Stop Playing Catch-up in the Contact Center! The Hidden Cost of Newbies
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- Jody Robbins
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1 Stop Playing Catch-up in the Contact Center! The Hidden Cost of Newbies Prepared by Dave Brown Founder & President Support Center University Sponsored by
2 Introduction Employee loyalty and retention is of equal or even greater importance compared to customer loyalty and retention as a factor driving company success. The logic behind this statement begins with the reasoning behind customer loyalty programs. It is well known and accepted that it costs more to find new customers than to keep the ones you have, and that existing customers are typically more profitable. The same concept can be applied to employee retention. Holding on to your employees at least the good ones is far less expensive than recruiting, training, and then waiting for new employees to come up to speed. To put the opportunity in perspective, we (Support Center University) recently worked on a project where the techniques described in this paper saved that company over $6 million per year. That s a somewhat extreme example intended to make a point. However, based on our experience in working with hundreds of companies, we estimate that most organizations can reduce their overall contact center expense by more than 10% by utilizing these techniques. The Newbie Challenge Most contact centers are constantly dealing with the effects of having new agents onboard. Sometimes having new agents on the team is considered a good problem such as when it results from business growth or spikes in headcount due to seasonal demands. However, it can also be a bad problem such as when it results from attrition issues. Whatever the cause, new agents in the call center can be a huge challenge. This problem often runs deeper than many realize. There are the obvious challenges and costs related to finding, hiring, and training new agents. However, there s a less obvious cost that is tied to the time it takes for new employees (a.k.a. newbies ) to come up to speed. In a complex support environment, this expense can be devastating. Newbies are less productive. They have longer handle times and lower resolution rates. You know it has an impact, but do you truly understand how this drags down overall contact center performance? Can you quantify it? More importantly, do you know how to improve it? This paper will share industry benchmarking data regarding staff turnover in contact centers. We ll provide newly available in-depth analysis into performance variations correlated to tenure. Readers will learn how this impacts overall center performance. We ll also show you how to measure and calculate these metrics for your contact center. Most importantly, we ll share specific methods to mitigate these challenges and keep your contact center performing optimally even with a high percentage of junior staff. Contact Center Attrition There are a lot of studies that have been done on this topic, and the results vary substantially. However, there is a common thread: Attrition for contact centers is high. The Hidden Cost of Newbies 2
3 One such study, with a focus on general customer service centers, found the average attrition rate to be 86% overall. Drilling down, the study found that outsourcers are quite higher than average. Outsource attrition rates are 104%, compared to 68% for internal (non-outsourced) contact centers. Another study, with focus on technical support centers, reports that this category enjoys a lower attrition rate. Technical support centers have attrition rates that typically range from 20% to 40% annually. During the recent economic downturn, that was even lower at approximately 10%. An important point when considering attrition numbers is that it includes churn. A center having 86% attrition doesn t necessarily mean that only 14% of the staff that start the year is still there at the end of the year. Often, organizations that suffer high attrition also have difficulty keeping people long enough to recoup the cost of acquisition. It s not unusual that a high percentage of new hires leave within three or six months. In such instances, it could be that 25% or 50% of the staff that begin the year are still there at the end. However, several of the positions turned over multiple times. What causes attrition? In most conversations, attrition is treated as a bad thing, and in many cases, it is. However, attrition can also be the result of business success and growth. The contact center is typically an entry-point job. When companies are experiencing high growth, the contact center can be a source of talent for other areas of the company. It s a good resource pool, since these employees come with customer service training and experience, plus knowledge of the company s products and services. However, when the company is growing at a high rate and the contact center is also feeding other areas of the business, the result can be an extremely high percentage of newbie service agents. Other businesses have seasonal spikes in the contact center. This is true of consumer-oriented product companies that may require extra pre-christmas sales staff and post-christmas service staff. Financial software companies often require huge increases in support staff at end of year and during tax season. For these companies, the normal cycle of business results in a high percentage of newbies at certain times each year. One of the most difficult challenges is when you have high attrition due to morale problems. Unfortunately, this can result in a situation where the negative impact on the organization (of having a high percentage of newbies) makes for a difficult working environment resulting in even more attrition. This can become an ugly cycle that is difficult to break. To stem the flow, the organization must determine and resolve the underlying issue. As we ll discuss in the next sections, there are many costs associated with a high percentage of newbies. One of the unmeasured costs is the toll on morale as the performance challenges strain the organization. No matter the cause, in the end, newbies are newbies, and the challenges to the organization exist whether the driving factor is positive or negative. The Hidden Cost of Newbies 3
