Can You Keep Tabs of Your Customers Across Multiple Channels? An Interview With Marco Pacelli

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How often do you lose track of your customers when they straddle channels in contacting your business? In this edition of Inside Scoop, Bob Thompson talks with CEO Marco Pacelli about how his company, ClickFox, can help businesses track customers over multiple channels and anticipate customer behavior—pleasing the customer and saving time and money.

The transcript of this interview, which was recorded March 1, 2007, was edited for clarity.

Bob Thompson

I’m very pleased to have Marco Pacelli, CEO of ClickFox, for this edition of Inside Scoop. ClickFox helps analyze customer behavior, both within existing channels, like web sites, IVRs and call centers, and across channels. Marco, welcome to our program.

Marco Pacelli

Thank you, Bob. It’s a pleasure.

Bob Thompson

I saw ClickFox demonstrated at a conference recently. I was intrigued because last year we did a major study on customer experience management, and we learned a lot of things about what customers care about and some of their frustrations. One of the things that came through loud and clear is that there is a lot of dissatisfaction with IVRs. Thirty-five percent of survey respondents said that IVRs have definitely not improved the customer experience—which, I guess, would lead you to the conclusion that maybe they were put in for some other reason, like cutting costs. But clearly customers are having some issues there.

Secondly, we’ve done research in prior years and found that just trying to understand what’s going on across channels is very, very challenging. It seems like ClickFox has some potential in both of those areas, and I’m looking forward to exploring that with you.

To kick us off, though, I wonder if you could briefly talk about your background, in terms of how you came to ClickFox and your current responsibilities.

Marco Pacelli

Sure. The subject you just brought up is definitely dear to my heart. I came to ClickFox two and a half years ago, introduced to them by a group of venture capitalists that had known me from other start-ups I had done work. I’ve been through the start-up world a couple of times. One start-up, in the early ’90s. The second one, I sold to a company called NICE Systems, which is a Nasdaq company—very, very popular in the call center space. And I helped run NICE for about five years, reporting to the CEO, Benny Levine; built their sales and channel organization globally; helped grow the company to about a couple hundred million. And as the founders left, I left. During that experience, one thing that I have commonly heard at every customer that I visited globally was, “Help me capture the customer experience, cradle to grave, start to finish.”

When I came across ClickFox and saw that a group of Ph.D.s out of Georgia Tech had put together some very sophisticated algorithms to model behavior of interactions within channels, human to human, machine to human and machine to machine, I quickly was able to visualize taking this concept into a product that would address the problem that I had been hearing for many, many years, which was, “Help me capture the customer experience, start to finish, and let me understand from that how it affects my business positively and negatively.”



So over the past two, three years, we’ve taken this concept—this prototype—and turned it into a real product package, deliverable via a hosted ASP model to a large enterprise market. And we’ve had a tremendous year in ’06; ’05 was really just a launching board to really justify that the product could work and securing several good key partners in the industry and some anchor accounts. And in ’06, we were able to really show the industry and the Gartners and Foresters of the world that what we do actually has a value-add return and generates a large savings and a large return on investment for the large enterprises. So we finished ’06 with a tremendous year; great references; a lot of proof. And ’07 is just going as we planned. It’s very, very successful.

Bob Thompson

How many customers does ClickFox have?

Marco Pacelli

We have about 30 clients and an additional 10 to 15 that are in pilot. And we usually roll about 10 to 15 per quarter in pilots. So the market’s ready for this technology, I think. We’ve seen a huge movement within the large enterprises around this customer experience. I agree with you. People are very, very displeased about self-service completion rates. Specifically in the IVR markets, we hear stories about 80 percent serviceability in those channels. And in reality, it’s not true. The most successful systems I’ve seen out there are typically in the 30 [percent] to 45 percent range. And that’s just not enough.

I agree with you that these systems were put in for a purpose of trying to improve the customer service and help customers self-serve, but we, as creatures of habit, don’t like them. We don’t like the “unpersonal” touch, if you want to call it, that these systems have delivered to us. And it has caused a huge impact on the customer satisfaction scores in enterprises, as well as it has not reduced the volume of agents. We see, in the call center world, more and more agents being added, more and more call centers being opened. Why? Why is that happening when we have these sophisticated e-commerce systems, email systems, chat systems, voice-automated systems, speech systems that are supposed to help us self-serve? And this is where we address the problem.

Bob Thompson

You have a term that you use, “customer behavioral analysis,” I believe.

Marco Pacelli

Intelligence. Customer behavioral intelligence.

Bob Thompson

I’m just wondering if you’re familiar with the TV show, Criminal Minds.

Marco Pacelli

Yes.

Bob Thompson

Because they have this group of people called the Behavioral Analysis Unit at the FBI. I’m wondering if you had any relationship with them.

