Recent News

Cutting Costs in Today’s Economy

Mark Crawford
June 30, 2009

XN Financial Services is a Florida-based firm that creates specialized insurance products underwritten by Lloyd's of London. One of the tasks that CFO Bob Zobel enjoys the most is "turning over little rocks."

He admits the cost savings he discovers barely budges the cash needle, even though XN's revenue is just $80 million. "These are not big numbers," the CFO comments to CFO Magazine. "But they get bigger when you add them up."

He takes a seat-of-the-pants approach, spotting potential savings in the course of his daily doings and travels. A favorite example, which involves cell-phone charges, "started with me but became a good deal for the company," he says.

Zobel frequently visits the firm's Canadian arm in Montreal. After his first trip there, he was surprised that his Verizon bill for the month had doubled from its previous norm, because of international calling charges. He was surprised again when Verizon told him that for just a few dollars a month, his "anywhere minutes" plan could be expanded from just the United States to include Canada as well.

That got Zobel wondering how much more the company could save on phone bills. About 50 of XN's 75 employees make calls for which they are reimbursed. There is frequent travel not only to Canada, but also to Europe, where analog phones do not work. So employees without a BlackBerry or other digital device can easily ring up $100 to $150 a week in land-line charges.

Working with his IT director, Zobel reduced the number of cell-phone suppliers the company uses from three to two, signed up for country-specific plans in all of the firm's international business destinations, and bought BlackBerries for those who travel to Europe. With everyone properly equipped, the benefit should be several thousand dollars a year.

Potential cost reductions can go unnoticed even when they stare you in the face. Zobel says he's proudest of a simple switch in hotels in Montreal that saved $75 a night—which translates into a savings of about $7,500 for the 100 or so nights Zobel spends there in a year. The best part, he adds, is that XN's board thought the story about the hotel change was "fabulous." Other employees are now being encouraged to look for their own travel cost savings. "If two people are going to the same city on the same day, take the same plane and share a cab," he says.

Test Your Leanness

At ServisFirst Bank, a Birmingham, Alabama institution with $1.2 billion in assets, business-services provider Crowe & Horwath is winding up a two-month-long expense-benchmarking project. The bank's CFO, Bud Foshee, says he expects that less than $80,000 in potential savings will be identified.

He characterizes that level of savings as not terribly significant. "Anywhere money could be saved, they've looked at it and have found very few things," says Foshee. "This proves that we've done a pretty good job of controlling costs. When you grow as quickly as we have, you don't always watch your expenses. But I don't know of anything we could do right now that would save an awful lot of money."

The examination covers more than 20 categories of noninterest expense, such as maintenance, office equipment, IT processing, printing, stationery, and check expense. Crowe & Horwath will receive a percentage of identified savings, to be paid out over three years.

Foshee says that rather than being motivated by the recession, the project was prompted by a cost-control orientation the bank has had since it opened in 2005. A big part of that effort has been a preference for outsourcing whatever is possible, including internal audit, compliance, and managing the bank's core processing system. "We avoid investing in the people and equipment for those things, and it's worked out really well," he says.

Other Kinds of Cutting

Some types of expense savings — aside from well-known ones such as layoffs, hiring freezes, and benefits reductions — are emerging as trends among smaller companies, according to Angela Roberts, area practice director for Ajilon Finance Solutions.

Videoconferencing is becoming an increasing popular alternative to physical travel for such purposes as board meetings and business pitches. Installing videoconferencing equipment brings not only immediate savings but also expense reductions that will last, Roberts points out. "Whenever you use it, you'll be saving not only on travel costs but on time away from the office," she says.

An even lower-cost alternative to travel — in fact, a free one — is the use of Internet communication vehicles such as Skype. Roberts says that she and some of her clients are using freeconferencecall.com for audio interaction without the need to install camera equipment. For their part, Skype users can see one another by using cameras mounted on their computers.

This is a summary of an article published by David McCann on www.cfo.com entitled “A Cornucopia of Costs.” See the complete article online here.

