Off-site Customer Relationship Study January 2016

Executive summary • This whitepaper is based upon original research by EY during Q3 2015. We carried out more than 60 interviews with customer experience professionals from 40 leading companies across a range of customer-facing sectors. • Our research gives us an inside view of how companies are managing relationships with off-site customers and how these interactions are likely to evolve in the future. 10 key takeaw ay s: the definitive trends D igital tech nologies are resh ap ing th e customer relationsh ip ch annel mix and f ront line organiz ation. 1. Automation replaces the simplest tasks (level 1) through digital tools: FAQs, Interactive Voice response (IVR), and online forums, etc. 2. Use of written digital channels such as chat, email, and messenger apps is spreading and evolving. 3. Value proposition improvements are reducing the need for customers to call for basic interactions or information. 4. Service providers and customers alike have virtually stopped using traditional email. 5. A generational divide has developed in the choice of channels to interact with service providers, which appears heavily influenced by smartphone use. C ustomer relationsh ip s are ev olv ing tow ards more emp ath ic and social interactions, rep lacing th e rush to answ er q uestions q uickly . 6 . Companies are adopting new collaborative approaches and asking customers to contribute to customer care via user forums or as brand ambassadors. 7. Customers are making increased use of social networks, prompting companies to invest in dedicated social media resources and tools. But corporate expectations of the gains look over-optimistic. 8. Trends in contact mix and channel choice are changing the role, training and skills of the Customer Care Agent (CCA). C omp anies are looking f or new C RM cap ab ilities to enab le more p ersonaliz ation and contact initiation. 9 . Data analytics will be at the heart of future customer relationships, allowing companies to provide a personalized contact and value proposition. 10 . Outbound contacts will experience a new golden age. 2 O ff- site Customer R elationship S tudy | J anuary 2 016

Key findings D igital tech nologies • Example: In the banking sector, one-to-one meetings with retail agents have been replaced by are resh ap ing th e daily checks of account balances on smartphones. customer relationsh ip • Tutorials (example YouTube channels) educate viewers and allow them to solve problems by ch annel mix and f ront themselves. • F A Q s are increasingly dynamic with semantic line organiz ation search engines that select and retain only relevant information. 1. A utomation rep laces th e simp lest • IV R solutions direct client queries to the right advisors and solve problems faster and more tasks ( lev el 1) th rough digital tools: efficiently. F A Q s, Interactiv e V oice resp onse ( IV R) , and online f orums, etc. “We were able to deflect 50% of incoming flows to FAQ or automated email tools, allowing customer • Specific and dedicated apps are developed by service agents to focus on complex cases”. companies to encourage self-help and reduce L eading e- commerce company customer demands. C ase study : a maj or e- commerce play er reduced incoming contacts b y more than half b y using automated answ ers and F A Q s. P lay er Complexity level Context Channels Öow structure Contact rate: S tandard q ueries 6 % of total orders S imple IV R s, w eb site F A Q s 1 (order status, parcel ( 300+ answ ers for q uestions status, pay ment, standard q uestions) unsub scription, etc) . c50% R epetitive Chat and email 2 R egular q uestions/q ueries (w ith automated text c2 0% q uestions unavailab le in F A Q s recognition and automated reply ) c30% V ery complex cases P hone calls 3 Complex (parcel lost, w rong order, etc. ) to customer service q uestions w ith impacts on b rand image employ ees Incoming contacts Sources: E-commerce player website / L’Express / Interviews. O ff- site Customer R elationship S tudy | J anuary 2 016 3

2. Use of w ritten digital ch annels such • email is the major contact channel in the digital industry (example e-commerce companies). as ch at, email, and messenger ap p s is • Messenger ap p s are likely to become the next sp reading and ev olv ing. common channel as they are well aligned with • C h at is well developed in line with new customer emerging customer habits. habits (search online, act offline) and is available while browsing. • Example: chat is widely used by online pure players “Front line will be 100% digital in less than five (such as online banks). years for telecom operators”. L eading mobile netw ork operator C ase study : w eb /email/chat interactions are b ecoming more common, especially w ith w eb - only value propositions. W eb / email/ ch at are grow ing interaction modes In ev ery industry , p ackages are created w ith only digital sup p ort P ercentage of F rench people having proactively W eb -only of f ers b y industry used this contact channel in the past 12 months • 100% digital offer: 53% Mob ile no calls, no chat 50% netw ork • A ssistance 4 6 % operator via w eb forms 4 4 % and forums • Customer representative answ ers to emails in less Energy than 4 8 hours 2 3% 2 1% provider • F A Q and video are 17 % 18 % availab le in customer’ s 12 % self- help 7 % • H elp via chat, email, Tw itter, F aceb ook O nline and b y phone 2 010 2 012 2 014 b ank • W hen customer tries W eb site email Chat S ocial Media to contact a CCA , a dy namic F A Q search tool is proposed Sources: BVA - Customer Care Services Observatory / EY Analysis / company websites 4 O ff- site Customer R elationship S tudy | J anuary 2 016

