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Contact Center Trends in the New Reality (Part 1): From Cost-Minimization to Revenue/Margin Optimization

The contact center/call center is often thought of as the “front door” of a company, providing a friendly and welcoming entrance for customers to enter into a mutually-beneficial relationship with the organization. Obviously if the front door is closed, or if there is a long line or “queue” to enter the front door, the customer may take their business elsewhere. Hence, it is crucial that the contact center be accessible at all times, and perhaps more importantly, via any communication channel that the customer prefers.

It is however not enough to just be accessible. The contact center also has to be effective. That is, the contact center agents must be able to resolve the customer’s issues, and/or answer the customer’s questions. And of course, it is in the best interest of both the customer and the company that the agents be able provide that support as efficiently as possible. Time is a precious commodity for customers, and no one wants to sit around waiting; similarly, companies want to help as many customers as possible in a given day (and ideally with as little cost as possible). Hence, the ultimate challenge of the contact center is how to provide great, world-class, differentiating customer service – while keeping that cost of service low. To that end, several trends are emerging in recent years in the contact center industry.

In this multi-part blog series we will examine these emerging contact center trends and discuss how software from SAP – including the SAP CRM Interaction Center and BCM – can help your organization take advantage of these emerging contact center trends. In this first blog entry, we will look at how the strategies of many contact centers have shifted from pure cost-minimization, to a focus on service differentiation and service revenue/margin optimization.

Strategy Shift from Pure Cost Reduction to Service Differentiation and Revenue/Margin Optimization

Companies have historically viewed contact centers (along with customer service itself) as a necessary cost of doing business. Meaning, that if the company sells a product, the company is obligated to provide some form of rudimentary customer support. Increasingly however, as products become more commoditized and prices are driven down, companies begin to see customer service differently – rather as an opportunity to differentiate themselves from fellow competitors via service excellence. And, as companies look to stay competitive in crowded markets and difficult economic climates, companies realize that instead of focusing exclusively on trying to eliminate customer service costs, companies can also use their contact centers to increase revenues – via service products, cross-selling, up-selling, and repeat business and referrals from satisfied customers.

In today’s best-run companies, revenue from actual products only contributes to about 55% of total revenues, with the sales of services contributing to 45% of revenues, and on the rise. Thus, to remain competitive, companies must also be able to effectively market and sell services that accompany their products. For example, in many industries (such as consumer electronics) retailers may often sell a product itself at little or even no profit, with the goal of making money by selling the customer an extended service protection plan – which may have a profit margin of perhaps 50%, far higher than the 10% or less margin of the product itself. From the perspective of a company, the great thing about selling extended services is that the sale of the service does not necessarily have to occur at the same time as the sale of the product. For example, assume that a customer buys a product and then later calls into the contact center for service or support. After the contact center agent satisfactorily resolves the customer’s issue, this is a great (if not perfect) time to offer the customer an extended warranty, accessory, or upgraded product.

The SAP CRM Interaction Center can help support companies in these efforts to drive service differentiation and service/margin maximization by providing agents with automated recommendations for accessories, cross-sells, up-sells, and other offers. Products can be linked to campaigns (of course), helping agents recommend the appropriate product or product-related service to customers who respond to a particular campaign. In addition, product proposals can also be accessed by the agent during sales order entry process, both for the order header itself as well as for each line item in the order. For example, the agent can access top-N list, product listings, and previous order history for each customer sales order. Additionally, for each line item in the order, agents can propose relevant accessories, cross-sell, up-sell and down-sell items (see figure below).


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