The Business Case for Proactive Notifications

Customer Service
Customer Service
Proactive notifications slash customer care costs and create new opportunities to satisfy customers. Here's why they're a win-win.

One of the hot growth areas in customer care today is to contact customers before they call companies. For decades companies have focused much of their strategizing on ways to squeeze related costs out of their budgets and they still spend at least $1 per minute to field each inbound call to the contact center. Automated outbound notifications cost as little as thirty cents per notification, which means the savings opportunity is significant. This is just one of the reasons so many companies are implementing automated proactive notification technology.

Proactive notifications provide automated, personalized outbound alerts to customers by email, text message, and voice. Banks, for example, are increasingly using proactive notifications to alert customers when their checking account drops below a certain amount. This outreach reduces the chances that customers will be hit with overdraft fees, which is an obvious win for the customer. For the bank, the revenue potential of the fees is often outweighed by customer care costs, such as fielding calls from irate customers and replacing ones who close their account in protest. Scotiabank has embraced this approach to proactive customer care, allowing their customers to select which alerts they want to receive and how they want to receive them.

While it's not difficult to project that choice and control are both important to consumers, surveys clearly show that consumers welcome the option of receiving proactive notifications. According to an August 2009 Forrester Research survey, 93 percent of consumers surveyed would like or love flight status updates and hotel reservation confirmations. The survey also found high interest (88 percent) in financial service notifications, such as transaction confirmations.

Harris Interactive also conducted a survey on the topic, which found that 87 percent of consumers wanted proactive notifications for fraud alerts - even if they hadn't signed up for notifications. This survey also shows how enterprises can use proactive notifications to accommodate declining consumer interest in direct mail outreach, including bill inserts. In fact, 61 percent of respondents said they prefer all proactive outreach, regardless of the urgency, to be via SMS, email, or automated calls. Thus proactive notifications are a way for enterprises to reduce their mailing and printing costs. An additional benefit is the improved reporting on whether a message was received by the consumer, something sorely lacking in traditional direct mail. Utilities in particular could benefit from enhanced reporting, given the strict regulations for service disconnection due to lack of payment.

Maximizing effectiveness

Enterprises have two main options for deploying proactive notification technology: buying and operating an on-premise system or using a hosted software-as-a-service (SaaS) solution. As with any other application, the choice often comes down to upfront costs and scalability requirements, such as the ability to support a large spike in reminder notifications a few days each month during a billing cycle.

The ideal product also should support a variety of notification options - e.g., voice,
email, and SMS - to maximize reach and effectiveness. Besides accommodating the widest possible range of customer preferences, this flexibility also lets the enterprise choose the appropriate delivery method, such as using email when the notification needs to contain images or SMS when text alone is effective. Consumer expectations are progressing quickly in this area, so while some may prefer to get an email for a payment reminder, others may expect to have a text message sent for something as time-sensitive as a fraud alert.

A thorough strategy is the key for maximizing effectiveness. To begin, the enterprise should indentify the major reasons why and when customers call, and then develop notifications that anticipate those reasons. Proactive notifications are fundamentally different from spam and unsolicited sales calls during dinner. Instead, customers opt-in and maintain constant control of how, when, and why they're contacted, through Web portals and IVR systems that enable them to set their alert preferences. Customers perceive these personalized notifications as being highly relevant, thus minimizing the chances that an important alert - such as a checking account balance falling below $100 or a change in a flight's departure time - will be ignored.

When implementing proactive notifications, enterprises should be aware of the regulations and industry best practices for each delivery method. For example, SMS notifications should abide by guidelines such as the Mobile Marketing Association's U.S. Consumer Best Practices, as well as the Federal Trade Commission's Do Not Call Registry. This also improves effectiveness by reducing the chances that customers will perceive them as an annoyance and ignore them. The ideal proactive notification solution should include tools that let enterprises adjust settings - such as delivery time of day and method - to maintain compliance.

More and more companies are using proactive notifications for a variety of purposes across a broad range of industries. In addition to banking, billing, and travel applications, prescription refill reminders and appointment reminders are common notifications for consumers today. Looking ahead, proactive notifications can help put Smart Grid technologies to work by enabling utilities to send alerts that inform customers about seasonal pricing events, off-peak pricing, advanced meter capabilities, and cost-reducing energy tips.

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About the Author: Christy Murfitt is senior manager, solutions marketing, for Nuance