3. V alue p rop osition imp rov ements are 4. S erv ice p rov iders and customers reducing th e need f or customers to call alike h av e v irtually stop p ed using f or b asic interactions or inf ormation. traditional email. • D igitiz ation diversifies non-voice touch points. • O nline f orms, email and p riv ate messaging on • Call deflection strategies are developed by social media have replaced traditional mail. They companies to shift contacts to appropriate are used to fill and send scanned documents, aiding channels. dematerialization of administrative procedures. • Simplified value propositions are offered, • S ocial media netw orks are used as a new reducing customer queries. complaint and bargaining channel by customers • More reliab le tech nical sy stems and more seeking compensation. mature p rocesses are curbing contact duration and the need for voice channels. • More inf ormed and self -educated customers make less frequent but more complex calls. “Companies are eager to shift entirely to emails due to the excellent ‘once and done’ ratio. “Digital and multi-channel allowed us to decrease 80% of emails can also be written through semi- call volumes by 20% in two years”. automated tools”. P ay- TV operator Telecom operator C ase study : F orecast evolution of customer contact channel mix b y share of inb ound contacts ( F rance, inb ound only , 2 015- 2 019 ) . 100% V oice ►Increased push for emails w ith automation and parsing methods 35% for b asic q uestions. 30% ►S trong development of chat. Chat ►S trong reduction in calls 2 5% thanks to avoidance strategies 2 0% and grow th of digital channels. 15% 10% email 5% 0% S ocial Media 2 015F 2 016 F 2 017 F 2 018 F 2 019 F Sources: EY forecasts and analysis O ff- site Customer R elationship S tudy | J anuary 2 016 5

Trends: Digital channels have changed how customers access customer relation services. Main customer contact ch annels • P h one calls are declining • Digital solutions (email, chat, forums) are becoming more important. • Customers knowledge of services/products and of how to use their devices is increasing. • C h at solutions w ere non-ex istent 3 y ears ago y et now are soaring. • They are tied to changing habits, as customers are increasingly using messaging apps (Messenger, WhatsApp). • Websites / self-help are now accepted by customers who are used to find solutions by themselves or th rough collab oration. • They answer basic questions via dynamic FAQs, redirecting more complex issues to other channels. • Email, p riv ate messaging on social media ( F aceb ook / Tw itter) , and w eb f orms are rep lacing traditional email. • They enable photo and document sharing but take longer than other solutions to resolve issues / answer questions. • S ocial netw orks – p redominantly F aceb ook – are gaining a grow ing role in customer relations, b ut must b e sustained b y community managers. • Community management is run by either Digital or Customer Relations business units according to company objectives. “When the number of touch points available is multiplied, contact volume increases, with each channel sustaining a specialization”. I ndustry ex pert 6 O ff- site Customer R elationship S tudy | J anuary 2 016

5. A generational div ide h as dev elop ed S martphones offer in th e ch oice of ch annels to interact w ith six different touch points serv ice p rov iders, w h ich ap p ears h eav ily influenced by smartphone use. V oice • Generation Y uses all contact channels almost S MS / Mob ile equally. Messenger 6 apps • Older users favor the phone: it remains the Email Internet / preferred channel for those born before 1960. w eb chat • Generation X uses electronic messaging as much as S ocial the phone to contact providers. netw orks • This variation could be explained by smartphone penetration: phones enable use of six distinct channels / touch points. • Social and digital smartphone functions are mostly used by Generation Y, but will spread to other age groups faster than the population ages. Trends: Customer choice and preferred contact channels are changing and vary b y age. C h annel p ref erence b y age in 20 15 100% c5% c5% Internet / w eb chat c2 5% c2 0% c2 5% c10% S ocial media c2 5% c30% Electronic messaging c9 0% ( email and S MS etc) c2 0% c10% c6 5% S martphone app c2 0% c30% Telephone / V oice c10% G en. Y G en. X B ab y B oomers S ilent G en. Sources: EY analysis ( < 35 y ears) ( 35 - 55 y ears) ( 55 - 7 0 y ears) ( > 7 0 y ears) O ff- site Customer R elationship S tudy | J anuary 2 016 7

