11 April 2016 Category: Insider Perspective
How ‘inside sales’ and well-targeted telephone account management can service the ‘non-stop customer’ in an omnichannel world
There is a new reality in sales and it might make uncomfortable reading for some.
Many companies who approach us about using our services do so because they have seen their digital investments fail to deliver expected results. In particular we are seeing a large number of companies re-examine their sales strategy vis-a-vis their small to medium customers. Having pushed these “bottom of the pyramid” customers towards a ‘no touch’, self serve, digital environment many organisations are now reviewing this decision with surprising results.
What’s behind this re-focus is the overwhelming realisation that the traditional demand funnel no longer exists as it did. A transformation that has been driven by the emergence of what Accenture calls the ‘non-stop customer’. Instead of a customer sticking to one channel to purchase, they jump between different channels, online and offline, back and forth multiple times. And while they do, they expect to receive an accompanying, consistent omnichannel experience. Fail to deliver on this experience and you can expect your customers to vote with their feet.
So, back to our troubled customers and what to do about their “long tail” customer segment…
Sales organisations need to ditch their old playbooks. Customers demand a differentiated personalised end-to-end customer experience and companies that rely on ‘digital only’ channels for selling to even their smallest customers are discovering that these once loyal customers are behaving differently in terms of purchase and loyalty and it’s impacting their bottom line.
What got us here won’t get us there and maybe that’s a good thing!
The thinking that drove organisations to adopt a ‘low touch’ or ‘no touch’ approach to servicing often large swathes of their customer database was not trivial. It was, in most cases arrived at through careful analysis of each customer segment’s profitability and growth potential and the drive towards ever greater sales productivity and effectiveness.
The problem arises when you become a bit too myopic about the numbers and too literal about the question of productivity. The measure of productivity is ‘the output of a worker divided by the time required to achieve the output.’ In this basic sense, we can see how it made sense to carve up the customer base and re-focus sales attention on the 20% of customers who represent 80% of revenue. But what of the other 80% - could it just be the case, that with a little more time, care and attention, that calculation of productivity could be rebalanced in favour of the many.
We think it can, and in our experience, we are seeing a good number of larger enterprises reach this conclusion too.
What has led us to reach this conclusion?
No-one would argue that there are not sound economic arguments for driving down the costs of servicing these smaller customers. They spend less in Annual Recurring Revenue (ARR) than accounts in higher tiers and it’s costly to account manage them. But when large enough numbers of them stop ordering, their absence is keenly felt in the numbers.
Moreover, churn is not the only issue to arise from pushing this large segment of customers to self-serve digital channels (even though statistics suggest that companies that sell their products predominantly online experience 3 times the churn of those that sell in the field). It is also the loss of insight gained through actually talking to this important segment of your customer base that is proving to be another significant pitfall of a single digital purchasing experience.
Measuring what these customers mean to you?
They say you don’t know what you’ve got until it’s gone and this seems to be very much the case for these ‘second and third tier’ customer segments.
Relying on the raw numbers alone overlooks certain key characteristics about this customer group which need to be considered alongside the core revenue figures when deciding how this group should be serviced:
1. Loyalty – traditionally these customers are among your most loyal, not least because they are often out of focus for your competitors, while your larger customers are highly visible and frequently courted by the competition. Loyal that is, until they sense a lack of interest in their business.
2. Insider informants - digital channels have a very mixed record with telling you what you may need to know. They are good at gathering complaints but much less so praise or thoughtful comment. These customers if spoken to often, provide insight into competitive activity, market conditions and risks and to which your brand may be exposed.
3. Higher Margin - this customer group is traditionally not as price sensitive as their larger counterparts. They value customer service and/or stock availability. Unlike the priority customers, they do not have team of purchasing managers squeezing you on price and the relationships are often higher up the food chain and last longer. Of course this margin may be eroded by the cost of doing business but ignoring it entirely could be perilous.
What you lose in losing them?
Even if the bean counters had considered all of the above and still placed sales productivity over and above these factors, a win/loss analysis would also have revealed what you risk in losing through not servicing this group with some people based resources:
1. Growth customers – companies change, most are continually looking for growth and some will transcend the category of small customer more quickly than others. Are you set up to identify these companies before your competition? Order value may not be the best indicator, if they are already ordering from your competition.
2. New Entrants – like the high growth customers above, there will always be new entrants. No news travel faster than news of a ‘new kid on the block’ but there has to be someone there to hear it!
3. A way back – a lack of regular contact with this customer group in an intuitive ‘human’ way may slowly erode your knowledge and ability to manage those customers and that damage is likely to be permanent after a 2-3 year hiatus
If these are the risks, how do you know if you have a problem and what can be done?
Looking for Clues
For many of the businesses which have approached us recently, the early indicators of unrest in this segment have been found in the numbers: declining order numbers or value of purchases, falling numbers of active users of a portal or ecommerce site; increases in the number of complaints received. Any or all of these factors could be a sign that a ‘self serve’ approach is missing the mark and a move to a multi or omnichannel approach could be desirable.
For others, it is simply a question of looking at the segment as a whole and asking ‘how do we make these customers more profitable?
Whatever the reason for taking another look at how you service this costly but significant proportion of your customer base, your next challenge will be what can be done and what will it cost?
Building for success
No-one is recommending a return to the ‘good ole days’ of passive order taking – the key is in deploying next generation telephone account management if we are talking customers; or ‘inside sales’ if we are talking about prospects. And none of it is rocket science. If you have someone on the phone as opposed to online you can do a number of things differently:
- Deliver sales uplift or cross sell messages in every call – an incremental increase in sales revenue no matter how small, if applied across every call, can begin to move this underperforming customer segment into a group well worth the effort
- Mine the data captured through other channels to map out their purchasing profile to intelligently personalise their buying experience
- Use the 2-way conversation to understand more about the customer profile, capture new contacts, gain insight into the competition, the market conditions and other factors that feed directly back into sales and marketing messages. And more importantly still, codify that information in a structured way.