The Winning Pattern: Learn from the Numbers,
Multiple Improvements, Regular Customer Contact

In our May through August issues, UNI-SQUARE introduces the outstanding companies and individuals selected as the winners of UNIVA AWARDS 2022. In this June issue we feature UNIVA AWARDS 2022 winner Naho Hagiwara from UNIVA Fusion (hereafter Fusion). Fusion’s business depends primarily on subscription purchases of beauty-related beverages and cosmetics. Hagiwara was directly involved in “lowering the cost of customer relationship management” and “reducing the proportion of customers who canceled their subscriptions.” These projects not only produced results; they were also outstanding examples that should be shared with our NAKAMA. They made Hagiwara a UNIVA AWARDS 2022 winner. But, besides Fusion, the UNIVA CAPITAL Group includes many companies with repeat purchase or subscription business models. Hagiwara’s tactics offer many practical suggestions for NAKAMA doing similar work. Congratulations, Hagiwara-san!

Don’t ignore what the numbers teach us

Hagiwara joined Fusion in February 2018. It was still a small company with only ten employees. Hagiwara was assigned to the admin team responsible for logistics and inventory. Now she is the leader of the customer team responsible for customer relations and cost control. It hardly needs saying that, for a company with a subscription business model, customer relations and cost control have a strong impact on sales.

Hagiwara’s task was to improve sales of a beauty drink called DARK CLEANSE. Why, despite another drink KOMBUCHA CLEANSE’s being Fusion’s signature product, did Fusion pour so much effort into DARK CLEANSE?

“DARK CLEANSE was launched in February 2019, and during 2019 it sold very well. But the number of requests to cancel subscriptions equaled the number of orders. During the product’s heyday, there were around 4,000 incoming telephone calls per month asking for cancellations. Then, as time passed both the number of orders and the number of cancellations declined. Staff were preoccupied with the company’s primary product KONBUCHA CLEANSE and often never got around to DARK CLEANSE. This realization led to the decision to control costs on the assumption that, given shrinking sales, no large increase in sales could be expected.”

The first thing Hagiwara noticed was the high cost of handling incoming calls to cancel subscriptions.

“I was surprised at the imbalance between the cost per call and the number of calls, and said that we needed to take steps immediately to improve this situation. I experienced directly how dangerous it is not to keep an eye on the numbers, something that can be said whatever the job.”

Until we discover the best answer for the business

To clarify the causes, Hagiwara carefully checked both the content and duration of recorded calls. One factor increasing the cost per call was that, despite the changing sales situation, the call center had not changed its billing.

“When DARK CLEANSE was launched, a full-time hourly wage system was adopted. Because there were many calls, its cost-performance was good. Starting in 2021, however, as sales declined, the number of incoming calls also sharply decreased. I saw that the actual number of calls had fallen below the full-time hourly wage system assumption of six calls per hour. Thus, the cost per call was ¥300 higher than it was in 2019.”

Hagiwara also noticed, first, that the telephone was the only way for a customer to cancel a subscription. By promoting the use of the WEB and e-mail for cancelations and setting up an in-house response system, she further lowered outsourcing expense.

“By offering next-purchase coupons and providing a guide to our scheduled delivery system on each online customer’s ‘My Page,’ we reduced the number of cancellations. The number of incoming calls declined, but online customer retention went up.”

That, however, was not enough for Hagiwara, who offered a proposal to Call Center A, to change its billing to a “Per Call system.” Negotiations continued for half a year.

“We had worked with Call Center A for seven years. They understood our company as well as our products. As we searched for a way to switch cleanly from one system to another, negotiations became bogged down. I had decided that if there were no alternative to the hourly rate system, we would have to find another company.”

Fortunately, the call center Fusion was using, provided an introduction to company B. Cost-related negotiations went smoothly, and in January 2022, a contract was signed. The cost of handling calls was reduced from ¥5.57 million in 2021 to ¥3.38 million in 2022, saving ¥2.18 million.

The Secret to Improving Retention

Now, however, we turn to the hardest to achieve success of all, reducing the cancellation rate from 17.2% to 13%.

“It was clear that a vital factor was what the operators at our new ally Call Center B said to callers to persuade them to not cancel their subscriptions. We collected and analyzed recordings of what they said and set up a weekly meeting to provide feedback.”

In addition, Hagiwara set up role models for sharing information about operations as she worked to improve operator skills.

“It was critical that the client (Fusion) listened to each meeting’s recordings. This was an effective appeal to the call center and changed the seriousness with which operators handled the calls. One result was the proposal from the front line to offer a special discount coupon to those who called to cancel who decided to continue to subscribe.”

The discount was not, however, offered to all customers. As Hagiwara said over and over again, the most important thing for an operator is clear understanding of the customer’s reason for cancelling and choosing an appropriate response. The result of the customer team’s hard work under Hagiwara’s leadership was a 17.4% improvement in the customer retention rate.

“Even though the numbers were better, we can’t let down our guard. I have learned from this personal experience how important the latest numbers are. Even now I check the numbers every day and coordinate with the marketing team and call center every week.”

Hagiwara’s challenge is never ending. What are her goals at work this year?

“In 2022 most of my work was defensive and related to DARK CLEANSE. In 2023 I want to go on the offensive with KOMBUCHA CLEANSE. I want to propose new tactics, capture new customers, and contribute to growing sales.”

What are her private goals?

“My hobby is photography. I love to take my Nikon D850 and go hiking in Kamikochi and Norikura in Nagano Prefecture. But the camera is heavy and the hiking demanding. Every time I regret having taken it. But when I shoot beautiful scenery, it was worth it. The regret flies away (laughs). This year I would like to try shooting and editing video instead of only still photography.”

Finally, we asked her how it felt being a winner in the UNIVA AWARDS?

“Finding the courage to enter and seize this opportunity to pull together what I had done and the results thereof contributed to my personal growth. While that was by itself a big achievement, I never expected to be chosen as a Winner. That was a surprise. I was guided by my boss who provided the know-how, how to do a trial calculation and predict the outcome for the cost of incoming calls. Every measure taken was made possible by the advice and support of other teams. I am truly happy to see this award as a celebration of the company and not just myself. I am very grateful, indeed.”

Congratulations to Hagiwara-san and to everyone at Fusion!!!