C ustomer relationsh ip s • Example: In telecoms, the online forum for a 100% digital offer gets the best contributors to run the are ev olv ing tow ards community. more emp ath ic and social interactions, rep lacing “Savings from call reductions have been mostly th e rush to answ er re-allocated to qualitative projects, like forums, in q uestions q uickly order to improve customer relationship quality”. P ay- TV operator 6 . C omp anies are adop ting new “Chat is managed by a community of collab orativ e ap p roach es and asking ‘ambassadors’ who are brand lovers involved in customers to contrib ute to customer helping other users”. care v ia user f orums or as b rand O nline marketplace amb assadors. • Example: In the e-commerce sector, a leading marketplace has developed collaborative self-help by recruiting top clients as brand ambassadors to deal with other customers’ issues. Ex amp les: Digital companies have involved clients in customer care through strong collab orative engagement and self- help tools. C ontrib utors are rated b y p eers and th e telecoms f orum C h at is run b y customers on a leading e-commerce community manager marketp lace Sources: French 100% digital offer MNO forum and leading e-commerce market place website. 8 O ff- site Customer R elationship S tudy | J anuary 2 016

7. C ustomers are making increased • Specific social CRM tools are used to screen user posts and guide users towards (i) customer care use of social netw orks, p romp ting teams (one-to-one) or (ii) communication teams comp anies to inv est in dedicated social (community management). media resources and tools. But corp orate • The diversity of interactions, their empathic ex p ectations of th e gains look ov er- dimension, and the brand image implications are op timistic. leading companies to return instead to private messaging (one-to-one), enabling them to interact • Social media has become a favored channel to more deeply with customers. contact and interact with brands – offering strong emotional ties and many ways to engage in conversation. • The power balance between brands and customers on social media is reversing, however, as brands are targeted by social network users (for example on Facebook). “Social networks are not tomorrow’s channel for • Companies are therefore compelled to manage (i) care activities. We use it for marketing purposes customer passion including hatred as well as (ii) only”. their own media profile and online visibility– a task O nline tourism pure player requiring particular skills. O ff- site Customer R elationship S tudy | J anuary 2 016 9

8. Trends in contact mix and ch annel • Former traditional Customer Care Agent needed to be productive and able to cope with stress. ch oice are ch anging th e role, training and • The skills required are evolving: agents need to be skills of th e C ustomer C are A gent ( C C A ) . able to empathize with customers, understand their • Customers are increasingly well-informed problems and find fast and easy solutions using (sometimes more so than CCAs), forcing agents to knowledge databases. continually up-date their knowledge. • Customer care services are becoming split between (i) high-value complex interactions managed by increasingly skilled agents and (ii) low value and standardized interactions delivered by self-help and advanced automation. “Digital is changing customer relationships in banks. Inbound calls are increasing, simple acts are done through self-service and self-care tools and the retail agent’s role is changing. Customer Service employees are more and more involved in outbound calls and are compelled to have a multi-channel vision of customers”. M aj or retail bank Trends: Customer service is ceasing to b e a cost center and b ecoming a differentiator, req uiring different skills of customer care agents. The tradit ional CCA The agile multichannel CCA ► H andle interactions on multiple platforms ► P rovide a consistent customer service on all channels ► H andle high volumes of standardiz ed interactions ► Tasks U nderstand the customer j ourney ► Cope w ith pressure and stress peaks ► 9nsoer complep iuestions efficiently ► R educe customer w aiting times ► Amprove customer satisfaction (first call resolutions) ► V erb al communication ► V erb al communication ► S kills W riting and reading comprehension ► L istening (email, chat, social media) ► Empathy ► Customer datab ases for each channel ► CJE dataZases (cross%channel customer history) Tools (silos) ► S cripts, templates, help lines ► K now ledge management repository Sources: EY Analysis / Interviews 10 O ff- site Customer R elationship S tudy | J anuary 2 016

C omp anies are looking • Push communications such as SMS and emails are no longer used for standardized mass market f or new C RM cap ab ilities communication but tailored through targeting and/ to enab le more or customer scoring. • For high value interactions, Customer Care Agents p ersonaliz ation and need to have access to the customer’s background and profile as well as to share a common “culture”. contact initiation • Data analytics enable customer contacts to be predicted and initiated proactively. 9 . D ata analy tics w ill b e at th e h eart of f uture customer relationsh ip s, allow ing comp anies to p rov ide a p ersonaliz ed contact and v alue p rop osition. • Automation technologies developed to deflect calls and low value interactions will be improved with predictive approaches and semantic analysis. “When confronted with complex situations, ‘once • Real-time marketing and Data Management and done’ is far higher if you call a customer back Platforms (DMP) enable websites to be personalized than if you answer by email”. in response to cookies and the browsing history of R etail distributor customers. C ase study : Data analy tics is a huge challenge for F rench companies. 45% 18% of F rench companies acknow ledge A re currently deploy ing that they underuse plans to make use of B ig Data the customer data they collect Sources: EY Analysis O ff- site Customer R elationship S tudy | J anuary 2 016 11

