Voice Of The Prepaid User: Roadmap For Creating An Effective Customer .

Voice of the Prepaid User: Roadmap for Creating an Effective Customer Service Strategy June 2013

Voice of the Prepaid User Voice of the Prepaid User: Roadmap for Creating an Effective Customer Service Strategy Prepaid cardholders call customer service Prepaid providers should begin with an more than other financial services users, understanding of when and why prepaid which can add up to high costs for prepaid cardholders are calling customer service. providers. In fact, just one live agent call can This intelligence can provide a helpful sometimes be the factor that tips a prepaid roadmap for a contact center strategy. Read customer service program out of profitability. on to discover the profile of the prepaid cardholder’s service demands, based on What prepaid providers must consider to address this cost challenge is how best to funnel more customer calls to automated service, versus live agent service. The Interactive Voice Response (IVR) channel costs a fraction of live agent service, and can quickly and easily handle most routine calls. But developing a helpful and easy-to-use IVR system can be difficult, and a cumbersome IVR program can actually further frustrate customers who are already in need of support. 2 Contact Solutions Inventing Real Customer ServiceTM research from Contact Solutions.

Voice of the Prepaid User The Prepaid Customer Journey Interaction channels for any customer customers differ from traditional banking service program are complex, and there are and credit card customers in their channel multiple avenues for customers to interact preferences. with the contact center. Interestingly, prepaid THE PREPAID CUSTOMER INTERACTION MAP 70% 10% 70% of calls o r i g i n at e fr o m mobile phones There is minimal use of mobile apps 3 Contact Solutions Inventing Real Customer ServiceTM 10% Less than of customers Use text message (SMS) 10% 10% Less than of customers Use web IVR is the most heavily used channel in prepaid

Voice of the Prepaid User Prepaid Caller Goals and Actions SELF-SERVICE CALL TYPES AGENT CALL TYPES transaction history 1% Account maintenance 2% DISPUTES 2% load, transfer 7% Replacement 2% replacement 10% pin reset 28% 90% 10% balance 13% activation 16% balance 93% general inquiry 26% 90% r o u g h ly of phone calls are self-service While more than 90 percent of calls have the potential to be completed through self-service, a portion of the prepaid population persistently opts for a live operator. 4 Contact Solutions Inventing Real Customer ServiceTM

Voice of the Prepaid User Prepaid cardholders contact customer per month, while cardholders from payroll, service more frequently than do credit gift, rebate and general purpose reloadable and debit cardholders, and recipients of prepaid cards make an average 2.7 calls per government-sponsored prepaid cards make month. However, for all types of cardholders, even more frequent customer service calls. balance inquiries are the most frequent Cardholders of large government prepaid reason for calls to customer service. card programs make an average of 5.5 calls IVR CALLS PER MONTH PER CARDHOLDER 2.7 calls/month is average (portfolio i s m o st ly GPR a n d payroll) 1.5 calls/month (mix includes GPR, payroll, gift and rebate) 5.5 Calls/month (large gov prepaid program) extreme 50-60 calls/month 0 1 2 3 4 5 6 EXTREME IVR CALLING BY CARDHOLDERS (MONTHLY) 0% 25% balance inquiries 21% over 10 12% over 15 7% over 20 over 30 over 60 5 3% 0% 66 really extrem e cu stom ers Contact Solutions Inventing Real Customer ServiceTM Great if calling for usage-driven balance updates

Voice of the Prepaid User In addition, prepaid card users demonstrate somewhat flexible and scalable for prepaid a wide variability in call volumes – which providers to efficiently and quickly respond can depend on program type, time of year, to customer needs. time of day, etc. So the call center must be CALL VOLUME VARIABILITY October 1, 2012 EVENT Seasonality (Holiday, Tax refund) december 30, 2012 CALL VOLUME VS NORMAL DAYS 5X October 1, 2012 EVENT Monthly variations (Deposit days) december 30, 2012 CALL VOLUME VS NORMAL DAYS 5X 7X October 1, 2012 EVENT 6 Unexpected events (Federal stimulus, weather) Contact Solutions Inventing Real Customer ServiceTM to december 30, 2012 CALL VOLUME VS NORMAL DAYS 2X or more

Voice of the Prepaid User Contact Center Cost Considerations The average cost of a live operator call is about 1.70, compared to 10 cents for an inquiry completed through automated response. OPERATING EXPENSES DIRECT OPERATING COSTS* direction and a m o r t i z at i o n 4 % pin pos card costs advertizing, marketing and promotion costs 6% other transaction fees other general and admin costs 7 % residency costs signature pos settlement (gains) and other losses 12% direct operating cost 53% overhead per transaction cost salaries, benefits %18 atm inquiry/decline customer service costs 1% 1% 2% 2% 3% 6% 12% 13% 20% 11% of operating cost 40% atm withdrawl CONTACT CENTER OPERATING COSTS* agent salaries other salaries (management, it, etc.) other rent telecoms charges it management training utilities & local taxes recruitment 0% 7 10% 20% Contact Solutions Inventing Real Customer ServiceTM 30% 40% 50% 60%

