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.

2. Measure quality as well as speed.

Herbalife and Merrill Lynch know they’re hitting the right balance between good service and efficiency because they go beyond broadcasting efficiency metrics on a billboard and measure the level of service their agents provide. The number that Herbalife’s Crocker is most concerned about is first-call resolution—whether a distributor can get all of her needs met in a single call, ideally without being transferred.

Merrill Lynch measures customer satisfaction for every call handled by an agent. As soon as an agent ends a call, the interactive voice response (IVR) system automatically asks clients to rate their service experience on a scale of 1 to 7. Anyone who assigns a score of less than 5 is offered the opportunity to be transferred directly to a supervisor. Whether or not clients choose to talk to them, supervisors listen to each call ranked 5 or lower. And every week, Nelson sends a memo with client survey scores to everyone in the call center.

Other call centers collect quality data online or through e-mail. At Creative Labs, makers of the Zen Micro MP3 player and other electronic toys, Associate Director of Services Steve Lamberti says that a statistically significant sample of customers who contact the call center get an e-mail survey asking them to rank such things as the quality and value of the call.

Once you’ve collected data on both efficiency and service quality, you can help institutionalize the appropriate balance between the two by developing a scorecard for agents that weights both accordingly. At McKesson Specialty—where call centers handle calls for pharmaceutical companies from patients who need help paying for their prescriptions, as well as from doctors and pharmacists—employees are assessed on whether they’re taking calls when they’re scheduled to do so, their average call handling time and their quality scores. Those who are high performers in all three areas earn a differential—an additional $1 to $2 per hour on top of their regular hourly rate. Lori Glover, director of call center operations for McKesson Specialty, says she views the quality score, which gets at whether the interaction was appropriate and succinct from the caller’s perspective, as one of the most important metrics. McKesson relies on Witness Systems to both record calls and capture an agent’s keystrokes. “We look at not only whether the agent’s demeanor and approach in handling the verbal portion of the call was appropriate, but were they leveraging tools and technologies and entering data points,” says Glover. For example, supervisors can see if agents are efficiently accessing the information they need to address customers’ needs and whether they are entering all relevant data properly in the CRM system.

3. Coach agents to succeed.

The practice of recording and monitoring calls may seem Big Brotherish, but it’s actually a highly effective tool for coaching employees, according to Purdue’s Anton. Most call center supervisors will randomly listen to five to 10 calls a month per agent; the best supervisors look for things the agent is doing well to encourage repetition of those best practices. It’s also possible to flag “outlier” calls—those that are much shorter or longer than average and thus are more likely to include a coachable moment. Merrill Lynch does this and takes the added step of having a third-party organization listen to a sampling of calls, looking for things such as how well the agent pulled up relevant information, the level of confidence in the agent’s voice, whether the agent articulated and answered the client’s question appropriately, and whether the agent had intelligence in his voice. Supervisors find this a particularly useful tool for coaching new employees.

At Herbalife, Crocker taps in to the expertise of more senior agents by having them serve as “buddies” to new agents. New hires will first sit with their buddies to listen in on calls; when they start on the phones, they sit next to their buddies for the first month. “We have an open environment instead of closed-in cubes,” says Crocker.

4. Put customer data at agents’ fingertips.

Giving agents access to customer information may seem elementary, but it’s harder than you might think to pull off. According to a study by Arussy’s Strativity Group, the average agent needs to access five to 10 different legacy systems including old AS/400 applications, which means customers must wait 30 to 40 seconds while the agent tracks down relevant data. Although many companies are loath to invest in upgrading call center technology, the good news is that they don’t need to trash their legacy systems, says Arussy. A Web-based user interface can give agents easy access to data residing in multiple legacy systems.

Coca-Cola Enterprises, for example, is piloting a Web-based GUI known as Boss that lets agents view customer data in some 30 different AS/400 databases. “The Boss application gives agents immediate access to all data as if it were sitting in one place,” says Nita Pennardt, vice president of Coca-Cola Enterprises’ customer development center, which handles account management and customer support calls for restaurants and other establishments that serve Coke. “From the front Boss screen, agents can see the most recent 100 transactions we’ve had with the customer, and they can look at it by sales transactions, customer support transactions or equipment service transactions—or they can see all three. Even the last transaction made two minutes ago shows up if the customer has to call right back.”

Pennardt says agents love Boss because if a customer previously called for service on her fountain equipment, the sales rep will know that and can ask her if the issue has been resolved before launching into a sales pitch. “Before we had Boss it was very cumbersome for agents to get to all of that data,” she says. Speedy access to customer data has vastly improved agents’ efficiency as well. Pennardt says that productivity increased 76 percent after implementing Boss, with the number of transactions customer support reps were handling per day shooting from 58 to 102. “In addition to enhancing productivity, Boss brought a major boost to employee morale by making our agents’ jobs much easier,” she says.

Boosting agents’ morale can have a huge impact on their ability to serve customers well. “Everyone knows if your agents are not happy, they’re not going to make customers happy,” says Pennardt.

5. Approach self-service from the customer viewpoint.

As anyone who’s ever found themselves stuck in a poorly designed IVR system knows, it’s all too easy for companies to deliver a rotten self-service experience. But if it’s applied properly, self-service technology can be a highly efficient way to give customers the information they need in a hurry. The key, says Arussy, is starting with the goal of saving customers time and effort rather than just trying to save the company money. Companies should, for instance, make it easy for customers to opt out of the IVR system to speak with a live agent if they need help; hiding that escape route might cut back on the number of calls agents must answer, but it’s not worth the price of customer frustration.

