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The Contact Center: Retail Banking’s Revenue Bright Spot

The contact center is becoming the go-to resource for remote customers who want a real conversation with a banker, but sales capabilities need to be improved.

The contact center is being called upon to answer one of the biggest revenue questions facing the retail banking industry: how to sell in an expanding multi-channel market where fewer customers visit the branch. Something needs to be done as customers divert more activity from branch lobbies to web and mobile banking. Opportunities for face-to-face consultative selling are steadily being curtailed.

The situation introduces an important expanded role for the contact center, which has become a go-to resource for remote customers who want a real conversation with a banker, often after learning about a product on the web. Historically viewed as a service hub, the contact center now must play an increasingly important role in
revenue generation, essentially becoming the retail bank’s largest and fastest growing branch.

The complication, however, is that most contact centers are not set up for this new role. Primarily geared to handle a high volume of service calls, these centers have been managed for stringent efficiency, not sales productivity, with budgets held flat or cut as the volume and complexity of customer interaction has increased.

It will take a concerted effort if contact centers are to achieve their potential of becoming leaders in revenue growth in a multi-channel market. A different strategic orientation will be needed, along with investments in people, processes and technology.

The stakes are enormous. Given the potential for significant additional declines in foot traffic over the next three to five years, we estimate that the typical retail network faces a further runoff of up to 10 million customer visits annually for every 500 branches. Based on conservative estimates of sales conversion ratios and the value of products sold, that translates into a medium-term decline of roughly 135,000 unit sales worth $35 million of revenue for every 500 branches.

The contact center will make a pivotal difference in whether this business is lost to the branch or lost to the bank altogether. Illustrating the potential, Novantas research shows that a 300-person contact center can handle a million contacts a year and generate $30 million or more in corresponding annual sales. As progressive banks exploit the possibilities, the contact center will provide a much fuller offset to lost store revenue.

Sales Advantage

At first glance, it seems that lost branch sales could readily be replaced in electronic channels such as the web. But there is more to a sale than clicking a button. The types of lost branch sales are a tangle of reactive and proactive; simple and complex — a mix that does not uniformly translate well to remote channels. While banks can reasonably expect to boost simple, reactive product sales or service add-ons via the web, more complicated advice-driven sales — often the highest value — are still being lost.

One of the great advantages of branch selling is in-depth personal interaction, allowing a banker to ask questions, pro- vide advice and, most importantly, take care of things on behalf of the customer. A banker who offers to “take care of that for you” stands in stark contrast to a web transaction, which typically requires customers to sort through confusing online forms and product information to do it themselves. In the emerging remote banking marketplace, the contact center provides the best alternative to build sales rap- port and assure customer responsiveness. Yet the typical contact center is in a come-from-behind position relative to the branch, which has received decades of investment in the drivers of sales productivity.

Turning the tide in the contact center begins with a shift in the unit’s strategic role, from cost center to sales center. Institutions with high sales productivity in the contact center recognize that each conversation offers a chance to strengthen and expand a customer relationship. Doing so requires careful management and measurement of the sales process, keeping a close eye on the yield from each step and also investing in the capabilities needed for further progress.

The potential payoffs are far beyond what many bankers realize. In mature bank branches, the typical sales conversion rate (sales units divided by walk-in traffic) is only about 1.5% on average; the very best is usually no greater than 2.8%, but only in a fraction of locations. In contact centers, by contrast, we see higher average conversion ratios of about 2%, with best-in-class centers delivering double or triple the average in select areas with the right investments. Despite years of investments in branch selling, the best sales conversion ratios have only a fraction of the potential of the contact center.

Why is the contact center so well-positioned for sales, especially cross-selling? One key factor is dedicated customer attention. Our research shows that customers will usually set aside a minimum amount of time when they call to ask for help from a contact center, typically 15 minutes, providing a window of opportunity for an expanded conversation. If service consumes only five of the 15 minutes available, for example, callers are more likely to be pleased and more likely to spare time for a conversation about larger needs that go beyond the service event.

Call Yield Optimization

Because agents vary widely in their skills and there are many complexities in pinpointing sales opportunities on the fly, sales performance in the contact center critically depends on analytically-driven call support. Two components of this support are call strategy tagging (CST), which helps to set priorities, and call guidance, which helps to facilitate customer conversations as they progress.

Tagging. The goal of call strategy tagging is to define the objective for each conversation, primarily by making fuller use of available customer information. While many banks already tag customers for the “next best product,” this implies that the right strategy for all customers is a product sale — not so. In many instances there are more fruitful objectives such as reducing attrition; stimulating product usage; encouraging self-service; or evolving a secondary checking account into the primary account.

Accordingly, CST includes products but also looks more broadly to address all phases of the customer lifecycle (see sidebar). Such systems are designed to provide immediate insight for agents in the course of customer conversations, encouraging them to consider a variety of outcomes, not just product sales only. Also customer strategies will necessarily change over time, speaking to the need for a solid analytical process that continually learns and adapts to changing customer circumstances and possibilities.

The principles of call strategy tagging extend to the hand- off routines embedded in the routing system for incoming calls as well. It is important to refine call routing so that purchase- minded customers receive the attention they need.

