Proposal to Reduce Customer Service Costs at the University of Denver

Proposal to Reduce Customer Service Costs at the University of DenverMike Rivera

DU: University Communications

DU: University Communications // Proposal to Reduce Customer Service Costs at the University of Denver

Executive Summary

e University of Denver (DU) serves a large number of constituents on a daily basis. Many are in need of

customer service to answer questions about the school, its programs, cost of attendance or any number of

other topics. Typically, these interactions occur in relative isolation from each other because the university

is operated in a decentralized manner where each unit has signi"cant autonomy from all others. is

operational structure fosters an inefficient method of handling customer service issues. Duplication of

efforts, information bottlenecks and longer than necessary wait times are common and costly.

is analysis centers around estimates from one of the primary customer service oriented divisions,

Enrollment. Some of the "ndings include:

• Customer service needs are triaged, researched and responded to by a total of 91 staff members.

• $376,524/year (excluding any associated bene"t costs) is spent to staff customer service efforts.

• A lack of precise data exists about the types of issues constituents face, how many incoming issues are

received and the ability to track issues from beginning to end making analysis and progress difficult.

To reduce the number of dedicated man-hours and cost while increasing our data pool and customer

service experience, DU can implement a university wide, online customer service tool called Get

Satisfaction. While the tool will not eliminate all customer service issues, it can reduce many of them and

do so at a cost savings compared to the current approach (again, estimates apply to Enrollment):

• A 10% reduction in the amount of duplicated effort on the part of staff members efforts

• A 32% reduction in volume of incoming requests as people help one another (no DU intervention).

• A net savings of $25,000 for the "rst year of use, $116,000 for the second. Subsequent years would see

the same or better results.

• Calculations could be extrapolated to the rest of DU’s organization for even greater efficiencies.

DU: University Communications // Proposal to Reduce Customer Service Costs at the University of Denver 1

Current State of Customer Service at DU

e University of Denver enrolls 12,000 students, employs 3,000 professionals, has 110,000 living alumni

and sees over 9,000 interested new student applicants each year. (University Communications, 2011) e

school website attracts 4 million people a year who view nearly 40 million pages in total. (University of

Denver, 2011) With so many people interacting online with the university at any given time, it’s important

to have resources available to answer questions, provide guidance and troubleshoot issues when they

occur. DU does this through a decentralized approach where each academic and administrative unit

dedicates people to handle customer service requests within and for their unit. However, online visitors are

not always knowledgeable about this decentralized structure and where or who they should send their

requests. For example, DU’s website offers a “contact us” form that acts as a central place where anyone can

get help. Messages from this source are triaged by University Communications department personnel who

forward each inquiry to the most appropriate person or department on campus based on the speci"c

circumstances of each request. Other times, people will opt out of the general “contact us” channel in favor

of contacting a speci"c department or person if they’re con"dent that their choice is the best one. DU’s

Admission department is representative of this method of interaction. e department is continuously

contacted by prospective students who have speci"c issues to sort out. Financial Aid and academic

advisors within academic departments are similarly contacted about speci"c issues relating to their areas

of focus.

Even though the triage process creates extra work for DU staff, it works well for visitors who don’t know

or care to research who best to send their speci"c concerns. However, the system does have limitations and

downsides. It relies on DU staff to handle all issues internally at a signi"cant cost to the university. A better

system could be employed, but anything new won’t completely eliminate all downsides or costs. Indeed,

many incoming messages will always need to be handled by internal staff because of the highly customized

or sensitive nature of a each request. Many others, though, could be bene"tted with a different approach.

Let’s look at how customer service inquiries are handled today within a single campus division—

enrollment—and speci"cally the undergraduate admission and "nancial aid groups. First, customer


service requests are received via the web, email, social media channels, phone or in person. Each request is

triaged, researched, responded to and then re-responded to as need be until the issue is resolved.

According to Emily Forbes, Director of Communications—Enrollment Division, these two groups

respond to anywhere from 6,500-8,500 inquiries per month. It’s important to note that although this

proposal discusses a web based solution, we need to be aware that customer service also happens offline

whether over the phone or in person. However, this proposal is not limited to having impact on a web-

only basis. Companies who are already following a customer service approach over social media where

inquiries are answered by non-staff users (crowdsourced) are already witness to a reduction in all forms of

communication, not just online. (Customer Portfolio Management, 2011)

e characteristic to keep in mind in all of this back and forth is that it isn’t systematically saved for

future bene"t. If two people have the same or similar questions, they are asked independently from each

other and are, in turn, processed independently as well. ose two questions are likely never to cross paths

as they get answered. is environment of duplication of efforts (and therefore cost) is incurred by the

university without its knowledge of occurring since it’s not tracked or measured. And if it does happen to

know that similar requests are being independently answered two, three or more times, it is currently

powerless to do anything about it. Staff may create a list of ready-made responses to simplify and shorten

response times, but those efficiencies do not eliminate the cost of the effort completely.