Marco Pacelli

No, we don’t. But you could put us in that same category, probably, from an interaction point.

Connecting the dots

Bob Thompson

In a way, though, you’re trying to build profiles or trying to understand what’s going on within these interaction channels and across them. And with that in mind, could you say a few words about the solution you provide to help customers do that? Just take one channel. Let’s talk about IVRs because that’s the one that customers seem to love to hate. How do you figure out what’s going on within the IVR channel, so you can go in and know what you need to fix?

Marco Pacelli

Well, it’s a really simple concept, and the cliché, “the simpler it is, the more successful it is,” is true in this case. Every enterprise organization, whether it be a big bank or a big telecommunication company, has several customer touch-points. We, as consumers, can touch a telco or a bank through a voice system by making an 800-line call or through a web system or through a kiosk machine, an ATM machine or any other kinds of touch-points that these enterprises might have. Even an agent interaction. All of these systems, including the speech systems, do native logging. They log by de facto what happened in that channel: the call ID; the customer that called and the time they called; and the steps they went through.

We created a patented technology that takes that native information that’s already there and connects the dots. It takes unstructured data and creates a behavioral blueprint of everything you did when you called your bank and went through either a voice prompt or a touchtone prompt, step by step. It will create a blueprint—a visual graphical blueprint—of everything every customer does in each system independently as well as across, because since you are a unique customer to me as a bank, I know who you are. And I also know if you did something in my web system, in my voice system or with my agent.

Bob Thompson

You’re assuming that in each case they’re signing on with their account number or some way to identify them uniquely?

Marco Pacelli

Sometimes it’s through that process, and other times your phone number is a unique identifier and we can create the cross-reference there. So when you are going through their systems, our product collects the information from the logs. It creates a blueprint, like a simple blueprint of a home, showing everything that is happening, start to finish, and how everything connects and how many people behave like you versus like me.

The problem with these automated environments is they’re forcing a change that we can’t see visually.

On doing a bill pay, for instance, are there a million people that behave like I do in a bill pay and a million people that behave like you? And are your type of people more successful going through the bill pay process than my type of people, from a behavioral pattern? And do your type of behavioral patterns manifest that you press a zero at a certain point through the process? And is that based on the things that you heard on the prior step, or is it based on the things that you heard three steps back? Or is it just based on the fact that you have a tolerance level that just doesn’t adapt to the way I built the application?

Bob Thompson

So you would be able to see if somebody—or if groups of somebodies, because you’re not necessarily trying to analyze an individual customer but looking for patterns of behavior and segments of customers. So if you saw that what you thought people should be doing is using the IVR to do bill pay or whatever it might be and then they’re zeroing-out to go to an operator or they’re just leaving or they’re backing up and doing weird things, you would be able to take some action on that.

Marco Pacelli

Correct. And what’s even more important is the concept of repeat behaviors because we are creatures of habit. We like going to an ATM machine because it does what we want in the time we want, and we’re happy with that. We like going to the gas station now because we never have to go in and pay. We get done what we need to quickly. There are certain things that we, as humans, do on a regular basis. And if I study your behavior patterns and I know that twice a week you come in my system and do the exact same thing, why should I make you do that? Why don’t I give you what you ask for anyhow? And through studying your behavior patterns, I can start creating predictability behavior patterns and start being proactive with my customers. Meaning, I know you’re going to come in. Well, why should I even have you call? I can eliminate calls from happening in the first place. Let me give you what you’re going to ask for, anyhow, every week.

Bob Thompson

That’s an intriguing idea. You’re saying actually learn from it. Not just fix the problem. Not just fix things that are broken. But if people are doing things repetitively—

Marco Pacelli

You bet.

Bob Thompson

—find a better way of giving them what they’ll want eventually, anyway.

Marco Pacelli

Exactly. So the concept here is we all would love to self-serve. Come on. I mean, let’s face reality. We don’t want to talk to people all the time. We want to self-serve. I love self-service if it’s done right.

Bob Thompson

That’s the big if, though, isn’t it?

Marco Pacelli

Exactly.

Bob Thompson

If it’s done right. And after you have gone through an adjustment period—now, let’s be honest, we all remember back when ATMs came into play or when the scanners in supermarkets did.

Marco Pacelli

Right.

Bob Thompson

We’ve been seeing self-service over many, many years, but the first time we saw an ATM, there was some nervousness there.



Marco Pacelli

There’s a lot of nervousness.

Bob Thompson

I think sometimes companies, wouldn’t you agree, they push it too fast without dealing with the human factors of, “It’s a change. It’s something new.” You’re dealing with money or your personal information or whatever. There was all this talk about online banking, but it didn’t happen as fast as people thought it would because people are just unsure about the security of the Internet. Things like that.

