Automatic Response

By Elizabeth Judd

Automated e-mail systems can help improve efficiency and customer service, but they aren't yet ready to respond without human supervision.

What could be easier for a large financial institution than having customers pose repetitive questions via e-mail? Almost anything, according to bank executives, who say that customers can be served more easily and accurately over the telephone. Even handling questions in person at the branch is preferable, they say, to processing written inquiries.

But even though e-mail response systems pose all sorts of challenges, providers increasingly feel they have little choice but to put them in place. Message volume is growing rapidly, and maintaining top service entails responding to customers however they want to be served.

Automation provides at least part of the solution. Institutions such as Royal Bank of Canada and SunTrust Banks Inc. have installed systems that bounce back a quick acknowledgement before routing an inquiry to the appropriate customer representative, who is equipped with a range of potential responses. While cost savings can be a bit elusive to quantify, both banks report fairly dramatic efficiency gains. SunTrust reps, for example, can now handle on average 11 or 12 e-mails per hour, compared with seven before they began using e-mail automation in August 2002.

And there are other potential payoffs. Banks with pure manual response systems can only make rough estimates of how much e-mail they receive and how many inquiries are handled each hour. By contrast, automated systems provide accurate records that can be used to improve workforce scheduling and offer insights into customer behavior.

What's more, auto-suggest features, which provide a response that the rep can either modify and send or reject in favor of another suggestion, avoid many of the compliance issues surrounding e-mail, since all responses can be vetted beforehand. "To the extent that you can give canned responses," says Esteban Kolsky, a Gartner Inc. principal analyst who's based in Reno, Nev., "there's no need for a supervisor to check an e-mail before it goes out, and a lessened need for compliance training."

Despite these advantages, e-mail automation isn't always an easy sell in the executive suite. Banks pay up to $400,000 for the systems, according to Kolsky, and the overall costs run much higher because of the considerable time and effort required to build a knowledge base for them. Specialized training is also necessary. Mark Ellis, vice president of e-commerce development for Portland, Maine-based Banknorth Group Inc., says that convincing senior management to fund these projects is a major hurdle, since budgets are pinched and so many seemingly promising customer relationship management projects in the '90s "crashed and burned."

Still, New York City-based Jupiter Research projects that financial services spending on e-mail automation will rise from $190 million this year to $230 million by 2008. For banks that are committed to improving customer service in the online channel, e-mail automation is definitely one place to look.

Double Standard

From one perspective, the banking industry's lack of interest in e-mail makes sense. That's because contact volume still lags way behind that of the telephone. Holly Buckley, president of Buckley & Associates, a training outfit based in Oakville, Ontario, estimates that only from 11% to 15% of all inbound customer communications arrives by e-mail.

This ratio is growing, however. Toronto-based Royal Bank of Canada currently receives 2,000 inbound e-mails a day, representing year-over-year growth of about 40%, according to Ann Marie MacDougall, manager of operations for electronic channels. Moreover, Gartner's Kolsky estimates that by 2007, 35% of customer-service interactions at all organizations, banks included, will occur via e-mail.

That may not be good news from an expense standpoint. At SunTrust, senior vice president R. "Book" Booker compares the average expense per automated e-mail, $2.40, with what it costs the bank to field a telephone call: $2.15. Clearly, e-mail is more expensive to the bank, and the actual cost penalty is probably even higher than the numbers suggest. "It may take two or three e-mails to do what one phone call can do," Booker explains. "When you're looking at the cost of e-mail, you have to look at how many e-mails it took in all. We still have not gotten our arms around it."

Automation is helping to reduce that cost. NetBank Inc., for example, has cut the expense of processing e-mail by 45% since installing an automated system in August 2001, according to Virginia Johnston, executive vice president of customer care. Additionally, handling time was slashed from eight-to-ten minutes to 5.5 minutes per e-mail. "It's a huge savings," Johnston says.

