Does the Web Reduce Customer Service Cost? Empirical Evidence from a Call Center

Firms are investing millions to deploy web based self-services at their call centers primarily to reduce operating costs. The rationale is that the firm’s cost of interacting with customers through web based channel is an order of magnitude cheaper than the assisted channels like telephony. However, the interaction among competing channels of customer service at call center is not empirically validated so far. We conduct a field study at the call center of a prominent US health insurance firm to examine the cost saving rationale of web based self service. On one hand, the low cost-low quality web channel may substitute high cost-high quality telephony channel in some cases. Interestingly on the other hand, web also exposes customers to more information that at times aggravates their concerns and thus leads to more telephone calls. We designed a quasi-natural experiment in our field setting and used diff-in-diff specifications to show that web based self service usage leads to 14% increase in telephone calls. We conduct several checks to show that our specifications are robust to any potential selection of customers in web self-service usage. However, we further show that the impact of web portal is moderated by the web portal characteristics and individual customer characteristics. We find that if information is unambiguous and easily retrievable on web, calls in respect to such information go down by 29%. Likewise, we also find that the absolute increase in calls due to web usage for younger customers (age<40 years) and older customers (age>60 years) are much higher than the middle aged customers (age 40-60 years). In all, our research gives concrete prescriptions to managers in multichannel customer service management, web portal design and customer segmentation