Channel Shift: Realising the Benefits
Gerald Power
www.trapeze-transformation.com
The White Paper
The aim of the white paper was to challenge some myths about channel shift and explain why….
‘If the benefits of Digital are so obvious then why are they so hard to realise consistently?’
Or“Show me the money!”
Channel Costs
Everything should be made as simple as possible, but not one bit simpler.
Albert Einstein
Source Face to
Face
Telephone Post IVR Online
PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p
SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p
Common cost per transaction assumptions
Channel Costs
What did the analysis say?
Source Face to
Face
Telephone Post IVR Online
PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p
SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p
White Paper Yes* Yes* Yes* Yes* Yes*
They are credible averages, with two big caveats
• Use them as ‘average’ contact costs across many sectors• Don’t ever use them in a business case
Source Face to
Face
Telephone Post IVR Online
PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p
SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p
White Paper Yes* Yes* Yes* ? ?
Why the Caveats?
These values are consistent with providing simple information via the channel. Costs will become much larger and more complex when performing transactions and its transactions that you want.
Source Face to
Face
Telephone Post IVR Online
PWC Report [3] £10.53p £3.39p £12.10p NA £0.08p
SOCITM [9] £14.00p £5.00p NA £0.20p £0.17p
White Paper Yes* Yes* Yes* ? ?
Why the Caveats?
These values are particularly misleading as the proposition is often for transactional digital self service and these costs are far too low for that – they imply a simple page of ‘flat’ content e.g. just information no transaction
Blackburn and Darwen Winter Page
A great example of simple but very effective low cost digital content, £0.08p per hit or low seems credible
DVLA Online Car Tax
It cost around £40M and will take around 10 years to cover its costs, £0.08p per transaction? The NAO don’t think so.
For every Amazon and Facebook there are many forgotten online failures
Success requires a very good understanding of your business and how to deliver benefits using Digital
Savings & Benefits
Ultimately whatever we say about channel costs and whatever logic we use, its not a real saving until it shows up on the bottom line
In the current climate cashable savings are probably your prime objective and there are only two significant sources
•Headcount Reduction•Estates Rationalisation
If your channel shift programme or business model allows the customer to self serve, without an agent, it has the potential to give you cashable benefits
Cashable Savings
The Balance Sheet
Year 1 2 3 4
FTE Cost 250,000 200,000 175,000 175,000
Estate Cost 250,000 250,000 150,000 150,000
Investment 100,000 50,000 0 0
Net Benefit -100,000 -100,000 75,000 250,000
Looking at the balance sheet without the details of the technology and channel strategy can be very informative
Investing is relatively easy, but you don’t realise the savings until you cut your costs and that’s the hard bit
Behaviour Change and
Rate of Change
Change Rate & Net Benefits
Investment
Savings
The faster the shift the quicker the return on investment, so effort spent on influencing will be effort well spent
In the current climate it is vital that you make your investments work for you:
•If you are having to cut to invest its vital that savings come quickly, ideally in-year•The longer it takes to shift customers the bigger the hole the investment makes in your budget•Money spent on marketing can be money very well invested
The jobs not over until the customers shift… and even then its not over as you seek continuous improvement
Time is Money
Contact Volume
Cost Web
F2FTelephone
Channel Cost Profiles: The Mathematical View
This is a generalisation but:
•Face to face and telephone have generally linear cost profiles, the main cost is in answering the call•For digital the main cost is often in setting up the service, once you do that it costs the same where 10 or 1000 people use it
If people are not using the phone or F2F you tend to notice, idle websites often go unnoticed and its money quietly being lost as the investment yields no return
Digital has a Different return profile
0
5
10
15
20
25
30
35
40
- 2 4 6 8
An
nu
al V
isit
s M
illi
on
s
Cost of Site £Millions
Cost vs volume
Cost vs volume
defra.gov.uk (2p)
uktradeinvest.gov.uk (£11.78p)
transportdirect.info (33p)
Cost per Visit
UK Central Government Websites, June 2010 COI
Mean by site = 54p/visit Mean by visits overall = 23p/visit
Cargo Cults of the South Pacific: The Psychological View
The key lessons from the cargo cults:
•Just because it looks digital doesn't mean it is digital
•Digital is an end to end process model not a surface veneer
Its you job to make it clear to your senior team if they are investing in a bamboo hut and a new lawn or an air-traffic control system
Magical Thinking
Gerald PowerThe White Paper is available for download at
http://direct.govdelivery.com/channelshift-wp
There are more resources available at our websitewww.trapeze-transformation.com