Self-serve: Cheap can be very expensive


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Not so long ago in a land not too far away (Pennsylvania), I got completely swept up by the corporate culture of one of my clients – Green Mountain Energy. It was the late 90s and people were doing all sorts of crazy things, like choosing their own energy provider!

Pennsylvania had just been deregulated, New Jersey was well on its way and Green Mountain was working hard to become the incumbent of choice. They were out in force, sponsoring concerts and festivals, buying massive amounts of radio airtime, working with charities and grassroots organizations within the community – in short, actively interacting with and engaging their customers. What a concept!

Among certain groups, affinity for Green Mountain and their message of renewable energy was nearly maniacal. How many of you in the utility industry can say that you have a maniacal following among your customers? Do you think Green Mountain Energy could have achieved the same result by pushing their customers to an IVR or website to self-educate about deregulation, renewable energy, electricity generation, transmission, distribution costs, etc.? Not likely.

Green Mountain knowingly avoided such cost-controlled methods of dispensing information because they understood that their survival depended not on offering cheaper electricity, but on building a unique experience. Green Mountain Energy is hardly unique in that.

Creating such a long-lasting, loyalty-generating experience is what many organizations strive to do everyday. But you become maniacal about cutting costs encouraging your customers to self-serve and are actually distancing yourself from your own customer-base.

Can self-service equal self-termination?

A self-service model may very well save you money upfront. According to a DMG Consulting benchmarking study of enterprise, contact center and IT priorities, a self-serve initiative that is “… planned, designed, and rolled out properly can reduce the volume of calls to live agents by 20-to-90 percent, over time, depending on the purpose of the contact center and the tasks programmed into the (self-serve) solution [1].” While these figures may seem compelling at face value, absent is the long-term risk to the relationship that begins the moment organizations stop conversing with their customers.

Research conducted by Customer Relationship Metrics within the utility industry and in others has shown that while customers are using self-serve options for a wide variety of activities, they are also using those options to varying degrees. The old adage of “build it and they will come” is simply not proving true.

Utilities have spent time and money to allow customers to initiate, manage, and disconnect their own service. Currently the data clearly shows that customers are not initiating their own service. They are not micro-managing their electricity usage from Wi-Fi hotspots using SmartPhones as everyone predicted. And perhaps thankfully, they are also not terminating their own service. Here is the reminder that customer research should serve as a guide for implementation, since building self-service capabilities can require a significant upfront investment.

Other self-serve implementations introduce risk to the relationship not through waste, but through the loss of customer retention opportunities. The self-serve portal offered by my cell phone carrier that allows me to manage my minutes, upgrade my rate plan and phone, also allows me to cancel service without ever speaking to a live human being. What a phenomenally bad idea. How many people might have been persuaded to stay with that carrier by a knowledgeable and savvy (trained) agent? Some activities should never be offered as a self-serve option because of the potential amount of financial risk.

The Risk of Satisfaction with Self-service

Beyond the risks of wasted time and lost customers, the single largest risk of self-serve models is to future revenues. Customers who self-serve report a lower likelihood to continue service with an organization. Customers who self-serve also perceive less flexibility in resolving problems.

Within the utility industry the issue of customer attrition may not be as big a concern as it is in other verticals. As of 2003, only 17 states (and the District of Columbia) had moved ahead with electric deregulation. Since then, the appeal of electric de-regulation has waned, but with changing economic climates, the fervor for electric de-regulation may return.

What’s more likely is that power companies will want to take advantage of the new smart-grid infrastructure they’ve built to offer customers internet, cable and/or telephone services. According to a study, the average digital cable customer pays almost $75 a month for service, with many customers paying nearly $100 a month [2]. As a remote employee, I happily (maybe not so much) hand-over $90 to my local communications company each month for unlimited long distance phone service and internet. The point is, cable, internet and phone services generate A LOT of revenue. And if the investment has already been made in infrastructure that makes offering these services possible, why not take advantage of the revenue-generation opportunity?

This is where a disengaged, self-servicing customer-base becomes a problem. While these customers may not be dissatisfied with their utility provider, they also feel no loyalty towards the organization. It’s that (missing) feeling of loyalty that makes customers abandon their current cable, internet and telephone service providers in favor of an organization that has served them well in other capacities. Customer loyalty is earned through one-on-one interactions between delegates of an organization and its customers; it’s earned through problem-solving and collaboration – none of which can occur when an organization’s primary mission is to relegate customers to a cost-reductive self-help system.

This post is not intended to suggest that you shouldn’t pursue self-serve solutions. The fact is that there is just as much risk (if not more) to being perceived as technologically archaic by your customers. But in order for self-serve to ultimately benefit your organization, an implementation must focus on activities that are simple (high likelihood of a successful outcome) and activities that your customers are likely to want to conduct on their own. Most importantly, self-serve should never be viewed as a way to avoid talking to your customers. The most successful self-serve models invite customers to conduct the transactions they are comfortable doing on their own through a variety of different channels while providing live support each step of the way. Finding the right balance is your quest and customer loyalty is the holy grail you seek.

~ Carmit DiAndrea, Vice President of Analytics & Client Services


1. DMG Consulting LLC – Self-Service: Putting Customers First Makes You a Winner (Whitepaper), April 13, 2009 – Donna Fluss, Founder and President of DMG Consulting LLC


Republished with author's permission from original post.

Carmit DiAndrea
Carmit DiAndrea is the Vice President of Research and Client Services for Customer Relationship Metrics. Prior to joining Metrics, Carmit served as the Vice President of Behavior Analytics at TPG Telemanagement, a leading provider of quality management services for Fortune 500 companies. While at TPG she assisted clients in measuring behaviors, and provided management services to assist in affecting change based on newly created intelligence.


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