David Daniels, a senior analyst with Jupiter Research based in Spring Lake, N.J., says banks can get better mileage out of their e-mail automation technology by increasing certain kinds of operational support for it. While only around 20% of companies across all industries have invested in e-mail automation technology, for example, 90% have invested in telephone-routing capabilities. "Nobody in their right mind would think about having a call center without having the proper routing technology," says Daniels. "Yet, we see that companies don't necessarily apply the right technology or the needed resources to e-mail."

Daniels goes on to argue that more resources are not only desirable but required in this area, given rising customer expectations. In a recent benchmarking survey by Jupiter, 88% of customers across all industries said they expect a reply to e-mail within 24 hours. Yet in a Jupiter survey completed last June, only 60% of financial-service sites resolved an e-mail request within 24 hours; 26% took three days or longer to do so. Only 43% of finance-oriented sites used automated e-mail response at all. "If customers don't get an answer in a few hours, they'll call. And then your service costs are doubled," Daniels warns.

There's also the risk of losing a customer's business altogether. Jupiter surveys showed that 49% of consumers in all industries say the speed of an e-mail response affects their choice of provider. When customers across all categories were asked how to improve customer service online, 50% said that businesses should shorten their e-mail response time. "This issue is prevalent in the minds of consumers," Daniels says.

Tradeoffs

In order to deploy e-mail automation technology successfully, banks need to understand what the electronic systems can and cannot do. The systems are good at acknowledging messages, routing those messages to the appropriate party and handling simple questions with a canned response. They are not able to answer complex or multiple-part inquiries, or provide a completely automated solution.

Some problems stem from the fact that it's hard for an automated system to keep up with new slang and industry jargon to the degree that full software comprehension can be assumed. And response accuracy degrades quickly once you get past the simplest inquiries, like, "Where are your ATMs located?" So far, no banks have embraced true auto-response, i.e., letting the system issue a response to customer e-mail without prior review by a rep.

During BAI's SmartTactics for Profitable Retail Delivery conference in Las Vegas last March, Banter Inc. CEO Yori Nelken said that he didn't believe full automation could ever be applied to "the vast majority" of e-mail interactions. San Francisco-based Banter is a major vendor of automated e-mail systems.

A key issue for bankers implementing these systems then is handling the tradeoff between speed of response and accuracy. To improve efficiency and lower costs, bankers want to automate as many responses as possible and boost handling speed for their live reps. But pushing efficiency or speed too hard leads to unintended results.

When launching its Banter system in October 2001, Royal Bank set a goal for its reps of using the technology to handle 70 e-mails per day. By the time reps got up to about 60 messages a day, "our customer satisfaction took a dive," MacDougall says. "We placed more focus on productivity in our performance scorecards than we did on quality."

In response, Royal Bank began scoring its reps on how well they answered all parts of a question and properly formatted responses, not just on processing volume. Says MacDougall, "We relaxed productivity goals so the rep could take the time to answer the customer properly, and then customer satisfaction went through the roof."

Even with the new standards, e-mail handling at Royal Bank is more efficient. Currently, the bank's reps take 6 1/2 minutes to handle each message, compared with 12 minutes before the automated system was installed.

When it comes to how much e-mail handling should be entrusted to automation, the general approach is to answer straightforward and repetitive questions automatically — say, by directing the customer to a URL on the bank's Web site — while routing account questions and other more complicated inquiries to a rep for personal attention.

Depending on the level of information technology sophistication at an institution, it may also be possible to identify the source of the message and differentiate service accordingly. "The bank can say, 'We'll get back to you in one hour,' if they're a high-priority customer, and take 24 hours for lower-priority customers," says Chris Moreira, product manager for the e-mail management solution at Atlanta-based WebTone Technologies, Inc.

Banter's Nelken contends that banks will only attain the service goals they desire — customer e-mails answered accurately and quickly — if they begin to use fully automated responses for the most basic questions. To those who balk at the thought of electronically-generated errors, he says "no human agent is 100% accurate" either. Customer reps give wrong answers on the phone as well, and from a cost/benefit perspective, some level of error may be acceptable. The question is: What is that level of error?