Personal touch

Marco Pacelli

Correct. And as humans, we feel more comfortable about change if we see it. And the problem with these automated environments is they’re forcing a change that we can’t see visually. So it takes more time. The other point is that the way these systems have been built, they’ve been modeled around what a typical interaction is between a customer and an agent. That’s not the way they should be modeled. That’s a completely different interaction. It’s a human-to-human interaction. What about modeling these systems around behavioral patterns? What are you, as my customer, expecting from me so I can create a personal touch? I mean, why are certain web systems very successful like the MySpaces and the Yahoo!s and so on of the world? Because they create that personal touch feeling.

If I know who Bob is and I know what Bob likes to do and I know that Bob does these things all the time and I know what his tolerance level is in a speech environment versus touch tone or in a web system and so on, then I can start creating a personal touch-map of how to treat Bob. And how to handle Bob because he’s important to me. So every time you come in and do service with me as a bank, it’s going to be like I’m your best friend and you’re my best friend. It’s like you walking into your favorite restaurant. The owner knows you, knows where you want to sit, knows what your favorite drink is. And by the time you get to your table, it’s ready to go and you’re pleased.

Bob Thompson

That’s a great theory, but are any banks actually doing something like that today? Because I might go sign up with them.

Marco Pacelli

It’s getting there, Bob. It’s getting there. We have several bank customers now. We have several telcos. A few of our banking customers have been banking customers for a couple of years. And they’ve collected two years’ worth of behavioral patterns. And their success has been enormous. One bank, in particular, has gone from a 40 percent containment rate in self-service to the high 80s because they’re able to study behavioral patterns.

Bob Thompson

And containment means that a customer stays through the process and actually completes it?

Marco Pacelli

Self-serves, correct.

Bob Thompson

A self-serve, OK.

Marco Pacelli

Correct. Not just hangs up or transfers but self-serves, completes the interaction. And we’re seeing more and more of this so that helped us, and the industry realize that, yes, studying behavioral patterns of customers does create value and results in both fixing the issues that have the higher success rate and also eliminating interactions that aren’t needed. Let me give you an example. We’ve done a few very sophisticated cross-channel implementations lately, and they’re both in telco spaces. At one telco wireless provider, there are WAP hand-held device logs. There are other web log interactions and other IVR speech, touchtone and naturals of language interactions. We did a whole cross-channel analysis. And we saw that there were many, many customers with the prepaid wireless that were going to the web site and upping their prepaid card to add more money to their card so they could use their phone. As soon as they were done with that, they made a phone call to the call center and went directly to an agent because they didn’t want to wait. They needed to know if they could use their phone. And they asked the agent, “Did you receive the money? Is my account active? Can I use my phone?” Then, they would go to their phone and check on their WAP phone to see if they could use it and have an account with a balance.

Then, they would make another call center call immediately after that and check to see what’s the latest wallpaper and ring tones they could buy. Now, $25 interaction, that whole process to the company. Expensive, long process. High rate of dissatisfaction because there’s a lot of risks that that customer could face during those interactions that could make them unhappy about the service. Too many interactions in too short a timeframe with too many touch-points.

The solution our product has shown them was that, OK, as soon as they pop up their card, whatever touch-point they use to do that, send them an SMS with the link; give them the balance, the available credit, the latest ring tones, the latest wallpaper they can buy with all the links to them. One interaction. One process. Immediate feedback. Eliminating the calls completely from happening. Satisfied customers.

Bob Thompson

And did they measure satisfaction before and after, in terms of the experience?

Marco Pacelli

Yes, they did.

Bob Thompson

Any things you can share with about that?

Marco Pacelli

They got an increase of about 14 percent satisfaction within the first month. And satisfaction measurement is becoming more common with our technology. We are taking the customer satisfaction results on a monthly basis and bringing them into our technology. And we’re showing the reverse, meaning these customers scored high. What did they do with us the past day, week, month, year? Why did they score high versus these other ones that scored low? Is it because they’re experienced in a particular channel or across different channels? Or is it because just the type of customer they are, they maybe should never be serviced through speech because they don’t like it. Maybe we need to give them a different channel to service their requests on. It could be web. It could be just voice.

So then you start creating that personal touch because if you start identifying the behavior patterns and what customers like and don’t like, then the next time that customer calls in, I know they don’t like speech. I know they don’t like e-commerce. I’ll push them right to an agent immediately for that type of customer and they’ll have that agent interaction they want, versus another one which wants me to give them the information without them spending six minutes to get it.

Bob Thompson

It sounds like if the analysis is done and the improvements are made to these processes, whether they’re within a channel or across channels, that a customer gets something that’s better for them, and the company can get something that’s more efficient or a more cost-effective process, as well.

