Creating a Profitable Call Center

Not long ago, agents in the call center of a well-respected global Fortune 50 company endured the weekly distribution of the bathroom-time bar chart, a graph showing how long each of them had abandoned his phone to visit the loo. If an agent’s bar exceeded the benchmark for his call center, he’d hear about it from his supervisor at his next performance review. When call center consultant Lior Arussy handed the disbelieving CEO a copy of one of the bar charts, he jokingly recommended to the executive that the business services company install infrared sensors to detect when agents left their seats.

Once the embarrassed CEO looked at the numbers, he got the message that running a call center as a pure cost center not only produces a sweatshop environment for agents, it’s also bad for business. Pressure to minimize costs was translating into pressure on agents to get customers off the phone as quickly as possible. As a result, close to 50 percent of new customers were bolting for competitors within six months.

"The company was leaving money on the table," says Arussy, the CEO of Strativity Group and author of Passionate and Profitable. "Using very, very conservative estimates, 25 percent of revenues a year were essentially lost because the company was not focusing on customers, but instead focusing on efficiency." The company is now implementing a service-oriented architecture that will give agents quicker access via the Web to the information they need to provide better, faster service. What’s more, the CEO has come to view his call center as a gold mine of customer information. He started listening to calls himself and now requires senior executives to do the same. What they’ve heard has spawned ideas for operational changes that have cut costs and increased revenue.

This company’s blind spot about its call centers is unfortunately not that rare. The temptation to outsource the call or contact center is understandable, and companies are increasingly giving in to it. According to a December 2004 JupiterResearch survey of U.S. contact center employees, 28 percent of respondents outsource some or all of their contact center operations. Dimension Data’s "2005 Global Contact Centre Benchmarking Report" puts the number of companies globally that outsource at least one of their call centers at 20 percent, up from 14 percent last year.

But viewing the call center as a pure cost center is a huge mistake. Although expensive to run (annual operational costs hover between $80,000 and $120,000 per agent, according to Jon Anton, director of benchmark research at Purdue University’s Center for Customer-Driven Quality), the call center also represents the public face of your company. A well-run call center can significantly increase customer loyalty—and a poorly run one can prove a major liability. A Purdue University study found that the average repurchase rate for products that work as advertised is 78 percent. But the repurchase rate jumps to 89 percent when customers have a problem with a product that’s successfully resolved though a positive call center experience. Conversely, the repurchase rate plummets to 32 percent when those customers have a lousy call center experience. If that’s not enough to convince you that your call center is strategic, the fact that it’s a potential wellspring of customer intelligence should.

As the Fortune 50 CEO discovered, it is entirely possible to transform a call center from a cost center into a source of competitive advantage. Doing so requires striking the right balance between operating efficiently and providing great service—as well as empowering agents with the training and information to meet customers’ needs. An effective call center strategy should include well-defined processes for capturing and sharing customer information. And depending on the nature of calls coming into the call center, it might include a healthy dose of carefully applied self-service technology and even some offshoring. No matter what, an effective call center strategy recognizes the long-term value of customers and doesn’t skimp on customer service in the name of short-term cost cutting. Here’s a checklist of six best practices that can help you transform your call center into an engine of value creation.

1. Balance efficiency and service.

Walk into almost any call center and the first thing you’ll see is a huge electronic billboard flashing statistics such as caller wait time, call abandonment rate and average call duration. "That tool put in front of agents screams, ’Come on, rush it! We don’t have time! This is not about the customer, it’s about closing cases!’" says Arussy. "When employees see those numbers constantly running, it puts tremendous pressure on them to rush customers instead of trying to build a relationship." Customers whose needs aren’t met, however, generally won’t put up with shoddy service. "If you’re not providing a very good service level, customers will call through again, and you’ll end up with more call volume because you did not resolve the query the first time," says Michele M. Crocker, vice president of distributor services for Herbalife, a weight-loss, nutrition and personal care products company.

Surprisingly, good service doesn’t always mean longer talk times. When Judy Nelson, first vice president of Merrill Lynch Global Private Client Services, instructed the 700-plus agents at the two call centers she manages to focus on solving clients’ problems instead of worrying about call duration, customer satisfaction increased on average 5 percent to 6 percent. And the average length of calls actually declined approx- imately 5 percent. "The directive to spend as much time as we need to solve the client’s issues made me feel great coming to work for Merrill Lynch because I knew they really cared about the client," says veteran agent Paul Keller.

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