A recent study by Aberdeen Group came up with the not-so-surprising result that best-in-class call centers – under pressure to be revenue generators – actually create more wealth for a company when they are not specifically tasked and incented to cross-sell and upsell.

What? How can you make more money by not selling?

By taking the long view.

Think of it this way. Peppers & Rogers, in Return on Customer, made a strong case that a customer’s value ought to be measured by their current revenues plus the net present value of their likely future spending with you. If you annoy the customer by overselling them, you actually destroy customer value at that very moment.

But what do you do to boost that customer’s profitability? We suggest two principles: Support how customers buy. And make sure you understand the value and values that are at stake in the relationship, not just in the transaction.

You support the customer’s ability to buy from you when they are ready. And they’re often not ready when they’re talking to a customer service representative. They’re calling to complain or to ask a question. If your CSR knows this and is incented properly, the call can end successfully and actually create future value at that very moment. This is precisely the implication of the AberdeenGroup study.

Fairness, equity, fast resolution

Paul Greenberg, a colleague and friend of mine, just participated in a webinars on customer experience issues and loyalty with Ginger Conlon of 1to1.com and Dennis Pombriant of Beagle Research. (You can find the webinar link on the CRMA website.) During the webinar he asserted that, even though companies want to segment customers by “best” and “below-zeroes”, every customer wants to be treated as important.

How do you achieve this?

You certainly cannot afford to give every customer exactly the same level of service as defined by your operations team, unless you provide everyone with lowest-common-denominator, super-cheap service. That’s not the CRM way and it’s certainly not smart differentiation. This approach may seem fair, but only in the sense that everybody has an equal opportunity to get bad service.

The fact is that customers define service quality. If you give your customers choice when seeking service, they’ll choose the channel that will give them the most value. That can build loyalty. At the very least, it can help avoid frustrated customers and prospects. And if you build your selection of channels intelligently and offer them selectively, you can be assured of happier customer interactions at a reasonable cost to you. And maybe even a profit.

Two examples come to mind. Consider first those lovely VIP lounges for frequent flyers. I fly all around the globe, and I usually look for the most affordable flight. That means I’m constantly flying on different airlines, and I’m not near the terminal where I can get VIP service. So I pay for VIP lounge access for the day. This way I get a bit pampered: A comfortable seat, reliable wireless access, quiet surroundings, a suitable beverage … and of course I feel well-served by the airline I’ve chosen. I got a good price on the ticket. And I’m being treated well (for a fee). Everyone wins.

Now consider banks. They really want to lower the costs of serving their smallest customers. Banks make money investing the money you deposit. If you don’t deposit a lot, they can’t make a lot off of you. In fact, as my colleague Naras Eechambadidemonstrated at the Greater China CRM conference in Shanghai last April, banks actually lose money on such customers. (His book, High Performance Marketing, is a good read for managers who like to make fact-based decisions.)

To lower their costs, many banks offer accounts with no annual fee if you choose the “self-service” route: You can do all your common bank transactions (except for getting quarters for the public laundry) at your ATM. As long as you only use your bank’s branded ATM, you can get a free account. Of course, you can choose to pay the monthly fee and get full service at the window, too. This service choice gives customers the power to choose the experience they want.

Both examples also demonstrate that customers don’t always behave as you intend. For example, VIP lounges are intended to build airline “loyalty” – which of course the airline defines as a propensity to buy tickets from them again. No such thing in my case. Sure, I love United’s lounge, but my access to it has no impact on any future airline ticket purchase: airline ticket prices vary so much that it is worth it to me to find a great price and then simply pick up the daily fee for the nearest VIP lounge.

In the case of banks, lots of high net worth customers actually choose the ATM-only accounts. It’s not that they can’t afford a full service account. It’s just that they don’t need it, and they like the convenience of the ATM.

The fact is that customers want service choices so they can customize their service experience and get value. They resist being treated democratically and fairly. Last year Lois Crisler wrote in Customer Interaction Solutions that the deadliest words a customer can hear are, "Your call will be answered in the order received." Crisler reports, “Yet, every day this phrase, or some variation, is voiced millions of times to customers who are routed through Interactive Voice Response (IVR) systems. After a decade of widespread IVR technology implementation -- primarily in the pursuit of speed and cost savings--the actual message that customers who are lost in long wait queues and endless feedback loops are hearing is, ‘You don't matter to us.’”

Speed and democracy are killers at the CSR interaction: “Not only are companies failing to achieve the low-cost, high-profit rewards they expected, but worse, several strategic profit-generating opportunities are being lost. These business losses include opportunities to deepen customer loyalty, achieve higher agent productivity and increase upselling and cross-selling,” Crisler concludes.

But most importantly, you might want to rethink what it means to sell to a client. I’m not suggesting that you abandon cross-selling and upselling. I just ask you to consider the consequences of the new economy: The customer is at the center; and most products are now services.

Part II

Company: pkward.com