NetBank's Johnston remains conservative on that point. "I don't think you can plan to make errors with your customers 5% of the time. Yes, all humans make errors, but our error rate with deposits is 0.2%." Unless automated systems can make the error rate nearly infinitesimal, she says she will still want a rep to review all responses.

NetBank, which uses a WebTone system, is gradually increasing its rate of automation. As of May, the Atlanta-based institution routed 73% of all e-mails correctly. By including additional keywords, Johnston hopes to raise that percentage to 80%. What's more, she's found that 67% of the time, the suggested response is the appropriate one, an accuracy rate that she hopes to elevate even higher.

Johnston emphasizes the importance of analyzing the data received by a system such as WebTone's. She says that WebTone representatives visited NetBank customer-care centers to learn which reps weren't answering customer questions accurately, and why. In addition, she advises banks to use a system built specifically for financial services: "When our system hears the word 'CD,' it knows it's a certificate of deposit."

Training Issue

Automating e-mails involves a lot more than just selecting a vendor. Bankers first need to identify the major categories of questions customers are asking so the institution can create a database of potential answers. Gartner's Kolsky estimates it can take anywhere from four months to two years to write clear responses for the database, set standards for accuracy and train reps to use the system. Although some of the work must be completed before the system is in use, much of the training can take place while the system is routing messages and proposing responses.

Training is critical because a bank can't simply take people out of the call center, give them the job of handling e-mail, and expect good results. Most institutions seek employees who are skilled at written communication and then train them for this specific task. "The biggest challenge," says SunTrust's Booker, "is making sure our people can read, as opposed to the listening skills required with phone calls. The next priority is making sure they can write. We have to make sure our people slow down, read what the customer's asking, and respond in concise, readable phrases."

Royal Bank hired consultant Buckley to teach its reps some of the nuances of good e-mail responses — everything from comprehending all parts of the question to responding with an empathetic tone. Buckley says that in face-to-face communication, 18% of the message is conveyed by the actual content, 37% by voice or tone, and 45% by body language. In e-mail, tone matters disproportionately. "Ernest Hemingway has a tone," says Buckley. "The problem is that most bank reps don't write like Ernest Hemingway."

Once the automated system is up and running, bankers can ponder possible improvements. NetBank's Johnston is adding more formatted templates that let the customer populate fields and complete simple and repetitive processes without talking to a live individual. Today, NetBank customers can use templates to initiate international and domestic wire transfers and to order automated teller machine and debit cards. NetBank will soon add templates for stop-payment requests, address changes and ordering checks.

Banter's Nelken suggests that banks consider software features that intercept questions and offer a first pass at a response. In this scenario, when the customer types a question, the system will immediately suggest a response. If the response is useful, the customer can say "okay" and withdraw the e-mail. If not, he or she can submit the question through the traditional e-mail channel. Royal Bank is planning to try this feature in the near future, according to MacDougall. Nelken predicts that using the "interception" feature could deflect between 10% and 35% of all inquiries.

Some institutions are looking at ways to use the repository of customer information afforded by e-mail more strategically. Goals include the obvious — scheduling reps for times when e-mail volume is heaviest and monitoring quality — to the more arcane. Just as call centers can provide valuable insights into what customers are thinking and which products might better meet their needs, e-mail leaves a written record that can be analyzed by anyone within the bank, Booker says.

But for now the most critical goal is one that sounds simple but is proving maddeningly elusive: doing an exceptional job of providing accurate e-mail responses in a short period of time. Kolsky says this means reliably formulating a response within two hours, a goal that no bank is near to achieving.

"Banks have had a real problem dealing with e-mail," says Banknorth's Ellis. "They didn't understand the volume they'd get, the type of questions asked, and most importantly, the fact that online customers are very demanding." That being the case, institutions have little choice but to keep working on online responsiveness.

Ms. Judd is a freelance writer based in Washington, D.C.

Copyright © 2003 by Banking Strategies, published by BAI.

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