¡Bienvenidos! Best Practices for Using Welcome Calls in Your Hispanic Customer Service Strategy

Tony Malaghan
June 24, 2009

Many companies have adopted strategies to welcome their newly acquired customers. These contacts most often take place in the form of letters or packets mailed to the customer via the postal service, an e-mail, a pre-recorded outbound broadcast message and/or a live outbound telephone call from a customer service representative. The type of industry, purpose of the initial contact and cost to deliver the message drives the strategy and the tools utilized in a welcome contact. We have seen that many companies underestimate the benefit of welcome calls, especially to their U.S. Hispanic customers.

Census 2000 showed that more than one person in eight who lives in the U.S. is of Hispanic origin, and the U.S. Hispanic population continues to grow much more rapidly that the non-Hispanic population. By 2012, nearly one person out of every six living in the U.S. will be of Hispanic origin. By 2025 that figure will have increased to one out of every four! According to the Selig Center for Economic Growth, in sheer dollar power Hispanics' economic clout will rise from $862 billion in 2007 to slightly over $1.2 trillion in 2012. Based on these numbers, this market is certainly one worth taking, pursuing and developing specific strategies to target and retain these customers.

In nearly every industry, a welcome contact that thanks the customer for their business and congratulates him on selecting your company as his provider helps form the foundation for a successful long-term relationship. In today's competitive landscape consumers have many choices when selecting providers for their banking, lending, insurance, landline/wireless telephone service, cable TV, home security, etc. I think it is fair to say that in today's highly homogenous marketplace, consumer decisions are initially driven by price and businesses have to look elsewhere to find that key differentiator between their product/service offering and that of their competitors.

One area where businesses can develop a real competitive advantage is providing excellent customer service. In the general market, low-cost postal mail, e-mail, and automated message strategies are effective tools to welcome customers and familiarize them with your products, services and payment methods. Except for the very young customer, who may be a first-time user of your service, general market consumers are fairly experienced in commonly used business practices. However, the U.S. Hispanic market is comprised of individuals who vary greatly in their level of acculturation to the social/cultural life, as well as business practices in the U.S. Those unacculturated and partially acculturated Hispanic consumers may be unfamiliar with U.S. business practices, processes, and tools that can be accessed to answer questions or resolve disputes and will benefit greatly from a live outbound welcome call by an experienced bilingual customer service representative.

Immigration has been a major contributor to the growth in the Latino population which means adult consumers who are newly arrived to the U.S. must research, shop, and purchase the basics and luxuries to function in their new environment. Most of these consumers have used banking, insurance, telephone, utilities, and other services in their native countries, and will seek similar services in the U.S. However, the way companies in these industries operate in other countries can be vastly different than in the U.S. because they function under different laws and regulations and use other business practices. For example in some Latin American countries industries which are very competitive in the U.S., such as telecom, operate under a monopoly which means that immigrants to the U.S. must learn how to navigate, understand and make decisions in a complicated and competitive environment. Many of these issues and concerns are tackled in the sales process where sales people take the time to describe, explain, and answer questions about your product or service. Additionally, many companies provide Spanish-speaking sales representatives, and Spanish-language websites, marketing collateral and documentation as tools to educate the customer and close the sale.

However, let's be realistic: How many salespeople describe how a customer will be billed, the consequences of late or missed payments or other servicing issues? Sales people are motivated, remunerated, and driven to close sales and move on to the next prospect. Therefore this information is generally ignored. Since Hispanic customers are less experienced in billing and payment processes in the U.S., it behooves companies to deploy a high-contact strategy to ensure your customer understands your products, services and the importance of making timely payments.

The objectives of a live outbound welcome call to your new customers are best delivered by a bilingual customer service representative and may include one or more of the following:

Verify and correct account information
Answer any questions the customer may have about the product/service
Educate your customer on how to maximize his relationship with your company by further describing your products and services
Emphasize the importance of on-time payments to reduce delinquencies, service interruptions, etc.
Increase customer loyalty to improve retention and reduce churn
Identify relevant cross-selling opportunities for the future

The ideal timing for a welcome call will depend on the type of service your company provides, but optimally will take place within a few days of service activation. Do not underestimate the importance of the welcome call and the long-term benefits you will reap. This is the first contact you have with the customer following the sales process.