e following chart summarizes the estimated costs associated with customer service within the

undergraduate admission and "nancial aid groups. (Emily Forbes, personal communication, February 25,

2011)

Enrollment Division’s Current Customer Service Costs

(Dollar amounts exclude benefit costs for employees who qualify)

Position Title # of People Monthly Hours Hourly Wage Total Cost

Enrollment Specialists 5 43 $15 $3,225

Visit Coordinators 2 87 $15 $2,610

Admission Counselors 13 43 $19 $10,621


Position Title # of People Monthly Hours Hourly Wage Total Cost

Student Representatives 60 12 $8 $5,760

Work Studies 2 173 $11 $3,806

Financial Aid Advisors 9 35 $17 $5,355

Monthly Subtotal $31,377

Yearly Grand Total $376,524

As evidenced from the chart, many people have customer service oriented duties as part of their

employment with the university’s enrollment division. In aggregate, their time and effort costs DU

$376,524 a year. If we take the total dollar amount and divide it by the range of emails received per year

(78,000-102,000) we learn that DU spends somewhere between $3.69-4.83 per email to resolve customer

service inquiries. Whether this number looks big or small to you, it only includes two groups within DU

(albeit two groups that have signi"cant customer service responsibilities and signi"cantly more staff

dedicated to the effort than other campus groups). Nonetheless, this number doesn’t re&ect any of the

customer service costs borne by the rest of the university (nor the bene"t costs incurred by staff as already

mentioned in the chart). But for this analysis, we need only look at these costs to see how a new system

would reduce costs and bene"t both DU as well as DU’s external audiences.


A New Solution

Get Satisfaction (getsatisfaction.com)

is a web-based customer service

application that offers many bene"ts

and the promise of lower overall

costs. e major features of Get

Satisfaction’s tool includes:

• Feedback options: people can ask a

question, share an idea, report a

problem or give praise all in the

same place and using the same

interface.

• Storage: all information entered

into the system is stored into a

knowledge base where the most

popular topics are automatically

aggregated into an FAQ.

• Accessible: the system can be integrated into the DU

website in a variety of ways. It can also be integrated

into Facebook and accessed via mobile devices.

• Analytics: the system comes with an analytics

package in order to mined for useful data that can

inform future decisions.

• Extensible: the system can be integrated with

ZenDesk, a support ticket system, and CRM tools.


• Customizable: the system can be altered to mimic the current DU brand and given a unique URL based

on our own du.edu address.

• Moderation: topics can be moderated so that offensive material can be removed.

• Hosted: the system is run by a third party so DU is not responsible for security, servers and other

concerns. e company also offers a service level agreement for peace of mind.

• Exportable: all data can be exported if the need arises in the future.

Cost/Benefit Analysis

Ideally, a new customer service approach would simultaneously decrease costs and increase customer

satisfaction. Get Satisfaction can make these ideals real. ree main trends drive this possibility.

First, the sheer amount of inquiries DU receives (6,500-8,500 per month for one division). As shown in

the chart above, 91 people are fully or partially tasked to handle the volume. And, arguably, the high

number of requests are an indication that answers to questions are not available or are difficult to "nd.

Inquiries can be analyzed with the help of Get Satisfaction’s analytics package to spot trends and patterns

that can help inform the university about what issues are most pressing and how answers to common

questions might best be communicated in order to further decrease the number of incoming requests.

Second, society is increasingly willing to engage in online “self help.” e Pew Internet & American Life

Project has studied the impact of the internet on American society since 1999. Among their 2010 "ndings

on adults: (Pew Research Center, 2010)

• 79% used the Internet

• 78% conducted online research about a product or service they considered buying

• 61% used a social networking site like Facebook and LinkedIn

• 59% look for "how-to," "do-it-yourself " or repair information (2008 data)

• 32% posted a comment or review online about a product they bought or a service they received


Among teens, Internet use is even heavier at

93%. (Purcell, 2011) All of these statistics indicate

that all Americans (and, in particular, teens who

are a primary target audience for the admission

group at DU) are increasingly using social media

sites on the Internet to research and comment on

products and services.

ird, there is an incredible amount of

digitized information available on the Internet

and it is being shared and moved in massive quantities. It was estimated that 500 billion gigabytes of

information was stored on the Internet in 2009 (e Guardian, 2010) Additionally, Internet traffic is

predicted to reach a total of 767 exabytes, or 64 exabytes per month (an exabyte is equal to a billion

gigabytes) by 2014. (Cisco, 2010) Digitized data allow information to be stored, manipulated and accessed

inde"nitely.

