, companies can also use CrowdService to gain insight on product/service issues, increase loyalty, and even drive sales. However, building a business case on these less tangible benefits is more challenging.

Of course, in any ROI discussion there’s also the “I” (investment) to consider. Companies need to hire and train people with the right skills, acquire and implement appropriate technology, and provide on-going funding. But these investments are typically modest compared to the potential return. Using conservative assumptions, Forrester analyst Natalie Petouhoff says a payback in one year or less can be achieved.

Tips to Succeed with CrowdService

These ROI calculations, based primarily on cost savings (or avoidance) can make it easy to build the business case. But real success rests on a critical assumption: that the total customer experience is not compromised.

Remember the off-shoring trend in call centers? By and large, our research and other studies have found the savings were achieved at the expense of the customer experience, which can increase customer attrition. Can you afford to lose customers in this economy?

Achieving both short- and long-term benefits with CrowdService means bringing together the best of the social and CRM worlds to work collaboratively. But as this chart indicates, there are fundamental differences to consider. Social users are volunteering their time to connect with other people and enjoy the experience. CRM users, on the other hand, generally follow processes designed to optimize resources.


Here are few tips for success, based on my research and personal experience running this community for the past 10 years.

  1. Invest in skilled moderators. You need people who can stimulate discussion, help resolve problems and deal with inappropriate behavior.
  2. Seed initial content and contributors. Much like starting up a knowledgebase, you’ll need to proactively post starter content and invite contributors.
  3. Recognize and reward your stars. Create programs to encourage the small percentage of community members that will post most of your content.
  4. Develop community success metrics. Don’t depend just on page views; a healthy community will get regular new posts and replies/comments.
  5. Integrate social and CRM workflows. Avoid creating a social silo by using automated case creation, giving agent alerts to hot problems, etc.

Of course, you also need appropriate technology. Although I’ve discussed Helpstream as a kind of “new breed” of integrated CrowdService vendor, it currently lacks some of the robust functionality found in dedicated CSS and social business vendors.

CrowdService Solutions

This list includes selected vendors researched by the author that can be used or integrated into a CrowdService solution. No endorsement is implied.

For larger or more complex requirements, CrowdService solutions can be created through integration. For example, RightNow and Lithium are SaaS-based vendors that both focus on customer service in large enterprises. Kana and Jive can be integrated for companies that prefer an installed solution.

For small to mid-sized businesses, Fuze Digital Solutions provides social capabilities to motivate users to improve the knowledgebase, and Parature offers a forum option as part of its integrated CSS suite.

I expect to see lots of vendor activity in this area. Salesforce.com has a social slant in the Service Cloud introduced earlier this year, and nGenera has indicated it will offer tighter integration between its interaction and collaborative tools. Oracle, although currently using the term “social CRM” for internal sales collaboration, certainly has the ability to expand into customer service operations directly or through partnerships.

These are just a few prominent examples. Feel free to add your comments below on your favorite CrowdService solutions!

The Next Step is Yours

Thus far, consumers have been leading the way in the Social Economy. I believe that CrowdService is a great opportunity for business leaders to provide great service while making the best use of scarce internal resources.

Consumers have extended their hand to welcome you. Are you ready to join the conversation?

Additional Resources:

12 COMMENTS

  1. Thanks, Bob for sharing your quite detailed overview on social technologies to help people. I find your perspective to be quite balanced, relevant and current to today’s offering and focus on customer service.

    My favorite quote:

    Remember the off-shoring trend in call centers? By and large, our research and other studies have found the savings were achieved at the expense of the customer experience, which can increase customer attrition. Can you afford to lose customers in this economy?

    True. Double True. It’s shameful that companies would be willing to sacrifice their revenue, reputation and brand damage simply due to language barriers. But now with the Web, offshoring could work given a significant (rather, massive) skills transfer. I won’t bite the hand that feeds me, so I’ll naturally advocate not to. But for overnight/backup coverage, this may be a must for larger organizations.

    Customers of Social Support community solutions needs to ask themselves “Why?” What are they set out to accomplish? A balanced, rational and realistic expectation mixed with a fair investment of strategy and forward-thinking efforts yields benefits for all parties, including customers. I can tell you that customers will notice a company who strives to give them quick answers versus buried ones.

    At Infusionsoft, we’ve been very satisfied with Helpstream. As a small (maybe, mid-size) business serving the needs of true entrepreneurs, Helpstream helps us help customers very effectively. Likewise, we have plenty of long term and intermediate advancements coming with them and love the SaaS offering they provide.

    ~Joseph

  2. Hi Bob

    Great article. It sets out in some detail what most of us already recognise; that social CRM in the guise of ‘crowdservice’ is encroaching on traditional customer service. This is both an opportunity to improve the quality of customer service and at the same time, a significant threat to it as well.

