Bad E-mail Response Equals Bad Customer Relations - ' Strategy '

A successful ERM system hinges on knowledge management—and timely human interaction.

When it comes to customer service, companies face a Catch-22. While the goal is to steer customers away from the telephone (which can cost anywhere from $15 to $40 per call), often the opposite occurs. "Here's what happens," says Rosanne D'Ausilio, an industrial psychologist, and author of Customer Service and the Human Experience (Champion for the Human Press, 2006). "I send an e-mail, and I get back a near miss. Maybe it answers one of my questions, but not all of them. So I pick up the phone and call the company. The agent who answers has no idea what I have already gone through. This drives up costs, and leaves customers angry."

Most companies strive to solve customers' inquiries with just one interaction, known as first-call resolution. According to D'Ausilio, the best companies have a first-call resolution rate of roughly 86 percent. But, she says, "What does that remaining 14 percent cost? It could easily be in the millions." D'Ausilio isn't exaggerating: According to a 2005 study by the International Customer Service Association, fully a third of all customer inquiries took more than six tries to get a satisfactory response, involving multiple e-mails and telephone calls. That can quickly eat up any gains from an ERM system.

In a perfect world, an automated e-mail response system would accomplish three things: First, it would send an acknowledgement to the customer, letting him know his message had been received and a response is on the way. Second, it would figure out what the customer had asked, by picking out keywords. Finally, it would either send a pre-written response directly to the customer, or direct the problem to a live agent. But even in that perfect world, the system can only operate on information that already exists in its database, which means that the true success of any ERM system depends on the breadth of the company's knowledge management system. In fact, says Jupiter's McGeary, creating a knowledge base that answers basic questions (such as product information) could reduce e-mail inquiries handled by agents by 15 percent. If such a system doesn't exist, companies can use a pre-built knowledge base offered in most ERM software applications (which will need to be customized) or build one on their own—an arduous task to say the least.

That's the strategy at Cabela's Inc., a $1.6 billion sporting-goods retailer based in Sidney, Neb. The company has been steadily adding information to its knowledge database for several years, and integrated its database with an ERM system from RightNow Technologies Inc. last May. After customers fill out a form-based message on Cabela's site, the ERM system determines the nature of the message and offers answers in the form of FAQs. "The database delivers recommendations before customers even send the message," says Ron Spath, Cabela's vice president of customer relations. In 2005, that meant 110,000 fewer e-mails—a decrease of 30 percent from 2004. All remaining messages—more than 266,000 in 2005—are routed to agents and answered within three hours.

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That live interaction is key to making ERM work. "One of the worst things you can do is send a meaningless response," says Stephanie Jones, senior vice president of the client practice at Connextions, an Orlando, Fla.-based call-center-services provider that offers outsourced customer service support to companies such as Napster LLC and AstraZeneca plc. "Nothing makes a person pick up the phone faster."

At Charles Schwab Inc., the $4.5 billion financial services company, messages are tracked through software from ERM vendor eGain Communications Corp., but, as a policy, customers never receive canned responses. "We could do it," says Brian Muir, vice president of desktop strategy and solutions. "But we know that a percentage of those answers will be wrong, and we can't live with that."

Poorly automated customer service tools will drive up costs and anger customers.

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