Beyond Deflection – What to Do with Your “Savings”

Featured: Measuring the Return on Knowledge Management

As knowledge management initiatives take hold and mature, it is essential to conduct a formal cost – benefit analysis to determine the proper level of investment for knowledge management and define the expected return on this investment. Continued success will come from efforts to enhance content creation processes, employ enhanced technologies and deliver tangible business value by leveraging knowledge assets. This research report introduces an approach to measure the return from knowledge management initiatives.

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Self-help and service automation (e.g. chatbots) provide a means to save money and lower the overall costs of service delivery.  Consider however that savings from deflection represents an opportunity to reinvest to improve service outcomes by reallocating staff to high value activities (e.g. onboarding, adoption, retention, expansion, etc.).  This article introduces the top opportunities to reinvest in service.

Potential Savings

Knowledge management, self-help and service automation offer significant opportunities to achieve cost efficiencies by developing and sharing information to help customers resolve cases without the direct assistance of service staff.  Efficiencies from self-help and automation create a potential dilemma for service organizations.  They can bank their savings or invest in customer success focused activities that yield increased satisfaction, retention and revenue growth.

Deflection

Deflection measures the impact that service automation, self-help tools, and content have on assisted demand.  When customer issues are resolved through service automation or self-help resources, thus no longer need assistance from service staff, they are considered deflected (there is more to deflection so check out our article on Defining and Measuring Deflection).

On average companies deflect just over 23% of cases by providing answers to customer questions through self-help or unassisted automated means.  When cases are successfully deflected fewer support staff are needed to handle assisted demand.    The cost efficiencies realized from deflected cases can be significant.

Bank the Savings or Invest in Growth

It is possible to view self-help and service automation as a means to save money and lower the overall costs of service delivery.  Alternatively, consider how savings from self-help, knowledge management and service automation can be reinvested to improve service outcomes by reallocating staff to high value activities (e.g. onboarding, adoption, retention, expansion, etc.).

New Opportunities

Consider opportunities to reallocate staff to the high value activities outlined in the table below.

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How to Define and Measure Deflection

Deflection Defined

Deflection is the rate that automated and self-help resources satisfy service demand that would otherwise be handled by assisted service staff.  The average rate of case deflection within the technology industry is 23%. The attainable rate of deflection is highly dependent upon factors such as the maturity and complexity of a product, the skills of the users, and the quality of tools and content provided by the service provider.

It is easy to overstate the impact of self-help, community and service automation by equating its overall effectiveness with a direct impact on assisted support.  Many issues may be resolved through self-help and automated means yet not all are destined for or entitled to resolution through assisted support channels.  For a case to be deflected it must meet the following criteria:

 

  • The customer submitting the case must be entitled to assisted support.
  • An issue must be successfully resolved.
  • The customer submitting the case requires no further action from assisted support resources to validate or clarify the answer provided through self-help or automated means.

Measuring Deflection

ServiceXRG offers the following approach to measuring deflection.  Each of the inputs for the deflection calculation are described below.

How to Measure Deflection

Multiply the number of Self-Help Service Events by Entitled Customers for a specific period of time by the rate that these customers indicate success in finding an answer using self-help resources (Success Rate).  Multiply this by the percent of entitled customers that successfully found an answer and indicated an intent to request assisted support if required (Intent Rate).  Multiply this by the percent of entitled customers that successfully found an answer and indicated an intent to request assisted support if required and indicate that no further action is required to resolve this issue (No Further Action Rate).

Target Value
Deflection = Self-Help Service Events by Entitled Customers * Success Rate * Intent Rate * No Further Action Rate

Entitlement

For a case to be considered deflected it must be submitted by a customer entitled to receive assisted support.

A case cannot be deflected from assisted support if it is submitted by someone that is not entitled to receive support assistance. Including visitors that are not entitled to assisted support in your deflection calculation will overstate the impact of self-help on assisted support demand.

How to Measure Self-Help Service Events by Entitled Customers

Establish entitlement to assisted support.  To accomplish this, you will need to authenticate customers engage in a self-help event (e.g. support site and community visitors and those served through other automated means).  Only customers entitled to assisted support should be included in your deflection calculation.

