April 1, 2003COMMENTARY--Pop quiz: Where would you advertise to sell footballs, Sports Illustrated or Cosmo? Easy question, right? Everyone understands the principles of target marketing: promotion dollars are best spent on the media and communication channels that reach the highest number of potential buyers.
But what many companies fail to realize is that customer care channels and methods must be equally tailored to customer demographics to build relationships and maximize return on service expenditures. Can your company afford to support customers via every possible channel?
The storefront, the Web, online self-help, IVR, mail, voice recognition, chat, service bots, telephone, instant messaging, VoIP and e-mail: companies have more options than ever before for interacting with customers. But just because dozens of service options exist doesn't mean they make sense for every company and every type of customer. It's expensive to offer them all, and most companies must choose. But how? Just as marketing efforts should be tailored and targeted, service channels should reflect the behaviors and preferences of your current and prospective customer base. The optimum service channels for your business are found at the intersection of customer usage patterns, service preferences and behavioral psychology.
Tips for serving major mass-market segments
Generation Y, also known as the Net Generation (5-22 years of age), grew up around PCs, cell phones, TV and other advanced technologies. These youngsters feel completely at ease with online options. According to the U.S. Census Bureau, teens exhibit a 77 percent Internet penetration rate (weekly access). Aside from e-mail, teens' favorite online activity is sending instant messages and chatting. Young adults in their twenties, thirties and forties are equally Web-savvy, with extensive Net use at home and at work. If your core audience is young consumers, you should absolutely be offering service via the channels that delight them: chat, IM, e-mail, online account management and automated Web self-help. The more you empower your young customers to serve themselves online, the more they'll embrace your company and refer their peers.
Boomers have a significant level of comfort with Web service, but seem to still prefer some human interaction. According to Mature Marketing & Research, over 40 percent of Boomers shop online and actively use e-mail. E-mail is as popular with older online users as it is for the overall Internet population. But the National Technology Readiness Survey discovered that Boomers are significantly less interested in using automated Web help, online chat and VoIP than customers in their thirties and forties. Boomers place less importance on online support options as compared to their younger counterparts.
Senior citizens place high priority on the presence of courteous and friendly employees in store locations, and this carries over to their expectations of human service interactions elsewhere. Research on seniors reveals a reluctance to use self-service options: fewer than half of consumers age 55-and-over regularly use ATMs and only 2.6 percent pay bills via the Internet, according to the Federal Reserve Bank of Boston. Only 7 percent of customers over the age of 65 consider online chat a desirable option for customer service, as opposed to 76 percent of those under the age of 65. While 80 percent of the teen market place a priority on automated Web self-help, only 52 percent of seniors desire this option according to the National Technology Readiness Survey. While the percentage of seniors online is growing rapidly, they still comprise the most hesitant group in using Web service and automated offline service options like IVR. Service automation is less familiar to seniors, so these options often frustrate, bewilder and disappoint.
Overall, women place a greater priority on service personalization and consistency. According to research by Primus, women have higher expectations of the online customer service experience than men. Sixty-nine percent of women rated rapid response to questions as "very important" compared to 58 percent of men. They also place a higher priority on cross-channel consistency: 51 percent of women thought it was very important that online products be comparable to those listed in catalogs and stores, compared to 32 percent of men.
The book Gender Sell indicates that women prefer service representatives who ask more questions and are active listeners. Women exhibit a greater need to know what to expect and look for straightforward service policies and warranties.
Men prefer simple and straightforward shopping and service experiences where convenience is paramount. According to advertising firm Foote, Cone & Belding, just as most men don't like to ask for directions, they also don't like to ask for service. Men prefer to research purchases online instead of asking friends for advice, and exhibit a great propensity to use self-service options. According to the National Technology Readiness Survey, men express a greater desire for online chat customer service (77%) than women (74%), who lean toward e-mail support.
This tip is general for a reason: customer lifestyles run the gamut, with thousands of niche products tailored accordingly; service must also be tailored. For instance, makers of personal video recorders and cutting-edge handheld computers should recognize that their core consumers are "first adopters," known for buying and using technology at the bleeding edge. Data Development Corporation reports that 57 percent of Internet veterans (a status indicative of first adopters since they have been using the Net since its early days) say they prefer to solve problems using Web resources. Only 24 percent preferred speaking to a service representative via telephone. That's a clear self-service preference based on affinity to technology.
A very different example is new mothers. These busy women report that they go to the mall far less often than before their child was born, preferring instead to shop online. IntelliQuest reports that new mothers are more likely than any other group of women to seek expert support online. Even hours worked can make an impact: the Food Marketing Institute reports that women who work full time are more concerned with service speed and convenience than women who work less than 20 hours a week. If low-income families are your target, industry research reveals very low Internet penetration rates and sophistication levels at this time. All of these factors--life changes, careers, income levels and more--can play a role in the type of service options that appeal to your customers.
Only your company knows the set of characteristics that describe its core customer base. If you keep these unique behavioral qualities in mind when establishing service channels, your customers will be delighted. It's not rocket science, but too many companies fail to consider the customer lifestyle.
By culling this research, the author in no way wishes to perpetuate stereotypes or ascribe characteristics to individuals within customer populations. There are millions of exceptions to demographic patterns, including women who work in construction, teens who hate pop music and senior citizens who enjoy online gaming.
The purpose of this data is to understand overall customer service preferences by demographic, with complete respect and understanding that individuals within a segment exhibit tremendous variation. Just because young people enjoy online account access doesn't mean they won't also call you if they run into a snag. The optimal service channels are those that delight the majority, but also remember and serve the minority.
Conquering the channel challenge
Providing service through the channels most meaningful to your core customers will dramatically reduce capital outlay. Why invest in automated self-help software if very few of your users will ever try it? Why employ hundreds of reps on the phone if your younger users would prefer to be serving themselves on the Web if given the proper tools? By tailoring channels to customer wants and needs, your company can dazzle customers and avoid superfluous expenditures. This goes for service hours, too -- we all know that college students have very different body clocks than the average senior citizen (ever wonder why the senior's dinner special starts at 4:00 pm?). Keep these time frames in mind when setting up service hours. The younger crowd will be disappointed with service less than 24x7 while seniors and Boomers will generally be satisfied with morning-evening operating hours.
Serving customers in their preferred channels will impress them and encourage repeat purchases, cross-sales and referrals. Customer delight transforms the "cost center" of customer service into a "profit center" of lifelong customer relationships. Harvard Business Review found that customers expressing "complete satisfaction" ("delight") with a vendor's process are six times more loyal than those expressing only "satisfaction." Thus, there is a dramatic leap in loyalty between those who are thrilled by a shopping experience and those who are merely contented. Customer retention -- creating longitudinal investments in customers -- guarantees significant current and future economic benefit.
By serving customers at their point of need, in their preferred channel, your company will convey its understanding of their lives and needs. They may not say, "Wow, that's exactly the kind of service a Boomer like me enjoys," but they will think, "Wow, that was easy." Choosing the right channels puts your company on the path to delivering increasingly personal and rewarding experiences and products.
There are ample business reasons to target service channels to customer demographics. Many customers complain about how service seems to get worse as time goes on. Much of this impression comes from companies spreading themselves too thin across channels and then not serving any of them well. Don't use technology that your customers won't accept or force users into service arrangements that ignore their expectations and preferences. Maybe then we'll stop hearing our grandparents complain about endless IVR menus and our nephews grousing about being forced to log off and to pick up a phone to resolve their tech support issue. In the eyes of your customers, all channels were NOT created equal.
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