10 . O utb ound contacts w ill ex p erience • Customer scoring will increasingly be used to target the right customers with the most relevant value a new golden age. proposition. • Analytics and customer knowledge enable • Personal assistants (like Siri, Cortana or OK Google) companies to develop outbound contact practices. will change the customer relationship by delivering answers to customer questions directly. • The accumulation of client data enables companies to act proactively, instigating outbound contacts to avoid additional costs and maximize customer satisfaction. Ex amp le: Companies can convert data gathered from digital channels into insights, enab ling them to provide high- q uality multichannel customer care. Example Customer context O b j ective Example of new contacts g n ►The customer ► W elcome the new customer ti W elcome just purchased / to the service / company and provide W elcome email w ith tips on how s i sub scrib ed to the service him/her w ith useful information to fine tune service options x call / email E and tips. Closed- loop ►The customer ► G et fast feedb ack from customers Email asking to rate the level feedb ack w as in contact ( N P S ), w hatever the touchpoint of recommendation follow ing call / email w ith the company and the channel used the latest call to customer care P roactive ►The customer stopped ► U nderstand w hy the customer “ W e noticed y ou did not complete stimulus in the middle of a process stopped the process and try y our sub scription. Can w e help? ” call / email (eg. sub scription process) to get her / him to complete it ►The customer show ed ► Try to have the customer The user clicks on a sponsored Facebook P roactive strong interest in a product purchase the product / service post for a service from the operator, sales call / service that he /she w as interested in then receives a free trial offer by email for this service s t “W e noticed y our phone is still n ►The customer b row sed ► P ush relevant and useful oi P roactive technical assistance pages technical assistance solutions not active on our netw ork although p y ou looked at our support pages. t technical to the user ac assistance ►Connected device signals Y ou can contact us this w ay or go t assistance need to this store” n e o c v ti e ► ► v P roactive The customer’ s technical Create a file for the user’s “We have created a technical file ec ti issue seems genuine proactively identified issue, for y ou so that every thing is ready p technical s ac (no need for user confirmation) “t emporary ” until activated w hen y ou get in touch w ith o o file creation r r b y the user contacting the company our support team” P P Sources: EY Analysis 12 O ff- site Customer R elationship S tudy | J anuary 2 016

H ow EY can h elp : EY A dvisory offers expert advice on transforming off- site customer relationships in the digital era. S trategy , Marketing & Innov ation Management • Marketing strategy • C ustomer ex p erience • Channel strategy dev elop ment sup p ort • Customer segmentation • CEX strategy implementation • P erformance tools • L ean management and indicators • Change management • D igital transf ormation • Multi-ch annel • Business modelling p erf ormance op timiz ation • R esources allocation • C ustomer ex p erience strategy dimensioning • V oice of the customer • O perating costs optimiz ation • CX lab implementation • O utsourcing / partnership • Customer path engineering / strategy Design thinking A naly tics Tech nology • Marketing p erf ormance • IT strategy and transf ormation • Customer data structuring • CR M support and deploy ment • A dvanced customer targeti • K now ledge management ng ring, text mining) platforms implementation ( sco • Multichannel personaliz ation • C ommercial p erf ormance • W orkforce management and siz ing • R evenue management O ff- site Customer R elationship S tudy | J anuary 2 016 13

Our survey: why and how To uncover the latest trends in customer care, Against this backdrop, we focused our market EY surveyed more than 40 companies in four survey on customer-facing industries with a lot of countries during Q3 2015. remote customer contact. In each market we quizzed Customer Service is changing fast. One-to-one vertically-integrated suppliers, online pure players interactions are being displaced by one-to-many and disrupters, and traditional champions to ensure connections; cross-channel touch-points are we captured the new habits and behavior of digital multiplying and customers are becoming more natives. demanding. Companies are affected in three ways: We interviewed a range of executives within these customer relationship costs are evolving, contacts industries. are increasing across ever more diverse channels and brands are becoming more sensitive to customer views. Interv iew s conducted b y market segment Interviews conducted by professional profile (# of comp anies) (# of interv iew ees) Telecom c1 1 Customer Care c30 Directors Insurance c8 Banking c7 Marketing c15 Directors E-commerce c5 Digital/Innovation c10 Utilities c4 Directors Retail c3 Change and Transformation c5 Media c2 Directors CEX Experts c5 14 O ff- site Customer R elationship S tudy | J anuary 2 016

G lossary • C C A : Customer Care Agent • C EX : Customer Experience • IV R: Interactive Voice Response • C RM: Customer Relationship Management • MN O : Mobile Network Operator • C S R: Customer Service Relationship • N P S : Net Promoter Score • D MP : Data Management Platform • TMT: Technology, Media & Telecommunications • IT: Information Technology O ff- site Customer R elationship S tudy | J anuary 2 016 15

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