Shop direct cut 1,500 jobs - the internet finally takes its toll

It was bad news last week for a lot of people when Shop Direct (one of the UK's largest catalogue retailers) announced that it was cutting 1,500 jobs in its call centres. This is another very big cut, as it was only a year ago that Shop Direct cut 1,150 jobs from their warehousing operations.

The sad thing is that some of these job losses were, perhaps to a certain extent, inevitable.

I was always interested to see how much of their business was phone based (I did do a little work with them some years back). The management at the time told me that for the demographics they targeted with their catalogue the phone was the primary channel of communication. Most of these demographics were mid to lower income people and as a result they did not use the internet extensively and preferred to phone in their orders when a physical catalogue arrived.

I was dubious that this was sustainable indefinitely, but even in the mid-2000s, the primacy of the phone channel seemed to be holding true. It's very interesting therefore to read that in five years the proportion of online sales has gone from 18% to 60%.

My suspicion is that an aggressive bundling of internet and TV solutions by UK service providers (such as Sky and Virgin) has increased internet penetration into demographics where previously internet was seen as either unnecessary or too expensive. The steady fall in price of PCs also probably helps, but I suspect that it is the role of UK service providers that has so fundamentally changed the channel mix for firms that do indirect and distance selling.

The one thing that could have changed some of this is the integration of the contact centre with the web channel. Co-browsing technology is well established, as is click to call and other ways of assisting customers on the web site. There are some startling statistics (anything from 40% - 70%) of the number of shoppers who start to fill a basket on a website but then don't go through to checkout. Offering them help if they get stuck, or an easy way to ask a question, could dramatically improve the number of completed transactions in the web channel. It doesn't necessarily require a huge contact centre but is an example of how a contact centre that adds business value is still very necessary for a business that has the internet at the core of its channel sales strategy.

Getting a good cold call ...and from a utility company too!

I was amazed yesterday to be on the receiving end of a telemarketer's call that worked ...and from a utility company too!

I'm at home on paternity leave (hence why the last post was 24th Feb - apologies), so I don't normally get these kind of calls. I normally hate telemarkets because it is done so badly (see blog posts from last year like Banks criticised by BBC for automated calls" and "Further thoughts on outbound in the UK....." ), so I was surprised to find it done well.

This call worked because it was done by a person. A lot of outbound telemarketing is now done by pre-recorded messages now. I hate that. My view is that if you want a customer's business, then show them that you value the customer by having a person make the call. At this point, advocates of the pre-recorded outbound message point to how cost-effective it is for high-volumes and low response rates. My suggestion would be to understand and target your customers better, otherwise you're still wasting money however cost effectively you are doing it.

The outbound call was from my utility company and highlighted the difference between their offers and British Gas when it came to additional services. Now British Gas have had their customer service problems (see my post last year "The British Gas, the utility industry, customer service and consultants" for an overview of their efforts to sue Accenture over a Siebel implementation), but I've always been pleased with their service.

What the agent did on this outbound call was to highlight pricing differences that related to me and the specific type of services I needed. She then offered to send me all the details by e-mail, so that even if I wasn't prepared to sign-up over the phone, I could look through the specific offer she had worked out with me at my leisure. I was impressed, as this was what I wanted and and how I like to buy things - I don't like to sign up to things without having all the details laid out clearly. The call used multi-channel appropriately (telephone for relationship building and discussion, e-mail for presenting a detailed offer) and that was good to see.

Perhaps the previous research last year that suggested utilities were the worst call centres in the UK (see post "Are utility companies really the worst call centres? ") will need to be revisited!

Channel in Financial Services

One blog I've been reading lately is Dr. Catriona Wallace's blog (Your Call) that covers the Asia-Pacific contact centre market.

She had a good post on 24th June looking at the consumer use of channels in Australian and New Zealand banking. Her research suggests that at least for Australia and New Zealand:

"... there are distinct differences between the BFI consumers and consumers from other industry verticals. For example, there is almost equal preference for BFI consumers to use the internet as first channel of preference as their level of preference to speak to a live attendant. In all other industry verticals the primary preference is to speak to a live attendant. About 9 in 10 BFI consumers are happy to use self service technology for simple transactions and even 4 in 10 are happy to use self-service technology for complex transactions. We just don't see this level of orientation around consumer self-service in other verticals."

She also highlights how demographics like gender and age also have a big impact on how consumers choose channels when dealing with their financial services provider.

I feel it is also well worth looking at is culture when looking at consumer's choice of channel. In Europe I believe channel preference is driven as much by culture as it is by vertical or by demographics. The last very detailed research I've seen on the subject was Forrester writing in 2004, but the differences are clear.

Asked which channel consumers would use to first contact their bank for a service issue, there were huge contrasts between countries. In the UK 72% of customers would use the telephone channel as their first option compared to only 26% of Italians picking up the phone. Branch showed a similar degree of huge variation, 91% of Spanish would go to a branch as their first action but only 59% of Dutch would go. However, 15% of Dutch would e-mail their bank as their first action (remember this was in 2004, today it's probably higher).

These cultural differences highlight how different the role of the contact centre can be. What in one country is a strategic channel for voice traffic in another is a minor channel for e-mail or remote support.

The acceptance of self-service in Financial Services is also interesting. I've posted previously on the Dimension Data/ Cisco Speech survey but this has focused only on speech acceptance for English speaking countries (including Australia and New Zealand). It might be interesting to extend that and see if consumer acceptance of self-service extends to other cultures. Alternatively, it may be that a lot of people phone up to check their bank balance and their priority is to get the answer quickly rather than from a human.

The one thing that I would stress is that despite cultural differences, is that as a vertical financial services has the most complex set of consumer channel usage however the consumers choose to use those channels.