The tone of a welcome call is friendly, informational and inviting. In best practices, the content of the welcome call includes the following steps:

Welcome the customer and ask if they have any questions or concerns about the service.
Verify the customer's contact information and ask for additional or missing information. These include verifying the correct spelling of the name(s) on the account, billing and/or property address(es), and home, work, and mobile telephone number(s). Ask for and record alternate telephone number(s) where the customer could be reached (beeper, pager, etc.), employer name, employment position and location, and spouse and/or co-signer contact information. This information is invaluable if the customer's account falls into collections.
Explain your billing process:
How your company will bill the customer and what the bill looks like: payment or coupon book, monthly billing statement, invoice, etc.
When he should be receiving his billing statement (or other payment notifications).
The payment due date: explain the terms of your payment agreement or contract.
Advise the customer of the due date, grace period (if any), how minimum payments are calculated and the penalties and/or consequences of late or missed payments. These could include late charges, credit line reductions, account closure, service suspension, etc.
The tools you provide to your customers to verify their charges and account such as a call center, Internet website, ATM, branch, etc.
Close the call by thanking the customer for his business and selling the benefits of your product or service. Reassure the customer that if they have any problems with their product/service, then you are only a call away.

Another opportunity for a customer contact is after the customer receives his first billing statement and before the first payment is due. This is particularly relevant to the U.S. Hispanic market as we have found that many companies in the U.S. who are servicing Hispanics do not provide bilingual or Spanish-language billing statements. If your customer's preference is to speak Spanish and you are providing billing information in English, this further emphasizes the importance of making an in-language call to explain your billing and payment process.

The tone of a statement education call is friendly and informational. In best practices, the content of the statement education call includes the following steps:

Ask the customer if they have received their bill and ask if they have any questions or concerns about the content or the amount owed.
Highlight the payment due date and explain the terms of your payment agreement or contract. Advise the customer of the due date, grace period (if any), how minimum payments are calculated and the penalties and/or consequences of late or missed payments. These could include late charges, credit line reductions, account closure, service suspension, etc.
Educate the customer on two important points: the importance of establishing good payment habits with your company and how to build their credit history.
Describe all the ways your company makes it easy to make on-time payments. Your payment methods could include as many of the following as is reasonable for your company and industry: postal mail, Internet, electronic bill pay, branch, pay-by-phone service, credit or debit card, electronic funds transfer, ACH, cash center, money order, mobile banking, third-party vendor service, etc. Based on the customer's preferred payment method, it is wise to advise him of how many days he should allow for the payment to be credited to the account.
This is an ideal moment to offer a recurring payment program where payments would be automatically debited from the customer's credit or debt card or checking or savings account. Offer an incentive for the customer to enroll in an automatic payment program, as this may provide the motivation for the customer to sign-up and, therefore, reduce the likelihood of missed or late payments in the future.
Close the call by thanking the customer for his business and selling the benefits of your product or service. Reassure the customer that if they have any problems with their product/service, then you are only a call away.

On a welcome and statement education call your customer service representative is building rapport with your customer and, possibly, identifying potential dispute, collection, fraud, or other problems. You are giving the customer an opportunity to build loyalty and trust with your company, so that if he does have a problem in the future he will not feel nervous about calling you to discuss his situation sooner rather than later. Depending on the product you are servicing, you may also want to mail the customer a welcome packet in the customer's preferred language with the above information in writing. The mailed material should not substitute for a live welcome call from a trained bilingual representative from your company as many studies have shown that U.S. Hispanic customers respond favorably to person-to-person contact.

The types of calls discussed in this article can be an invaluable tool to cement long-term relationships with your customers. In the Hispanic market, where customers respond favorably to personalized contacts, these calls give you additional opportunities to create customers who will not only happily utilize your company's products and services, but also pay as agreed, providing a boost to your accounts receivables.

Tony Malaghan is CEO of Arial International, a multilingual, muticultural consulting and training firm. Contact him at Tony@arialinternational.com.

The Role of Succession Planning and Leadership Development in Successful CU Mergers Addressed in New White Paper

CUNA Councils
June 17, 2009

The role of succession planning and leadership development in successful credit union mergers is discussed in the first of two CUNA Councils white papers.

“Converging Executive Teams: The Role of Leadership Development and Succession Planning in Successful Credit Union Mergers” by the CUNA Councils offers a glimpse into credit union mergers, and the various approaches for bringing together a leadership team, depending on the scope and circumstances of the merger. Current merger trends and the reasoning behind those proposed consolidations are addressed, along with the potential impact of a lack of succession planning.