    Crowdsourcing is an opportunity to harvest the knowledge, skills and experience of customers to help other customers solve problems. As Eric von Hippel’s research in Lead-User Innovation has shown, lead customers often know more about a company’s products and how they are used then even the company’s R&D staff. And of course, harvesting customers’ knowledge, skills & experience provides a wonderful source for innovation in new product, services and experiences.

    But crowdsourcing is also a threat. As we have already seen with earlier outsourcing and self-service, companies are likely to use crowdsourcing simply to cut their service costs. Many companies already underinvest in customer service. They see customer service as an unnecessary cost; they have already extracted the customer’s cash, so why should they waste money on service? That customers expect the company to provide customer service when the product doesn’t do what it says on the tin, is of scant interest to these companies. We all know who these companies are: Telcos like Sprint, banks, utilities, airlines… the list is almost endless.

    If crowdsouring is to enable value co-creation, it has to be explicitly designed with both the company and customers in mind. We will have to see whether crowdsourcing achieves this difficult balance or whether it is used as just another cheap cost-cutting ploy.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  3. Thanks, Graham.

    Yes, I completely agree. I am concerned that some view using social media (forums and the like) to “deflect” calls are not thinking about how this will change the customer experience. The implicit assumption is that customers will accept the shift and the company saves money.

    But proponents of off-shoring and e-service made similar assumptions. When the quality of service degrades, the cost savings will not offset the damage done as customers depart for greener pastures.

    That’s why I included this in my article…

    These ROI calculations, based primarily on cost savings (or avoidance) can make it easy to build the business case. But real success rests on a critical assumption: that the total customer experience is not compromised.

    The other critical element, in my view, is not just to “crowdsource” customer service, but to integrate the social processes with the CRM processes. Otherwise, it’s just another un-managed (social) island. There needs to be smooth and fast handoffs from social to CRM and vice versa.

    All that said, I think the potential for a win-win is higher for CrowdService than it was for off-shoring or even KM/e-service, because social media enables people to easily connect to other people and collaborate.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  4. Hi Bob:

    Another great and thought provoking article! Nice work.

    We also appreciate you mentioning Fuze and our unique community knowledge base used in some pretty large enterprise implementations servicing hundreds of concurrent support staff. Our Fuze Social offering will be out at the end of this year to further address some of the crowdservice capabilities you spoke of.

    Effective use of crowdsourcing in providing customer care certainly can offer tons of value in improving both the efficiency and effectiveness of customer care. Subject matter experts exist throughout the ecosystem of any company and many provide broad insights at little to no cost to the company that can add significant value in providing customer care and can be vital to quickly optimize product and service offerings when it still matters.

    With rare exception, all of our customers readily embrace the value in getting staff, consumers and partners in their ecosystem to participate in customer care, operations and product development. However, it is also important that companies realize that at the end of the day most consumers expect them to take ownership and responsibility for supporting the pre-sales AND the post-sales customer care.

    Communities can serve a vital need by facilitating open-ended discussions where knowledge and opinions are freely shared. However, in customer care there are many times when a consumer just wants to quickly find succinct, accurate and well written content that completely answers their question and that the company stands behind. Beyond some members of the community or even the person asking the question saying the content created by the community is accurate and good, people want someone who will stand behind the content and be accountable for its quality. Ownership by all is effectively ownership by none.

    Sure there are cases where the precision and accuracy of the content is not vital to the consumer due to how it is used, but there are also cases where consumers must quickly get to content they read or that is communicated to them that can be understood and absolutely counted on.

    Facilitating, motivating and leveraging diverse interactions among staff, consumers and partners are clearly critical, but only one component of a successful customer care strategy whose ownership must ultimately reside with the organization.

    Chuck Van Court
    Founder and CEO, Fuze Digital Solutions

    http://www.fuze.com
    Enterprise grade without the enterprise price
    The first and only knowledge base perpetually leveraging community insights to create new AND evolve existing KB content

  5. Chuck, thanks for your comments. I agree with you 100% that a company should own the customer service experience. But ownership doesn’t necessarily mean total control.

    In the end, what customers want is for things to work right the first time, so they don’t require help. But when they don’t, getting the right answer quickly is what matters, not whether the company tightly controls everything.

    If I’m having a problem with a Microsoft product, I often find relevant and very helpful answers on non-Microsoft forums. While I trust Microsoft more to be accurate, their KB is harder to navigate and doesn’t cover everything. So I’ll look a combination of answers and make a decision on what to try.