In combination, these three trends can be leveraged by DU to con"dently provide its varied audiences an

online “do-it-yourself ” customer service system that will be embraced while lowering the university’s

costs. How will cost be lowered? Two ways:

1.Reducing the number of responses to duplicate inquiries: once an answer is stored, people can be

directed to the archived answer in the future. is eliminates the effort needed to respond by an

employee.

2.Reducing the overall number of questions that need to be answered: since the system is based on a social

media model where people can freely participate and interact with the content, anyone using the system

can answer anyone else’s questions or be able to provide feedback, insight, etc. is reduces the amount

of inquiries an employee has to answer.

To determine what Get Satisfaction’s potential cost savings are to DU, we need to know how much

duplication would be eliminated as well as how many inquiries would be answered through a

crowdsourced model. e "rst two of these numbers are difficult to compute accurately before the system


is running, but we can derive estimates based on internal metrics and the success rates of other Get

Satisfaction users. e cost of the tool is also an estimate, but can be accurately estimated. Costs are

computed using the following rationale.

Duplication Savings CalculationUniversity Communications categorizes all the customer service emails received from the DU website.

Based on those measures, it estimates an average reduction of 2% of email volume in the "rst three months

of Get Satisfaction’s operation (mainly due to Get Satisfaction’s ability to reduce the amount of spam that

enters the stream), increasing to 5% within 6 months (as people are exposed to the system and driven to

use it) and then to 10% by the "rst year’s end (staff is trained and the system is populated with a wide

variety of help topics). Using the cost "gures per email given earlier, we learn that over the "rst year, Get

Satisfaction would save a total of about $25,400 in duplication costs. Aer year 1, savings would total

approximately $37,650 based on a continued 10% reduction rate.

Yearly Cost Savings From Elimination of Duplication (based on 6,500 Emails/month rate)

Monthly # Emails Cost/Email # of Months Total Saved

2% Email Reduction 130 $4.83 3 $1,884

5% Email Reduction 325 $4.83 3 $4,709

10% Reduction 650 $4.83 6 $18,837

Total $25,430

Yearly Cost Savings From Elimination of Duplication (based on 8,500 Emails/month rate)

Monthly # Emails Cost/Email # of Months Total Saved

2% Email Reduction 170 $3.69 3 $1,882

5% Email Reduction 425 $3.69 3 $4,705

10% Reduction 850 $3.69 6 $18,819

Total $25,406


Crowdsourcing Savings CalculationWhile the following statistic is used by Get Satisfaction for marketing purposes (and therefore skews

toward the most successful outcome), it gives insight for this portion of the analysis. A case study states

that Spring Partners, the maker of a note taking application, reduced the number of support emails it

received by 80% while seeing a rise in customers helping each other to solve problems without employee

intervention. (Get Satisfaction, 2011) ere is no indication what portion of the 80% reduction was due to

non-employee action, but it does lend support that crowdsourcing can happen in a customer service

setting. And the Pew Research Center again shows evidence that people can and do take actions relevant

to an online community as is found on Get Satisfaction: (Pew Internet, 2010)

• 32% of adults rate products, services or people using an online rating system

• 32% of adults post online comments or reviews about products bought or a services received

• 28% of adults categorize or tag online content like a photo, news story or blog post

ese types of activities are the hallmarks of the groups known as creators, conversationalists and critics

as de"ned by authors Charlene Li and Josh Bernoff in their book Groundswell: Winning in A World

Transformed By Social Technologies. e book’s companion interactive tool indicates that these groups

represent 46-50% of 18-24 year olds, 33-46% of 25-34 year olds, 23-34% of 35-44 year olds, 19-37% of

45-54 year olds and 12-18% of people 55 and older. (Forrester Research, 2009) Averaged out, these age

range percentages overlap the Pew Research Center numbers. We can apply the same averaged percentage

(32%) to our analysis given the supporting evidence from the two independent, concurring sources above.

Yearly Cost Savings From Crowdsourcing Effects

Yearly # Emails Cost/Email % Reduction Total Saved

6,500 Emails/Month Avg. 78,000 $4.83 32% $120,557

8,500 Emails/Month Avg. 120,000 $3.69 32% $141,696


is reduction in cost is estimated to range anywhere between $120,557-141,696 per year, but re&ects

the savings DU should expect once the system is launched and constituents are regularly aware of and

using it. e cost savings will not be this high the "rst year, but an exact amount will be contingent on how

quickly the tool can be rolled out, how quickly awareness and use build and how well the tool is

maintained on an ongoing basis to ensure that it is and continues to be of value through active moderation

on the part of DU staff. I estimate the "rst year savings to be a quarter of this range, $30,139-35,424.

