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Tough Economy and Customer Service

Most companies view the relationship between service cost and customer satisfaction as a forward sloping curve.  In good times, companies stock up the commonly ordered parts and hire skilled service reps keeping the order fill rates high and the call waiting times under control – thus delivering higher customer service levels. However, tough economic times force managers to improve resource utilization and reduce inventory holding costs. In an economic downturn the primary focus is on revenue generation while keeping costs under control. Every expense is questioned by the CFO. As service cost comes under pressure the customer service levels are sacrificed. A small reduction in the service cost puts a large dent in customer service – as depicted by the steep upward sloping relationship between service cost and customer service level.



The above may have been true but many companies are now trying to use the advances in technology to challenge this trend. They are applying innovative uses of technology to maintain higher levels of customer service while keeping costs under control. The trick lies in taking another look at some important assumptions about how customer service is defined, measured, and managed. The four strategies below can have a huge impact on your customer service while keeping your CFO happy

  • Differentiate: The standard “first come first served” approach hurts important customers who have established loyalties and high impact on margin. A company should start by identifying a customer service matrix.  For high value customers who have a service issue about a high margin product the company must deliver the best customer experience. This can be achieved through shorter hold times, higher inventory fill rates, access to multiple channels of communication. A low value customer may be urged to interact through alternate channels such as the web which deliver service at much lower cost to the company. Understanding the value of every customer interaction and focusing on high value interactions will allow companies to focus on profitable aspects of the business while keeping the costs lower


  • Communication enabled processes: With the emergence of VoIP telephony agents no longer have to sit behind CTI enabled infrastructure to answer customer calls. Every employee has the ability to indicate his or her “presence” status and availability. This information can be used in real-time by VoIP technology (SAP BCM) for routing customer interactions. This allows all company’s employees – anytime, anywhere – the ability to answer calls (or chat) from customers
  • Field Service and spare parts optimization: By sending the right engineer to the right job with the right parts on-board, companies can ensure high customer satisfaction and higher field productivity.  This requires that companies understand the skill set of their field engineers and focus on making sure that the utilization stays high.  The service operating costs are typically inflated due to spare parts dispersed all over the service locations. A well planned effort to stock optimal levels and returning unused parts back to the warehouse can be a huge cost saver
  • Forge profitable partnerships:  This is a great time for service companies to learn “lean” from the manufacturing world. Focus on core business and outsource (or crowd source to social media) non-core parts of your business. There are many potential partners who are highly incented to create long term relationship for mutually beneficial business outcomes. Companies should look at advances in service oriented architectures to create collaborative service  processes which extend beyond their firewall but deliver a consistent customer experience

By successfully executing these customer service strategies, companies can cause a shift in the cost curve that would allows them to reduce service costs without sacrificing customer service levels.  The implementation of these strategies will require companies to adapt their business processes and leverage the latest enhancements in SAP CRM 2007 release.



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  1. Dennis Howlett
    This is a great post Param but I have a real difficulty with it. The measures you’re talking about are precisely those that should be implemented when times are good. That way you have a highly efficient organization that can respond more quickly to lean times and which is always optimizing its resources.

    Also, given the scale of company that SAP typically deals with, I’d question how quickly some of those same companies can respond.

    Having said that, one area I do believe can provide fast track results would be through considering implementing ESME ( as a tab in Web Dynpro clients for problem resolution purposes.

    We demonstrated that in an ABAP setting at DemoJam but it could equally apply as a possible alternative to your VoIP scenario.

    It might also be used in field service situations where an engineer experiences a problem requiring collaborative operations to resolve. 

    I’d recommend hooking up with Richard (Dick) Hirsch to bounce a few scenarios and see what he has to say about that.

    1. Former Member Post author
      I agree that these measures are quite good alternatives irrespective of economic stage. In good times though, companies generally have greater appetite for risk taking. They may want to venture into a new market or start targeted campaigns for renewing competitor’s service contracts.
      We now have SAP CRM 2007 customers who have gone live in less than 3 months. The rapid adoption of technology to fit business needs is picking up steam.  See the blog from Mike Burianek (Eclipse Aviation goes live with SAP CRM 2007)
      We’re also actively looking at social media technology trends (like Twitter) to see how customer service experience and employee productivity can be improved. ESME seems to have a lot of promise.

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