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Calculating the True Cost of Your Customer Communication Strategy

Scott Draeger
Posted by Scott Draeger VP of Customer Transformation Monday, January 21, 2019 - 17:21

Scott joined the industry in 1997, after earning a B.A. from University of Nevada, Las Vegas. He started as a document designer using several VDP technologies, before moving to the software side of the industry. He has more than 17 years of experience in the document composition software industry as both a transactional document designer and a software vendor. He earned his EDP and M-EDP certification from Xplor and his MBA in 2007 from the Lake Forest Graduate School of Management.

Customer Experience Update
Calculating the True Cost of Your Customer Communication Strategy

Editor's Note - This article was originally published in Document Strategy Media on January 8, 2019.

As customer experience (CX) thinking continues to take center stage in leading enterprises, customer communications are seen as critical for bringing improved customer experiences to fruition. In shifting customer communication to a strategic function, it is important to know the true costs involved in communicating with customers in order to have a clear understanding of the return on investment. The problem is that we overlook important costs from key steps in the process. When considering the true cost of customer communications, the best way to proceed is to follow the customer communications trail backwards, from delivery to design. This will give a baseline of the communications produced, which then help us appreciate the scope of the hard costs.

 

Here is what moving upstream would show:

 

Delivery

First, look at the operational communication delivery costs. Start with the most common enemy, truckloads of printed material. There are several types of physical distribution options to consider, including proposals, contracts, statements, correspondence, applications, onboarding kits, contracts proposals and other ad hoc communications. These costs are easy to find because they should show up as a line item expense for postage and courier services (FedEx, UPS, TNT Express, etc.). However, some of the largest expenses avoid rolling up to a single line item, because they appear tens of thousands of times for “only” $20.00 across many business units.

 

Archive

The physical delivery costs are easy to trace, but they won’t show the total costs. The archive system will turn up many communications that have escaped accounting. You will find that the simple questions, “What did we archive last month?” “Where are the communications for a specific customer?” and “Can you show me the archive for every communication channel?” are difficult to answer because it is likely there are multiple archive systems with multiple owners. The maintenance, management, storage and labor costs for each of these systems represent an important component of your true costs.

 

Some archive systems archive email, SMS, social and other digital communications. Other systems archive print communications. Some communications are totally unaware of the need for archive systems, living on hard drives (yes, still, in 2018). As you link CX to communications, all of these independent archive systems will have to be cross-referenceable when your employees are trying to instantly assess your customers’ content. Archive consolidation will decrease your archive spend with the number of redundant systems you eliminate.

 

Production

Before the communication is archived, it has to be produced, so now we move upstream once again to production. Some production takes place through traditional Customer Communication Management (CCM) systems. Some ad hoc communications take place in separate interactive systems. Other production may take place through project-specific SaaS solutions or SaaS add-on services. Some may be home-grown systems. Some production may be outsourced to social channels via an API, and these are usually started by some custom code.

 

The cost, maintenance, labor, usage, storage and other fees from these systems need to be tallied up. It is not uncommon for enterprises to have five or more parallel production systems. This can combine to cost hundreds of thousands in annual software maintenance dollars, millions more in redundant labor, and millions more in responding to uncoordinated customer experiences that result from this patchwork of systems.

 

 

Design

As you move up from production, you enter the design area. Many of the production tools have their own design environments. The CCM utilities can have desktop, web and cloud components of their design front ends. Most systems can take content from the content management systems and define data from core systems. The design utilities are generally equal to the number of production systems, plus a few common graphic design packages, scripting frameworks and general office software packages. Having a lot of tools translates into redundant designs that increase approval, compliance and deployment costs.

 

Data and content

Upstream from design, you have data and content. These systems are generally feeding the communication systems. However, some of the production and archive systems will require specific ECM or WCM systems to access built-in integrations, which can increase the cost of customer communications. As you consider consolidation, look for opportunities to remove redundant systems, which are maintained by very smart (and often expensive) IT experts who ensure every piece of content is compliantly managed. Most executives fail to ask “Why?” enough in this area, and costs accumulate unnecessarily because the system selection is not in tune with a clearly articulated strategy.

 

Business units

Finally, we make it to the business units. The business knows what communications need to be sent. They know why each communication needs to be sent. They understand the archive and retention requirements. They know the cost and benefit of the communication in terms of their department to an amazing degree of detail. However, they often do not understand the potential of upstream or downstream impacts of their projects. The business units are often purchasing “point solutions” that can do a great job on a narrowly defined problem. However, these point solutions can cause downstream problems in archive, delivery and CX modeling. These costs can be low in terms of cost per seat per month at the start of a project, but the integration and compliance costs may be much higher for another team.

 

As we retrace the disparate costs of customer communications through each phase of the process, we see that the true total cost of customer communications is spread across more areas, with pieces applied to a variety of budgets. My experience has been that when it comes to the true cost of customer communications there is typically a large gap in the information sharing that takes place between all the departments involved. 

 

When that reality is taken into consideration and the actual cost of a customer communication is uncovered, collaboration though all points of the project and consolidating systems to support a well-defined communication strategy starts to make a whole lot of sense.