Perspective - Help Yourself article from Economist
Nice piece on Economist.com which lays out some predictions and then gets some quotes from some industry players on what they see. All are upbeat of course. It's good for the industry for magazines to inject the blue sky or in this case state the obvious (ie help yourself if you really want good service these days).
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Help yourself
Jul 2nd 2009 | NEW YORK
From The Economist print edition
Customers are working for companies free of charge, and they like it
AMERICANS worried that cheap labour in faraway countries threatens jobs at home should redirect their gaze to the mirror. Yes, companies are outsourcing jobs—to their customers. They are steering ever greater numbers to ATMs instead of tellers, websites instead of telephone hotlines and automated checkouts instead of manned registers. The recession is making them even keener.
Self-service is on the rise in industries from retailing and entertainment to travel and telecommunications. According to VDC Research Group, retailing, hospitality and health-care firms spent $2.8 billion on self-service technology in 2008. Between now and 2013 their investment will grow by around 15% a year. Speech-recognition technology, which permits automated responses to telephone calls, is also faring well. Datamonitor Group, a consultancy, expects spending on that to rise by around 8% in 2009.
Firms that embrace self-service technology like to talk about the joys of “customer empowerment”. Customers have grown increasingly used to self-service devices, whether they like them or not. A lot of consumers would still like to speak to a human being. But many people, especially younger ones who grew up with the internet, like doing things themselves. Gartner, a research firm, estimates that nearly 60% of customers prefer to check themselves whether an item is in stock at a store, often through a self-service kiosk or their mobile phone, instead of relying on an employee.
When done well, self-service can even increase customer loyalty. According to NCR, which makes self-service technology, 85% of consumers prefer brands that offer several forms of self-service: online, at kiosks and via mobiles, for example. Sometimes self-service can be more personal, not less. Many speech-recognition services store customers’ information and greet them by name when they call. Companies that provide up-to-the-minute online account statements, including some mobile-phone and cable-television firms, appeal to those wanting to keep a close eye on their spending amid the recession.
The main reason why companies are so keen on self-service, however, is cost. On average, transactions performed through kiosks cost a tenth of what they would have had an employee handled them, according to Summit Research Associates, a consultancy. Comverse, a technology firm, reckons savings from online self-service can be even greater: it costs $7 to answer a query through a call centre, but only ten cents to deal with one online. Comverse says one of its clients deflects 200,000 calls a week through its online self-service portal, saving it around $52m a year. The savings come chiefly from replacing employees with machines, which do not require health benefits or a salary. According to Francie Mendelsohn, the president of Summit Research Associates, each self-service checkout at a grocery store replaces around 2.5 employees.
The extra convenience that self-service affords can also bring in new customers. Blockbuster, a video-rental firm, plans to set up 3,000 kiosks by the end of the year at supermarkets and convenience stores in order to reach people who do not come to its own stores. Pitney Bowes, which makes franking machines, has set up self-service mailing kiosks in shops and office buildings and is sharing revenue with the United States Postal Service, which is facing dramatic declines in mail volume. Pitney Bowes’s research suggests that people who might otherwise not have bothered mailing packages or letters are now doing so.
The recession has made the savings from self-service especially welcome. Companies claim they do not fire employees but redeploy them to do more important work. But in a slow economy they are likely to get the boot. Self-service technology may provide other ways of helping companies through straitened times. Retailers, for example, are eagerly awaiting near-field communication (NFC) chips, which would store credit-card information in mobiles and so allow customers to use them instead of cards to make purchases. The technology would also help retailers keep track of customers’ spending habits and advertise special offers. Brad Fick of Direct Source, which sells self-service technology, says NFC devices will be introduced in the next year or two. For retailers that last until then, that is good news.
Posted by staff at July 15, 2009 01:37 PM