One area where Get Satisfaction cannot compete well with the current model is under circumstances

when an inquiry is too speci"c to warrant a generic answer that others will "nd value in. Some people will

also need to share personal data in order to "nd resolution and neither the customer nor DU will want

that information to be part of the public sphere. While the system cannot eliminate these types of requests,

sensitive topics can be moved off the system and onto a private channel like email or telephone.

Other ConsiderationsGetting Get Satisfaction running smoothly for the university would require one-time cost for

implementation and ongoing costs for maintenance, training and moderation. However, other costs such

as a reduction in the amount of triage that a decentralized organization creates could be reduced. Further

research and analysis into these variables as well as into DU’s current customer service processes would

result in greater accuracy of "gures and expectations.

Some bene"ts and costs of this proposal are intangible variables and cannot be pegged to speci"c dollar

amounts:

• A reduction in the amount of time spent by DU staff on customer service could result in cost reduction

through personnel reductions, but could also free managers to better utilize their employees.

• Users of the tool may be able to "nd answers to their questions quicker and easier than they otherwise

would. is creates goodwill, better customer experiences and happier people.

• Analysis of Get Satisfaction’s statistics may uncover insights into problem areas for the university which

would otherwise go unseen and unknown.

• Additional areas of cost savings may materialize. Once such possibility is that Get Satisfaction integrates

with ZenDesk, a bug/problem ticketing system. University Technology Service’s Help Desk service uses a


ticketing system, but a switch to ZenDesk would make available to the world their technology centric

knowledge base which is currently locked inside that group.

Final TallyAn enterprise version of Get Satisfaction was quoted by a sales representative at the company to cost

$25,000/year. An exact "gure would need to be "nalized based on DU’s particular circumstances, but even

if the tool cost twice this amount, it would still pay for itself within its "rst year of use. Adding both

duplication and crowdsourcing effect cost savings, Get Satisfaction would reduce expenses anywhere

between $50,539-55,824. In its second year, savings would reach between $140,957-162,096. In subsequent

years, costs could be reduced even further as the system is expanded to handle other areas of business

process, such as internal customer service support in addition to external support (for example, Human

Resources providing service to employees).

Recommendations

is analysis uses a multitude of estimates to arrive at costs and savings "gures. Nonetheless, the

conclusion is readily evident: DU should purchase Get Satisfaction and incentivize all campus units to

adopt it. e net cost savings are signi"cant (remember, this analysis only estimates savings for a single

division at DU) and many intangible bene"ts exist including a richer website experience, quicker and more

efficient feedback on average and better insight for staff on problems, solutions and new opportunities.


References

Cisco. (2010, June 2). Cisco Visual Networking Index: Forecast and Methodology, 2009-2014. Retrieved

from the Cisco website, http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/

ns827/white_paper_c11-481360_ns827_Networking_Solutions_White_Paper.html

Customer Portfolio Management. (2011, February 28). Airline shis customer service away from call

centre [weblog message]. Retrieved from Call Centre blog,

http://www.callcentre.co.uk/ccf-news-content/full/airline-shis-customer-service-away-from-call-centre

Get Satisfaction. (2011). Retrieved March 2, 2011, from the Get Satisfaction website,

http://getsatisfaction.com/success-stories

Forrester Research. (2009). Retrieved March 3, 2011, from the Groundswell webiste,

http://www.forrester.com/empowered/tool_consumer.html

Pew Research Center. (2010, May). Retrieved March 2, 2011, from the Pew Internet & American Life

Project, http://www.pewinternet.org/Static-Pages/Trend-Data/Online-Activites-Total.aspx

Purcell, K. (2011, February 9). Retrieved March 2, 2011, from the Pew Internet & American Life

Project, Trends in Teen Communication and Social Media Use.

http://www.pewinternet.org/Presentations/2011/Feb/PIP-Girl-Scout-Webinar.aspx

University Communications. (2011). Retrieved February 28, 2011, from the University of Denver website,

http://blogs.du.edu/today/about/fast-facts-about-the-university-of-denver

University of Denver. (2011). Retrieved February 28, 2011, from the Google Analytics website,

https://www.google.com/analytics/

Wray, R. (2009, May 18). Internet data heads for 500bn gigabytes. Retrieved on March 2, 2011, from e

Guardian, http://www.guardian.co.uk/business/2009/may/18/digital-content-expansion




Proposal to Reduce Customer Service Costs at the University of Denver

Documents

Transcript of Proposal to Reduce Customer Service Costs at the University of Denver