Why upgrade campaigns bog down.
Convinced that upgrade fulfillment will become an increasingly serious problem for software companies, Levy last year created the Upgrade Corporation of America, which he claims is already the industry's "largest third-party upgrade processing company." Levy seems to have spotted a genuine problem: More than 20 blue-chip clients currently rely on UCA to handle upgrade telemarketing, order processing, and fulfillment.
Levy argues that third-party companies like UCA are likely to do a better job of upgrade processing because they can afford state-of-the-art mail-order systems and don't rely on short-term, temporary employees. But Levy admits that much of UCA's success depends on knowing how to avoid several obstacles that often get upgrade campaigns in trouble:
* Abandoned calls: Typically, an upgrade offer results in a surge of calls that can overwhelm a company's phone system. "If the volume of calls exceeds the system's capacity, you'll aggravate a lot of people," Levy says. "Moreover, roughly 15% of people who get blocked or abandoned the first time never call back. Those are sales lost forever." (Callers generally won't wait more than 30 seconds to talk to a sales representative, he adds.)
* Information requests: "Only 50%-60% of people actually place an order the first time they call," Levy says. Many of these non-buyers want more detailed information--spec sheets, demo disks, answers to technical questions. "You've got to hire and train people on the phone who are capable of answering questions as well as taking orders, and you should be ready to fulfill information requests immediately."
* Open orders: When customers offer purchase orders or checks to pay for upgrades, most software companies put the order on hold until the money actually arrives. Levy notes that as many as 20% of these payments "will never show up without prodding, even though the customer was really prepared to pay." To capture the "enormous amount of money that's left on the table," Levy says open orders should be pursued aggressively with invoices and follow-up calls.
* Credit card and check processing: The majority of customers--60%-70%, says Levy--will pay for upgrades with a credit card. Here, the bottleneck is getting the card approved, "a very time-consuming process" that can be complicated by invalid accounts and errors in recording the card number and expiration date. Handling hundreds of small checks is another "unbelievably" people-intensive process, he adds, in part because a check should be cleared before a company fills the order. As many as 5%-10% of checks will bounce, Levy says. "It's a serious problem."
* Single-copy fulfillment: "Most software companies are used to shipping pallets or truckloads to a handfull of large accounts. It's suddenly very different when they have to ship tens of thousands of onesies," says Levy. An inefficient shipping system can make fulfillment costs skyrocket; in addition, upgrade customers tend to judge software companies by their turnaround time. "People don't want to wait three or four weeks when another company ships immediately."
* Order tracking: Especially when shipping is delayed, a lot of customer--about 30%, Levy estimates--will call back to find out what happened to their order. "If you don't have an automated order tracking system, you're going to spend a lot of time and money making those customers happy."
* Returns: As many as 5% of upgrade customers will take advantage of a money-back guarantee (or will discover they ordered the wrong disk format or have a similar problem), says Levy. "It's amazing how many people will call up and complain that they didn't get what they wanted." Getting prompt refunds to these customers is important, in part because credit card companies may impose a $12 fee for charge-backs that involve a customer complaint.
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|Date:||Sep 4, 1991|
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