You also need to consider whether the transaction you’re trying to automate is, in fact, a good candidate for automation. Enzo Micali, senior vice president and CIO of 1800flowers.com, says his company has never used an IVR system to take orders. Choosing flowers, after all, is a subjective experience, so customers either want to talk it through with someone or see a photo of the arrangement online. The company does, however, use an IVR system to let customers check on the status of orders.

At Merrill Lynch, an astonishing 87 percent to 92 percent of calls to the call center are handled through an IVR system. But the kinds of information that callers want—stock quotes, account balances and such—are well suited to automation. John Killeen, CTO of Merrill Lynch’s Global Private Client Group, says that during the past five to 10 years, the increase in automation has been the single biggest change he’s seen in the call center. He reports that the IVR system has streamlined operations within the call center and that Merrill Lynch has made the IVR experience better for callers. For example, speech recognition technology has improved dramatically in the past few years, and Merrill Lynch’s IVR system now runs on the Tell Me platform, which features state-of-the-art speech recognition.

Customers who dial 1-800-MERRILL speak an identifying code and are presented with dynamic menus based on their relationship with the company. The system offers “barge-in” capability, meaning that callers can interrupt the prompts at any time to get directly where they need to go.

When piloting the IVR system, Merrill Lynch invited some more-frequent callers to try it out. Client feedback helped the company fine-tune the system to make it intuitive, choosing natural-language English instead of financial services jargon and avoiding automating things that might irritate clients. Today Merrill Lynch’s IVR system efficiently handles most of the frequently asked questions—it actually dispenses stock quotes faster than agents can—and Merrill Lynch saves rep talk time for more complex client questions, making agents’ jobs more interesting.

When a caller opts out of the IVR system to speak with an agent, skills-based routing ensures that the agent is qualified to answer questions associated with that branch of the system. The agent can see on her screen where the caller exited the system and thus understands the context for the customer’s question. Agents also have cobrowsing capability, so they can, for instance, remotely help a client set up bill payment.

One caveat about overautomating is the danger that you’ll forfeit opportunities that could be capitalized on in a live call, says Arussy. For example, banks often try to push customers to make address changes via the Web. Yet in doing so, they’re forgoing the chance to ask whether customers have new financial needs associated with their move. The irony, says Arussy, is that many of those same banks are spending money to acquire lists of people who have just bought new houses to try to sell them mortgages.

6. Capitalize on customer intelligence.

In many call centers, agents simply absorb or deflect blame and then get rated on how well they handled the call. The cause of the customer’s complaint goes no further than the agent’s screen, and the company misses out on an opportunity to address the issue. And whether callers are irate, neutral or happy, companies are crazy if they don’t mine the call center’s constant flow of customer feedback for ideas for product and process improvements, new product brainstorms and even competitive intelligence.

Shockingly few call centers do a good job of both collecting customer data and then sharing actionable intelligence with other parts of the company that could capitalize on it. “Quite a few call centers are capturing various usable bits of information,” says Brad Cleveland, president and CEO of the Incoming Calls Management Institute. “But only 10 to 15 percent both capture the information and have a process in place to share it on an ongoing basis with other departments.”

Creative Labs has a decidedly low-tech but highly effective process for capturing insights from the contact center and sharing them throughout the company. According to Lamberti, an analyst will watch for trends in calls and contacts around a new product (like the Zen Micro, which Creative Labs introduced before the 2004 holiday season), delving down into calls, e-mails and Web-based support-forum contacts to draw out information about problems. “It’s a manual process,” says Lamberti. “There’s no pretty way to do that.” The analyst creates tick sheets to track the number of contacts per product as well as the top five to 10 issues that customers are calling about. The information is then compiled into what Lamberti calls “an ugly Excel report” and e-mailed to other departments.

Although he’d love to be able to push a button to share new-product reactions with other parts of the company, Lamberti says that it’s critical to have a person on the front lines frame the data correctly first to avoid “sending product managers and engineers on a wild-goose chase.” This closed-loop reporting process helped Creative Labs quickly pick up the fact that because the Zen Micro system didn’t have a default language, some English-speaking customers were inadvertently setting up their MP3 players in a language they didn’t understand. Within a week, Creative Labs initiated a user-installable firmware upgrade making English the default language.

But Lamberti’s wish for a more automated way to mine call center data is not that far-fetched. Vendors such as Nice Systems are eager to help companies tap in to their once-inaccessible gold mines of call center information and have scurried to add business intelligence functionality to their product suites. In addition to offering data mining and analytics, they’re enabling such capabilities as emotion detection and talk analysis. So it’s now possible with such software to zero in on calls with angry customers or rude agents by scanning for raised voices or interruptions. It’s also now feasible to, say, flag calls that include hot-button words or competitors’ names.

Companies are only just beginning to look at how they can use these new technologies to harness the wealth of data their call centers collect each day. But the sooner they start viewing their call centers as critical sources of business intelligence, the better. “Companies ought not to wait to have the latest, greatest technology to begin sharing data,” says Cleveland. Instead of merely handling calls efficiently, call center managers need to start thinking like consultants as well, helping the company identify opportunities to improve and grow the business. “Call centers have got to keep an eye on the bigger picture,” he says. “Technology tools can help—if you’re ready to use the data.”

If you’re not ready to listen to your customers, your competitors might very well be.