4 Financial Impact of Attrition There have been many studies and a wide range of costs published related to hiring and training new staff. The range of reported costs starts at around $5,000 per new hire. Certainly $5,000 per employee is NOT a fully burdened cost. That may be a reasonable direct cost for recruiting contact center employees. However, it does not truly reflect the cost to the organization. Other studies go as high as 150% of the annual salary. While this might sound like an inflated figure, it may not be far off when you consider the total impact on the organization. Companies often measure the hard cost of replacing lost agents. This includes the cost of recruiting, hiring, and training. The cost calculation typically ends with sending that new agent out on the contact center floor. Supervisors and managers know that new agents don t perform at the same level as the seasoned agents, but it s not often quantified. What is the impact of these newbies on organizational productivity and customer satisfaction? The Hidden Cost There are many performance measures affected by new agents. The more obvious are average handle time (AHT) and first-contact resolve (FCR) rates. Simply put, new agents take longer to handle calls, and they are more likely to be unsuccessful in addressing the customer s need. This may result in having to call the customer back after getting assistance from someone else. Or it could require the issue to be escalated to a more senior person. Or perhaps the agent might give a wrong or incomplete answer, resulting in the customer having to call back later on the same issue. It s not just their own performance that suffers when new agents struggle. The new agents require additional support from the more senior agents (Tier 2, Tier 3), supervisors, or coaches. This eats up capacity (potentially resulting in longer hold times) and drives organizational performance in the wrong direction. All of these issues have costs associated. Fixing the Problem The traditional approach to addressing the attrition issue, which you will find in many studies and articles, includes: Develop meaningful career paths. Enrich the job. Give employees a sense of self-worth. Pay a fair salary. Recruit the right staff. It s all Mom and apple pie. Sure, these are all good things that should be done, and I won t say that any are bad ideas. However, that s Management 101. It s common knowledge (if not common sense), and everyone is or should be doing these. The Hidden Cost of Newbies 4
5 Doing the above may help reduce attrition. However, you will inevitably have new hires, and the challenge is to assimilate them into the organization in a smooth and effective manner. Where many organizations miss the mark is ensuring that the work is designed to make people successful. The central theme of this paper is to help you improve the performance of new agents and reduce the negative impact on overall organizational performance. The correct strategy is twofold. First, get the call to the right person (avoid giving issues to agents who are over their heads ). Second, ensure that all agents have proper resources. The tactics to achieving this strategy begins with having a solid skills-based routing structure (with compatible new-hire training program) and is enhanced by providing effective troubleshooting and problem resolution tools. Understanding the Process Issue The problem in a typical organization is that new agents are not properly equipped to handle the range of issues that they will get. It s not a training issue. In fact, often they receive too much training. The issue is that the process is designed in such a way that they can easily receive issues that are beyond their capabilities. Many companies will say they do skills-based routing (SBR). However, most do not. The company may use the SBR feature in their contact routing system, but they are typically just sorting calls into different categories or groupings. That s not skills-based routing. Let s be clear. Having your customers choose options from a menu and sorting callers by the product and/or module they are calling about is not doing SBR. True SBR is where calls are organized by the nature and complexity of the issue and then routed to someone with the appropriate skill to resolve it. To better understand this point, let s use an example (see Figure 1). Let s say that a company organizes its calls into several categories via an SBR concept. They organize the calls into three or four (or six) categories that align with typical customer tasks or modules within their product. The call is then routed to that group, and an agent accepts the call. The group is made up of a mix of agents some new and some seasoned. Any one of the agents in that group could get the call. This is how companies often describe their skills-based routing design. The Hidden Cost of Newbies 5