Marco Pacelli

Absolutely. We’ve also done—and it’s becoming more and more popular—churn analysis. Another telco, we took retail store logs and interactions. We took their web and their voice and IVRs and their call center interactions and CTI, too. We actually can see what happens to the call when it leaves a self-service system. How is it routed? And we took their churn data. Churn data means these customers left us this month, and these other customers left us last month. Why did they leave us? What did they experience with us the past couple months that made them so unhappy with us that they left?

We noticed that in this particular case, it was all related to the first 12 hours after they became a customer their experience. What did they do? So they sign up for a service . Our products showed the exact service they bought and from where. And their whole experience with the enterprise within that next 12 hours of making phone calls to the call center—checking with agents on things, experiencing these self-service environments that drove them berserk—caused those customers to just go back, cancel their contracts and go to another wireless provider.

Bob Thompson

It’s that first impression that really matters.

Marco Pacelli

Exactly. First-contact resolution. Exactly.

Bob Thompson

What industries tend to be interested in these types of problems? It seems like financial services are one and you mentioned telco. Are there others that come to mind?

Marco Pacelli

Yes. So financial services and telcos were the early adopters that made it grow for us. But now, recently, we’ve seen a huge rate of increase in the cable companies and healthcare. Healthcare is very, very, very serious about the experience customers have because customer retention to them is very important. They don’t have the luxury of a lot of volume of new customers. They want to keep you as a customer as long as you have a life—and your kids and your grandkids and so on. So we’re starting to see a lot of emergence out of the healthcare lately, as well.

Bob Thompson

Just quickly, can you say a few words about your solution in terms of how it’s deployed, what does a typical solution cost—things like that—if a prospect were interested in something like this?

Marco Pacelli

We do a lot of pilots. We’ve gotten very good at the customer that is interested in our solution and sees a demo. If they want to give us a couple days of their data, we’ll turn around a pilot of our product with their data in it within a week, so they can actually see their own data within our system. It helps them justify the procurement. Deployment is very simple. It takes about two weeks. We host.

Bob Thompson

It’s an on-demand model, right?

Marco Pacelli

It’s an on-demand model. The pricing’s all based on volume of records processed per month, and it’s a subscription—annual subscription. The only thing a customer has to do is give us the link to their logs. We provide them with a secure FTP connection, and every day, those logs are brought into our system. The models are updated. And the customer has access to a full web portal environment that provides them all the detailed analytics, the dashboards with all the results and also keeps track of before and after. So as they make changes and improve processes that the product recommends, they actually see the results of that, as well.

Bob Thompson

Anything about price ranges?



Marco Pacelli

A low-end customer that’s doing just a million or less records per month is ranging anywhere from $200,000 to $300,000 a year. And high end, the large clients are over $1 million a year in subscriptions. Justifying it is very easy because if you take, for instance, an example of a big bank—one that processes a million calls a year—and let’s say they were to start this process whereby maybe they’re processing or completing 30 percent of those calls. If they’re able to take even a 1 percent improvement times the number of calls—and a call interaction with an agent typically is, let’s say, $4 a call—so for every percent they improve, it’s millions of dollars in savings. And we see this over and over again. We’ve been in enough situations where a 1 percent improvement in containment rate equates to tens of millions of dollars.

Bob Thompson

Just a quick wrap-up here. Can you say a few words about looking ahead over the next few years? What do you see as the vision for ClickFox’s growth and success and some of the challenges that you’ll need to overcome?

Marco Pacelli

We are very lucky and fortunate. We have a great management team. We have a great partnership program now. These companies have really helped us lay out our future. We are doing some very, very cool integrations with a lot of these companies to soon deliver very unique features around real-time analysis of behavioral patterns and passing that information on to systems that make real-time decisions, like real-time routing, behavioral routing, real-time responses to customers, based on their behavioral patterns.

This product is definitely becoming an integral part of an enterprise decision. By capturing all these touch-points and the behaviors across these touch-points, we become the central decision point for enterprises to make decisions on where they need to go as a business. So we will continue to move down the path of providing more and more automated behavioral analytics, path analytics and real-time responses to that information so that companies can deliver to their consumers real-time answers to what they want.

The end of the game here is, “Let’s reduce agents’ needs.” Everyone loves self-service. I’ve seen more and more companies trying to figure out, “How do I go from 30 calls centers I have globally to 10?” I know that customer is getting younger. I know the young generation doesn’t want to waste time and they have a very short tolerance level. They don’t want to talk to people. They don’t like to talk. They like to text. So the emergence of self-service in the next 10 years will be big. And we need to model it around that customer, what that customer expects. And ClickFox is well positioned to be the central point to have that happen.

Bob Thompson

It is one of the most innovative things I’ve seen in quite some time. I’m very pleased to have you on the program today, Marco, and appreciate you sharing some of your thoughts with us.

Marco Pacelli

Thanks, Bob. It’s been a pleasure.

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