The paper concludes with three credit union merger case studies detailing how a chief executive was selected, an executive team was brought together, and a leadership development program was created to ensure the merger strengthened the continuing organization and its ties to members.

The second new white paper examines strategies for customizing collections to fit a credit union’s membership and market. “Collections: Not a Cookie-Cutter Operation” by the CUNA Lending Council examines program structure, industry trends, and working with collections agencies. It also looks at collections philosophies of helping members versus managing numbers.

Dana Rawlings, lending council executive committee member and senior vice president and chief operations office for Smart Financial CU in Houston, believes that collections objective should echo credit unions’ “People Helping People” philosophy. “So many credit unions focus on how many calls you make, and on keeping [delinquency and charge-off rates] down,” Rawlings said in the paper. “But if you help members, the numbers will take care of themselves. And those members will send others to your credit union.”

CUNA Council members are entitled to complimentary copies of these white papers; non-members may purchase the white papers for a price of $50 per copy.

The papers are available online in the white paper section of each council site - choose the “Cross Council” tab for the mergers paper or the “Lending” tab for the collections paper.

Boost Contact-Center Efficiency

CU360
June 17, 2009

Companies have traditionally thought of customer-service hubs as cost centers--a part of the organization that tried its best to soothe angry callers, answer their product questions, and keep customers from defecting. But in this environment, contact centers take on a whole new meaning, according to destinationCRM.com. Many organizations now realize the contact center is a primary touch point for consumers.

"Customer service is the sole differentiator in the marketplace," explains Zachary McGeary, associate analyst at Forrester Research. "Acquiring new customers and retaining existing ones is more important today."

CU360 is an online portal for benchmarking tools, market insights, industry data, and analytical information.

This article was orginally published online by CU360 at cu360.cuna.org.
Reprinted with permission.

But many contact centers simply don't have the same pre-recession budgets to invest in delivering this quality experience. It's becoming more difficult to invest in new technology or hire more customer-service reps. "This isn't the time to be experimenting with new technology," McGeary warns. This means revamping the people, processes, and technology your contact center already has.

One problem among contact centers is watching perfectly qualified customer-service reps walk out the door of their own volition. "The biggest area that any company can focus on right way is staff attrition," says Oscar Alban, consultant for contact center provider Verint Systems.

"We need to address staff attrition because that's more money that can be used for other initiatives," Alban says. Finding out what's aggravating customer-service reps can cost little but reap great benefits.

Making sure customer-service reps are informed will help retain them. Empowerment—giving staff the ability to take actions to solve problems—is another low-cost solution.

"Giving staff the power to make decisions and come up with creative solutions is important," McGeary says. "They then have the power to exceed the customer's expectations or make good on what could have been a bad or unfortunate experience."

Any investment in technology should help empower your most expensive asset—your contact-center employees. Enabling desktop technology to publish real-time information about callers is one solution.

McGeary recommends looking into proper workflow, call routing, queuing, and looking at transition points from the interactive voice response system to a live person. "If you fix those high-level processes, it can reap great rewards in terms of efficiency," he adds.

And, there's continued interest in first-call resolution due to its two-fold benefit of cost savings and customer satisfaction. Companies are revamping and fixing skills-based routing and CRM integration capabilities. This way, calls can get to the right person with the information needed to successfully complete the call at the representative's fingertips. Another approach is to work with the system vendor to deal with underutilized technology. "People buy technology but only use a portion of it," says Verint's Alban.

One question that remains—and probably can't be answered until the recession ends—is whether companies will keep the same mindset or revert to throwing money at technology and not properly using it. "One lesson that persisted after the last downturn was that companies demanded more justification from vendors on what they can expect in terms of ROI," says Alban.

"Companies are in different states of disarray, but there's an opportunity here for customer-service executives to refine how they're interacting with consumers," adds McGeary. "Instead of looking at how you can cut as many resources as possible, keep in mind that you don't need to spend more money to fix many of the broken processes in your contact center."

Recent News

Tips for Successful ACH Usage Discussed in New Council White Paper

Cutting Costs in Today’s Economy

¡Bienvenidos! Best Practices for Using Welcome Calls in Your Hispanic Customer Service Strategy

The Role of Succession Planning and Leadership Development in Successful CU Mergers Addressed in New White Paper

Boost Contact-Center Efficiency