Target Value
Self-Help Service Events by Entitled Customers = # of self-help and service automation events within a specific period of time for customers entitled to receive assisted support.

Success

For a case to be considered deflected it must be successfully resolved using self-help resources or through unassisted automated means. 

Visitors will come to a support community or portal for a variety of reasons.  They may come to view a discussion thread, read an article, browse documentation, view a video or download a file.  While the use of service resources is positive, these “service events” do not always equate to a successfully resolved customer issue. Customers indicate that on average they find useful information 70% of the time when visiting a support web site and 68% of the time when browsing support communities. Useful does not however translate in to complete and successful answers.

How to Measure Success Rate

Identify the rate that service events result in successfully resolved customer issues.  The best method for determining success is to ask customers directly.  Use on-site pop-up surveys, post transaction event surveys and questions embedded in service resources.  Unfortunately, customer response rates to these types of data collection methods can be low.  Nevertheless, customer feedback is essential to establishing the effectiveness of self-help resources and automated issue resolution tools.

Target Value
Success Rate = Rate that self-help and service automation events within a specific period of time are successfully resolved.

Intent

A deflection will occur when there is intent by a customer to seek assisted support to find an answer.

In situations where customers are “browsing” available support resources, but do not intend to seek support assistance, there is no opportunity to deflect from assisted support.  Including “browsers” (visitors with no intent to seek assisted support) in the deflection calculation will overstate the impact of deflection on assisted support.

How to Measure Intent Rate

Identify customer intent to request assisted support.  The best method for determining intent is to ask customers directly.  Use on-site pop-up surveys or post transaction event surveys to establish the reason for a community or support web site visit.  Determine if the customer intends to seek assisted support if the self-help event is unsuccessful.

Target Value
Intent Rate = Rate that entitled customers indicate that their reason for using self-help or service automation is a first step in problem resolution and intend to seek assisted support if necessary.

No Further Action

For a case to be deflected a customer must indicate that the answer found through self-help has completely resolved the issue and that no further action is required. 

Some customers may successfully receive the information they are looking for but may still request assisted support to verify the answer.  Customers that request assisted support to confirm the answer provided through self-help or automated means should not be included in the measure of deflection.

How to Measure No Further Action Rate

Determine if any further action is required to resolve a customer issue.  Use on-site pop-up surveys or post transaction event surveys to establish the if a customer sought assisted support to validate, clarify or confirm an answer received by an automated or self-help event.

Target Value
No Further Action Rate = Rate that self-help and service automation events within a specific period of time are successfully resolved and require no further action.

Implementing a Deflection Metric

Using an accurate measure of deflection is imperative for establishing the true impact self-help and service automation resources have on assisted support demand.  The inputs describe above are stringent, yet necessary.  If you require any assistance in defining and implementing a proper deflection metric please contact ServiceXRG for assistance.

Featured : Measuring the Return on Knowledge Management

As knowledge management initiatives take hold and mature, it is essential to conduct a formal cost – benefit analysis to determine the proper level of investment for knowledge management and define the expected return on this investment. Continued success will come from efforts to enhance content creation processes, employ enhanced technologies and deliver tangible business value by leveraging knowledge assets. This research report introduces an approach to measure the return from knowledge management initiatives.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Bad Attach? Is There Such a Thing?

Attach Rate measures the effectiveness of new support contract sales activities (direct or through partners) by reporting the extent to which a support contract, beyond what is included with the product, has been sold as part of a new product sale.  When you sell a new product, you expect to attach a support or extended warranty contract.  It seems intuitive to assume that it is a good thing when you sell support with a new product.

It is likely that mixed in with those newly attached support contracts are several that are at risk from the start.  What puts these support contracts at risk is the way that they were attached.  When customers unknowingly buy support with a product, or reluctantly buy support to gain greater terms on the initial product purchase (e.g. a discount or promotion) they are immediately at risk of not renewing.

The good news is that you get the first year of maintenance revenue, the bad news is that you may not get the benefit of the annuity from year after year renewals.  In most cases bad attach can be avoided.  The first step to minimizing bad attach is to recognize if you have Support sales practices that lead to it.