    Some level of management is required. I’m not advocating creating a separate “social island” and then letting customers fend for themselves. Companies can use a vetting process by the community and authorized staff to “vote up” the better answers. Then leave it to the community to use as they see fit:
    1. answers that are popular but not reviewed/endorsed by the company
    2. answers that that the company has identified as helpful (but use at your own risk)
    3. answers that are fully tested and approved in the KB

    Not everything lends itself to this approach, of course. I wouldn’t go on a forum to resolve a problem with an online banking transaction. But for consumers are turning to each other for help already, I see a CrowdService approach as getting the best of both worlds.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  6. Hi Chuck

    You make some great points about the company needing to take ownership of providing solutions to customers questions, irrespective of who is actually providing the answers.

    Companies should be looking to learn from each and every contact, including customer enquiries. That means capturing customer enquiries, potential solutions identified and what actually works best. These real-world insights allow the company to become better at answering frequently asked questions, to fix frequently occurring problems at source and as a result, to reduce the volume of questions to a minimum. This applies to crowdservice as much as it does to traditional in-house customer service. And we don’t need to reinvent the wheel either; many of the basic challenges of working with ‘outsiders’ have already been solved by open innovators like Henry Chesbrough and lead-user innovators like Eric von Hippel.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  7. Hi Bob and Graham:

    It sounds like we are all fundamentally singing from the same song sheet.

    Bob: I think the approach you defined for qualifying the content is in line with what I also believe. However, I suggest that community content that is not editorially controlled by the company inherently has the “use at your own risk” tag and little value would be served by the company somehow qualifying this content as anything more. Conversely, the knowledge base content should be editorially controlled and the brand needs to stand behind it.

    Traditionally the problem has been that the knowledge base content while editorially controlled does not include the broad community insights and real-world application found in community generated content. It is like consumers have to choose what is more important to them: broad insights or succinct and accurate answers.

    In cases where editorially-controlled content is important to an organization’s ecosystem, they must effectively put the community in the knowledge base while retaining the editorial controls commensurate with the risk associated with who uses the content and how it is used. The common approach of interconnecting a community with a knowledge base frequently done today will not do this since although it will help create new KB content it does nothing to proactively involve the community in keeping existing KB content fresh and pertinent.

    Clearly I am biased on this topic since this discussion is squarely focused on something we believe differentiates our community knowledge base.

    Chuck

    http://www.fuze.com
    Enterprise-grade customer care and knowledge sharing without the enterprise price.

  8. Forrester analyst Natalie Petouhoff just released a new report on “The ROI Of Online Customer Service Communities.” Using Forrester’s “total economic impact” analysis, Natalie concludes that:

    The early evidence indicates that social technologies are a sound choice because they provide an attractive ROI in a short period of time while delivering better customer experiences.

    The cost/benefit analysis is pretty straightforward. Here’s a diagram that does a nice job listing potential benefits.

    [img_assist|nid=220448|title=|desc=|link=none|align=center|width=498|height=273]

    Natalie considers these risks in her model:
    * Reputation/trust risk. (failure to be authentic)
    * Implementation risk. (right internal stakeholders not involved)
    * Measurement risk. (assessing community health)
    * Scale risk. (handling rapid growth)

    But there’s one risk that Natalie doesn’t include — the risk that customers won’t like it. That using a community, if poorly implemented or just not what customers want, could actually degrade the total customer experience. However unlikely you think that is, the negative impact on customer loyalty could more than offset other benefits.

    As I mentioned in my earlier comments, don’t blindly assume that a new solution will make the customer experience better, or at least not make it any worse. I think those involved in any CrowdService initiative should think hard about this risk and make sure that customers are involved in the design and implementation.

    Anyway, this is a great report by Natalie and will help the industry move forward on this important topic. More information available on the Forrester web site.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  9. Agreed Bob. I don’t think we disagree. Maybe I needed a better topic sentence to explore the issues around the risks in the doc. What you didn’t see is the actual spreadsheet, where companies can input their own numbers, where the risks are weighed as a serious part of the equation. The point of having a “model” where companies can input their own data, is to see how, when, they change a variable, how that variable affects the ROI, in a postive or negative way.

    If a company doesn’t deploy a community utilizing best practices they could create a community customer’s don’t like. That’s part of the reason we outlined the risks and those are in the working model. If a company doesn’t pay attention to a minimum of the 4 risks we outline, it is possible to have a PR nightmare.

    Our model was built using data from real companies that had deployed best practices, that didn’t keep their heads in the sand and ignore what is clearly known about do’s and don’ts about social media.

    The model assumes that the company follow best practices for social media… And I will soon publish a best practices doc and 10 individual case studies on customer service social media to give more detail around what exactly companies that are successful do.