As calls arrive in a typical day, most organizations handle 90% of them in the Interactive Voice Response Unit (IVRU). While this level of automation may reduce staffing requirements, it often filters out customers who should have a conversation with a banker. The key to optimizing yield is examining and adjusting the IVRU in a way that still encourages economical self-service but also better assures that high-potential customers have a conversation with a banker when appropriate. The goal is to assure that the right 10% of calls flow through to a qualified agent.

Call Guidance. Transitioning a call from service to sales is often perceived as an art, and there are agents who naturally excel at it. Great agents with good training will assimilate all of the factors — the suggested strategy; what they have learned about the customer’s needs, preferences and attitudes; customer relationship data; and the nature of the service event — to present the right proposition to the customer in the right way. Unfortunately, these high-performing agents make up less than 10% of the talent pool, and most others fall behind in conversations as they try to apply complex decision rules to handle client opportunities and objections.

Call guidance can significantly and broadly improve the sales effectiveness of contact center agents (Figure 1). What you say matters. An expert system provides key conversational cues that have proven their worth in boosting sales, helping average agents to behave more like the best. In terms of return on management effort and resources, it is much more efficient to improve the sales efficiency of the majority of agents than to constantly try to recruit and retain a handful of elite performers.

fig_1_call_guidance

To be sure, software applications for customer relationship management (CRM) try to make things easier by aggregating relationship data and coming up with sales suggestions. Yet CRM falls silent when agents try to incorporate real-time information acquired in the conversation and then attempt to modify the approach to suit the situation.

By contrast, the leaders in contact center sales productivity provide agents with real-time intelligent guidance systems. This new breed of technology mimics the decision tree that the best agents follow intuitively, and provides that intelligence to every agent on the floor. This approach also allows for rapid, continual testing of different approaches and ideas for ongoing improvement and learning.

Call Strategy Tags

A flawed assumption that has been made for years is that analytically-guided product suggestions provide the one best way to optimize customer conversations. This omits myriad opportunities to increase the value of customer relationships by other means. As banks work to improve the revenue-enhancing capabilities of the contact center, they will need specific systems and strategies to tap the full range of customer possibilities.

The situation highlights the value of “call strategy tags,” which provide high-level relationship objectives for each customer, considering the individual’s unique needs and tradeoffs between multiple possibilities to alter and/or expand the relationship. As contact center agents handle calls over the course of the day, they should be equipped to steer conversations in a number of constructive directions, with product suggestions being only one category out of many possibilities. We believe that call strategy tags are applicable in up to 80% of conversations. Typical call strategies include:

  • Onboarding. Ensuring engagement and active usage.
  • Cost reduction. Educating customers about self-service channels.
  • Proactive retention. Expanding the use of “sticky services.”
  • Switching. Convert secondary relationships to primary ones.
  • Relationship deepening. Product and service expansion.
  • Usage stimulation. Diagnosing and correcting lack of product use.
  • Reactive retention. Recovering a relationship in danger of attrition.

Through call strategy tagging, constructive goals can be set at the onset of most customer conversations, providing guidance for agents to move relationships in the right direction at the right time. While a product sale is often the goal, it is only within the context of a broader objective and never a one-size-fits-all product push. Translating these strategies into action will depend on desktop intelligence and training.

Intelligent call guidance is an emerging capability based on real-time systems that were not possible a decade ago. It helps to plug the gap between CRM systems (which provide data prior to the call) and speech analytics (which provide data after the call). While call guidance systems will not eliminate the need for agent training and product knowledge, they significantly reduce the burden placed on agents for rote memorization. Agents are brought up the performance curve much more rapidly.

Another benefit of call guidance is enhanced compliance in a stringent regulatory environment. Agents need help in making sense of a complex set of national and state regulations that may come into play on any given call, both for products and customers. Call guidance can provide the assistance that agents need to remain compliant in all circumstances, without trying to memorize every possible regulation.

Development Priority

As U.S. retail banks continue to struggle with the branch sales productivity challenge, it is important not to fixate on the traditional physical network while losing sight of sales opportunities in remote channels. The multi-channel banking marketplace is coming more fully to life, and a highly capable contact center provides one of the best forms of insurance that a sale lost to the branch does not have to be a sale lost to the bank.

Yet often today, the contact center remains an after-thought in the consideration set for investments that will help to boost retail sales productivity. These centers are being routinely starved of developmental resources, primarily because hard- pressed retail executives have been distracted with the woes of the branch network and have not gotten around to building a business case for contact center sales productivity enhancements. Meanwhile contact center managers have little leeway or motivation to take the plunge on their own, remaining firmly planted in the role of hyper-efficient service providers.

In today’s challenging environment, organizations that can make the most of every inbound and outbound conversation will emerge with higher profitability and a more engaged clientele. Plus they will be well-positioned to serve migrating multi-channel customers who have left the branch and need high-quality remote services through the contact center. With their controlled environments and advanced technologies, contact centers will be a clear differentiator in performance in coming years, with the advantage going to players that make the needed investments now.

Alan Mattei is a Managing Director in the New York office and Darryl Demos is a Managing Director in the Boston office of Novantas, Inc., a management consultancy.

For more information, contact Novantas Marketing

+1 (212) 953-4444