Signs of Bad Attach

Customers are incented with steep product discounts if they buy support.

  • Sales promotions offer attractive deals on products but require automatic attach of support.
  • It is a common practice to include support without any effort to explain the benefits to customers.
  • Support is compulsory.
  • First year renewal price is adjusted upwards to make up for initial discounts due to pricing tied to product net price.

All these scenarios share something in common – the benefits of support were not sold and justified to the customer at the time of initial attach.  When customers do not understand the benefits of support, or worse, don’t know that they have support, they are likely to question its value when the renewal notice arrives.

How to Avoid Bad Attach

  • Make sure that customers understand that they are purchasing support – don’t try to hide it, they will figure it out upon renewal.
  • Always convey the benefits of support at time of sale.
  • Avoid discounts to support, especially if the discount is for the first year only.
  • Be aware of sales promotions that will attach support even when customers do not want it – you will get the attach but not the renewal.

If you only care about the first-year revenue from support and maintenance contracts, then any attach is a good attach.  If you want to maximize revenue from Support, then contract attach followed by a successful renewal is essential.

Why Your Customers Don’t Renew Service Contracts and What You Can Do About It

Assessment: How effective are your service contract renewal practices?

Are you leaving money on the table? Do you know why customers cancel service contracts? Use ServiceXRG’s Renewal Assessment tool reveal your Service Contract Renewal Health Score.
You will receive immediate feedback with recommendations to maximize service renewal performance, a copy of the Service Renewal Best Practices playbook and a complimentary coaching session.

Begin Assessment

Playbook: Service Renewal Best Practices

The Service Renewal Best Practices playbook introduces the metrics, practices, and activities necessary to optimize service contract renewal performance and grow customer relationship value.

Would you like a free copy of the Service Renewal Best Practices playbook?

Use ServiceXRG’s Renewal Assessment tool and receive your copy.

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Why Your Customers Don’t Renew

Renewal Begins Day 1

From the day you sell a service contract you need to begin working on the retention of that customer relationship.  The worst thing you can do is wait until 90 days prior to the service contract expiration to send a renewal notice.  Each of the reasons for nonrenewal can be mitigated – or at least minimized – through well defined renewal practices that begin on day 1 of the service relationship.

Keep the customers you have and find ways to prevent customers from canceling services in the first place.  Retention is paramount – make it a strategic priority!

Reasons for Non-Renewal

What You Can Do About It

Addressing Perceived Lack of Value

The most common reason for service contract cancelation is that customers do not perceive that the benefits outweigh the cost of continuing the service. Or, they do not feel that the risk is too great to cancel – this is a common perception by customers that use mature products.

Active / Cancelled

For customers that actively use your product, but have canceled services, there is still hope for a win back.  Re-engage active product users and attempt to convince them of the benefits of your service.

Electronic mail and automated campaigns will not be enough.  Call them and listen to their concerns.

You will learn a lot about why customers canceled in the first place (price, lack of use, product issues, etc.).  Consider making modifications to the service to make it more appealing (better entitlements and/or lower price).

Active / At Risk

Within your active customer base chances are good that you have customers that would like to cancel but are not willing to accept the risks associated with lack of service or out of date software.

There is still time to protect these relationships. Work with customers potentially at risk to help them use and realize the value of service. Consider the following:

  • Interact with customers throughout the relationship and don’t just wait for them to call you. Interaction can occur through a support case, a proactive call to the customer, an informative e-mail newsletter, and publication of useful self-help resources (blog, wiki, knowledge base).
  • Report progress relative to success plans, support plans, and journey maps.
  • Make sure that customers are taking advantage of the services offered through the service relationship.
  • Meet service-level commitments and make sure that customers are aware of your performance.
  • Conduct periodic health checks and account reviews (e.g. Quarterly Business Reviews or more frequent) with both technical and business unit stakeholders.
  • Leverage each customer interaction as an opportunity to reinforce the value and necessity of the service relationship.
  • Establish a service usage “statement” that highlights the type and frequency of services used. Provide customers with evidence about the benefits they receive.