    This model was based on real companies, their real data and yes, they did implement it well – not doing so would be a complete and total waste of time, money and wouldn’t be worth doing at all and we would not recommend deploying community technology without understanding the care and feeding required to succeed in social media. (And we know companies – many wasted millions and billions on CRM implementations… we don’t want to see that repeated…)

    Having said that, not following those four issues, certainly you could easily end up with a situation where customers “don’t like” the community. My research shows that avoiding those 4 risks will make it more likely that you will have a community that customers do like…

    And the main reason customers don’t end up “liking” a community is because the company isn’t authentic in its communication, didn’t involve the right stakeholders and doesn’t have executive support and thus doesn’t do all the care and feeding that is REQUIRED, doesn’t measure the results of the community or understand how to measure or what the measurements mean. Or if they do measure, they don’t know how connect the measurements to the customer’s opinion of the site.

    The analytics of communities and social media is VERY critical. I have a complete report on analytics of social media coming up soon also. (Part of the reason CRM failed was that many companies only deployed operational CRM and forgot about analytical CRM. The analytics was critical to CRM success.)

    As much as I wanted to put everything our research uncovered into this doc, the report would be 300 pages.

    Often times we see companies haven’t learned from the hundreds of horrible technology deployments of CRM or ERP or customer service. In addition to what made those fail, there are additional best practices that require many companies to seriously reflect on their ability to deploy social media and its related technologies…

    Social media is the opportunity to transform your business… and has a double edge sword; if you don’t understand it and follow best practices, you could do your company harm.

    I pay tribute to the companies and those brave souls who have done an amazing job of being authentic, genuine, honest and transparent with their customers as they engaged in social media, built their communities and now have successful customer communities that are truly something to admire.

    I feel honored to be able to tell their stories, learn from them and be apart of an era where people, process and technology have finally meshed into wonderful, transformational, successful implementations. I see more successful social media customer service deployments than CRM…

    Hopefully what we all share will help those that don’t know yet, to “get in the know.” If you don’t know, just reach out. In speaking to the companies I interviewed, I’ve never seen the spirit of sharing and collaboration, between even competitors, so prevalent. These brave souls care about making the world a much better place. I see the best in human nature result.

    We who write about this topic want nothing more than to see the brave souls and companies interested in social media to be successful. That’s why I am planning on holding best practices workshops and sessions for companies that want to understand how different this kind of deployment is and how to “get it right!”

    If you are on the path of social media and want to know more, DM me on twitter at @drnatalie or email me at [email protected]

    Natalie

  10. Often times I find hearing the results of the research adds to its value… So I thought you all might appreciate a link to the audio portion of the research. You’ll get to “hear” first hand how social media is actually transforming not only customer service, but also whole companies…

    And how companies— that do follow best practices and create communities that customers like and continue to participate in for years– have seen large, positive ROI’s!

    Here’s where the audio link … http://digg.com/d1ul2o
    Pass it on to a friend, a colleague, your boss, a skeptic!

    Let me know what you think!
    Write to me on twitter @drnatalie or [email protected]

  11. Check out some interesting commentary and discussion about this article.

    Wim Rampen, the blogger who started this thread, makes an excellent point:

    And now Social Media or Social CRM is being presented to be the solution to start listening, engaging with our customers and solve their issues. I like the idea, but have the following reservation: if in your company, all or a good part of the above mentioned efforts did not succeed, you will have very little chance that implementing Social Media or Social CRM will make you successful.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  12. I used to work as an English teacher for a while. I noticed after a while that if one of my pupils didn’t understand a grammatical concept they tended to ask another pupil before they asked me. That’s not because I was an evil ogre who would have bitten their head off for asking, but simply because people feel more comfortable speaking to their peers than they do entering into a more transactional dialogue with the ‘position of authority’.

    Despite my desire to be the go-to-guy, I would quietly monitor these conversations from my desk. If the answers given by their peers were wrong I would swiftly correct or refine them. Why not just do that in the first place? Because, sometimes their peers would have a better way of explaining something than even I as the teacher would. If I felt that this was the case, then I might ask them to articulate the point to another student who was struggling, and then perhaps note it down myself to use when teaching the same point in future.

    The outcome of this is that all the students got the right answers in the end, while some students felt that by giving advice they had been of use. This latter point not only built their confidence but also their engagement in classes and encouraged them to help others on my behalf in future. They became more receptive students, keener to learn, as they knew might be asked for advice in future. Meanwhile, I not only learned about my own weaknesses, but also used the talents of others to improve on them and better my teaching. A far more useful outcome than just repeating the same advice over and over like a parrot.

    I see a lot of parallels between this and the concept of online customer service communities. Many companies have reservations about giving up some of the ownership of their area of expertise. However, by monitoring advice and feedback from c2c dialogue, companies can learn a lot about the weaknesses of their product/service. Where online communities differ from the classroom is that once a c2c response is made it is captured and logged for others to access. If people are unsure as to its validity then it only needs one endorsement from the company. This is far more efficient than having to employ someone to repeat the same lines over and over.

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