The varying cost of service

How companies approach customers can vary in cost dramatically. Below are the costs as well as the pros and cons of the various methods that business use to win customers.

- Face-to-face: costs $100-$200 per transaction, worthwhile for closing big transactions, low volume.

- Branch shop front: costs $10-$20 per transaction, allows people to touch and feel product, fading in importance, limited reach.

- Telephone transactions with an operator: costs $5-$15 per transaction, can deliver high level of service growing in importance, high volume, location becomes irrelevant.

- Integrated voice response (IVR): Costs 50 cents per transaction. Self service for customers, high volume and wide spread. Limited complexity of transaction.

- Cyber collaboration: costs 50 cents per transaction. High volume widespread self service with email, fax confirmation of transaction and so on. More complicated transactions than telephone. Disadvantage is need access to PCs, bandwidth limitations and access to ISP. Will grow in importance.