Voice of the Prepaid User In general, customer service is expensive. In fact, one agent call can actually eliminate the profitability of that cardholder for over a month. AGENT ACTIVITY CALL DURATION (MIN: SEC) misc 4 % admin 6 % public sector training 6% all industries average email/chat 7% 59% 3:57 prepaid wrap %10 manufacturing agent are talking only of the time 60% PREPAID AGENT COST/HOUR 5:06 4:16 financial services idl %8 Range: 3: 39- 5: 33 3:26 Prepaid calls length is shorter than most industries AVG. COST FOR A PREPAID AGENT CALL 36.00 3.84 25.20 A call to an agent costs 1.70 13.80 1.70 1.05 low 8 avg high Contact Solutions Inventing Real Customer ServiceTM 6:42 low avg high

Voice of the Prepaid User EXAMPLE PREPAID CARD PROFITABILITY 11.00 10.00 revenue 9.97 incom e 0.99 9.00 cost 8.99 agent call 1.70 8.00 7.00 Agents come with costs – both hard and soft. However, ensuring superior service, whether In some cases there is a 100 percent annual via an IVR or live agent, is critical for prepaid customer service representative turnover companies. According to Forrester Research, rate, even after extensive training and ramp the impact of poor customer service can time. Accuracy, consistency and quality are be measured in the hundreds of millions of ongoing issues, along with long hold times dollars, lost to customer churn, abandoned and inevitable human agent error. purchases and negative word-of-mouth. FINANCIAL IMPACT OF IMPROVED CX total annual impact (in millions) 495 hotel s 44 wireless servic e provider s a irlines 65 insura nc e provider s c redit c a rd provider s 481 44 24 12 banks 12 9 450 60 83 825 788 1,364 1,297 590 225 203 452 213 307 a d d i t i o na l p u rc h a se s 90 150 Contact Solutions Inventing Real Customer ServiceTM churn reduction w o r d o f mo u t h 252

Voice of the Prepaid User Prepaid card customer experience measurements are in their infancy, but much can be gleaned from the credit card industry to create a baseline of information. Analysis by Forrester Research shows that credit card companies have low overall customer experience ratings, ranking just below banks. CX SCORES BY INDUSTRY industry (average) retailers (82) 75 hotels (79) 72 parcel delivery/shipping providers (77) 88 74 consumer electronics manufacturers (74) 80 67 insurance providers (73) 83 64 investment firms (73) 83 53 banks (71) 85 53 credit card providers (70) 20 89 85 63 30 40 50 very poor average industry score 10 Contact Solutions Inventing Real Customer ServiceTM 82 60 70 80 poor ok good 90 100 excellent

Voice of the Prepaid User Recommendations: Manage Profitability in the Contact Center with Automation Increasing customer preference for self- alerts can reduce call volumes further. service is one clear path toward profitability Efficiencies and a greater competitive advantage. IVR contribute to the financial sustainability of systems can automatically provide routine these customer service programs, they information, including balance and last also enable agents to spend more time deposit/reload prepaid with callers who need help with complex, cardholders most frequently call to request. atypical, issues, such as suspected fraud Proactive outbound communications for or lost cards. amount, which like these will not only items such as balance and low balance COST REDUCTION STRATEGY USING THE IVR 400,00 350,00 5% Automation rate im pr ove m e nt 24. 1% Ne t margin improvement 300,00 250,00 200,00 150,00 100,00 te lco cost ivr cost a ge nt cost 50,00 0 Self-Service is a key throttle program managers control IVR remains a high-use service channel hate bad IVR, but contrary to popular belief, for financial increased automation does not always lead information quickly, and it is an important to lower customer satisfaction. Actually, first touch on the way to an agent. But, many research demonstrates that customers prepaid providers overlook the improvement prefer the IVR if it gets them what they need potential of their IVR programs. Customers more quickly and easily. customers wanting their 11 Contact Solutions Inventing Real Customer ServiceTM

Voice of the Prepaid User Prepaid providers can create a preference for self-service by building an IVR that responds directly to the voice of its customers, and by creating automated transactions that are easy to use. Steps for doing so include: Research: First, companies should Get rid of ‘press 0’: By now, most have a plan in place to mine data customers know that they can press ‘0’ from IVR to see where customers at any time to reach a live agent. Don’t are spending the most time. (The remind them too many times of that fact, aforementioned customer profile should or they may abandon self-service. be comparable for many prepaid businesses.) Once prepaid providers Treat IVR like an automated agent: have this information, they can then Prepaid providers must not hold their IVR take the action required to make those to a higher standard than their agents. For interactions easier and faster. For example, if customers have to authenticate example, if 85 percent of customers are with at least three pieces of information in calling in to check balances, then that the IVR, but only one piece of information routine interaction should be handled with the agent, companies are training via IVR. them to expect that opting out for a live Remove agent will actually save them time. the fluff: It is important to have a clutter-free IVR system in place. Additionally, it is also crucial that callers be able to quickly hear and consider options to resolve their calls. Never-used, timeconsuming, and confusing IVR options should be removed by prepaid providers. Make authentication simple: Most customers do not want to deal with a 5-step authentication process each time they call a contact center. Without sacrificing security, make authentication as simple and as quick as possible. If the IVR is too cluttered, customers will immediately opt out and request to be transferred to an agent. As the prepaid industry matures, the examining the voice of the customer, importance of providing good customer prepaid providers can uncover concrete service, inexpensively, ways to enhance the caller’s experience will continue to increase and become in the contact center, while also trimming a competitive differentiator. By closely costs via increased automation. and doing so By Justin Lemrow, Director of Continuous Improvement, Contact Solutions 12 Contact Solutions Inventing Real Customer ServiceTM