What to Do About Customers that No Longer User Your Product

The second most common reason for service cancelations occurs when customers stop using your products or have difficulty using it in the first place.

Once this occurs – for whatever reason – there is little to do to win the customer back.

Onboard, Adopt, Success

The best strategies to minimize cancelations due to lack of use is to develop good onboarding, adoption, and success practices to make sure customers can use and apply your products effectively. Consider the following:

  • Develop customers’ product skills by offering easy to access and affordable (preferably free) training programs.
  • Help customers define and achieve success through success planning.
  • Define journey maps, provide coaching and guidance to help customers attain specific outcomes.
  • Do not wait for customers to call with problems, engage customers proactively through automated and personal methods.
  • Offer or extend proof of concept, architecture, and design guidance.
  • Define and monitor customer adoption (extent and frequency of use) and success (impact of use) metrics.
  • Assign success managers or teams to monitor and drive customer adoption and success rates.
  • Monitor product performance and service use.
  • Conduct periodic health checks and account reviews.
  • Offer a portfolio of value-added outcome services.

Optimize Renewal Practices

The actions you take to secure the service renewal are fundamental to success.  Great programs and great relationships can be undermined by simple breakdowns in renewal procedures.  The costliest process breakdowns include not asking for the renewal or asking the wrong person.  Consider the following:

  • Maintain a relationship with the person(s) responsible for renewing the service contract.
  • Target multiple points of contact for renewal notification.
  • If the primary person leaves find out who will assume responsibility for the relationship.
  • Set clear expectations with the customers about budgeting for contract renewals including any uplifts or add-on fees.
  • Notify customers at least two months prior to renewal expiration.
  • Analyze the reasons customers do not renew.

Service Renewal Benchmarks

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Where Customers Look for Support Information

Vendor web sites have become a secondary resource to general web searches when customers need help. Historically customers have rated the quality and effectiveness of information found on non-vendor web sites very low, but this trend has shifted with more customers indicting that the information they find through general web searches to be relevant to their needs and effective.

When customers find information on other – non-vendor sites, it diminishes a company’s ability to leverage the service interaction as a means to strengthen its relationship with customers. Without a concerted effort to expand and improve the quality, relevance and findability of the right services content through the support web site vendors risk losing the advantage they once had in retaining control of the on-line service experience.

Where Customers Go for Technical Support Information

Self-help Resources Most Frequently Used

Featured : Customer Perception and Expectations of Self-Help and Social-Support

Vendor web sites have become a secondary resource to general web searches when customers need help. Historically customers have rated the quality and effectiveness of information found on non-vendor web sites very low, but this trend has shifted with more customers indicting that the information they find through general web searches to be relevant to their needs and effective.

This study examines the expectations and perceptions of individuals that use self-help resources to resolve technical support issues.

 

 

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Please login to access this report. If you do not have an account, click on the button below to create a free membership*.

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*Membership level determines your access to ServiceXRG research and other member services. Paid memberships include access to research and playbooks. Free memberships include access to some reports and discounts to others. Please visit our membership page for a list of available membership programs.

Sales Engineers and Technical Support Staff Cooperation

Sales and Support staff often work with the same customer accounts, but not always in coordinated and cooperative ways.  ServiceXRG has identified three resource alignment methods used today to describe how technical resources from Service and Sales work.

Independent

 

Technical resources exist within both Sales and Service organizations. Technical resources operate independently from one another with objectives that are not typically coordinated and may conflict (e.g. Sales provides services otherwise entitled through a service contract).

 

Cooperative

Technical resource from Sales and Service are organized within a single customer facing organization or are aligned by similar or common engagement polices and performance metrics.  Coordinated customer engagement for larger accounts is common.

 

Coordinated

Customer facing technical resources exist within a single department with coordinated responsibilities for both pre-sales and post sales technical engagement.  Skills specialization may exist, but account engagement is coordinated and all touchpoints are aligned to meet common performance objectives.

 

ServiceXRG has examined the current state of service organizations and the forces at work that are driving organizational transformation. ServiceXRG examines how the isolated service silos of the past are evolving in to unified service entities focused on Customer Success. For more information about the full study see the following:

The Transformation of the Service Organization