6 Figure 1: Typical Call-Routing Approach The questions I like to ask are, Can any agent in that group handle any call? And can everyone handle all calls in approximately the same handle time and same likelihood of resolution? The answer is usually no. Very often, I m told that there are easier and harder issues to deal with. Senior agents can handle everything, but junior agents struggle with the tough issues. There s a wide range of handle times usually coinciding with the agent s level of experience. And junior agents are much more likely to escalate the tougher issues. To appreciate the solution, you must first understand the problem. It is important to realize the financial impact of this call-routing approach. Quantifying the Impact Understanding the true cost of new agents and quantifying the potential benefits of making changes is not easy. It is not something that can be achieved by analyzing data from existing systems and reports. That s because the nuances of effectiveness are hidden and the impact is averaged. However, quantifying the impact is not rocket science, either. It simply requires some focused effort and a few simple techniques. It s something any call center manager can do if they are willing to dedicate the time and get down in the trenches for a while. Here s how you do it: The Hidden Cost of Newbies 6
7 Step 1: Define agent tenure groups. Imagine if you categorized all the agents into three groupings. Let s call them junior, intermediate, and senior. It s not hard to come up with the definitions. A few conversations (interviews) with supervisors and agents usually results in a fairly consistent view. It will be something like under six months is junior and over 18 months is senior. Obviously the middle range is intermediate. Step 2: Define call/contact complexity groups. Now let s do a similar thing with the calls/issues handled by the group. You must categorize the call or issue types by complexity or difficulty. Again, it s not usually hard to come up with a list of the five or 10 hard or complex issues. These are the ones that typically get handled by the seniors and the ones that newer agents struggle with. Second, you create the list of easy issues. These are the ones that anyone can handle even the most junior person right out of training. Again, everything else goes into the intermediate category. Step 3: Observation and data collection. This step is critical. It s not complex, but it requires dedicated time. It requires unbiased observation by someone who understands the categories and is not predisposed to make either excuses or judgments. Create a data collection form based on Step 1 and Step 2. Spend a day sitting with junior agents. For every issue they receive (call or e- mail), record the level of complexity, plus the handle time and outcome (if it was resolved, escalated, etc.). Do the same for intermediate and senior agents. When you re done, tally the results and come up with an AHT for each combination of agent tenure and issue complexity. Figures 2 and 3 demonstrate how the AHT might look. These are actual results from a client project. We ll use this as our example case study for the remainder of this paper. Figure 2: AHT Analysis (Table) Issue Complexity Agent Level The Hidden Cost of Newbies 7
8 Figure 3: AHT Analysis (Chart) Basic Advanced Complex Junior Intermediate Senior Using the AHT we developed above, we can model the overall AHT. In Figure 4 below, we assumed that calls types (easy, medium, and hard) are distributed equally (one-third of each). We also assumed that they would be answered in a similar distribution (one-third received by each level of agent). Based on this, we can develop an overall AHT. In this case, it is minutes. That exercise and those calculations and particularly the minute AHT are important. We ll come back to this later. Figure 4: AHT without SBR (Calls Distributed Randomly/Equally) Average Handle Time (in minutes) Basic Advanced Complex Overall The Hidden Cost of Newbies 8
9 The Concept The foundation of the recommended solution is true skills-based routing. Figure 5 shows the concept. Rather than simply sorting calls into broad categories and then routing them to groups of agents with varying degrees of capability, we organize the incoming calls by their difficulty or complexity. The agents are then assigned to a primary skill level, and that becomes the majority of their workload. As the diagram indicates, it is still advisable to have the agents back up the other skills. This avoids the problem of having too many smaller groups, which typically results in service level, utilization, and other workforce management issues. By assigning an agent a primary skill and one or two back-up skills, we get better staff utilization and have a larger pool of people available to meet service levels. If this is structured correctly within your phone or contact-routing mechanism, the agents will spend the majority of their time handling the issues that are appropriate for their skill level. Only occasionally will they get overflow calls/ s from the higher or lower skills. The recommended target ratio is 80% of contacts within the target skill. All of our calculations below assume an 80% accuracy/success rate. Figure 5: Skills-Based Routing Concept In practice, getting the benefits requires two complementary components. In Step One, we must design the skills-based routing model that effectively routes calls to the correctly skilled agents. In Step Two, we align the new-hire training program with the SBR model. This enables us to The Hidden Cost of Newbies 9
10 provide the necessary level of training to the new agents and then route calls to them based on their capabilities. Mini Case Study Let s look at a real-life example and see how these concepts can be applied. We ve changed the name and hidden any identifying data. However, the following is a synopsis from an actual project. Our case-study company ACME has approximately 2,000 telephone agents. The majority are outsourced (offshore). The multiple centers each handle different products and/or call types. Turnover is very high close to 100% in some centers. ACME has traditionally trained new hires for six weeks before they went on the phones. The strategy was to give them deep, thorough training so that they re prepared for any type of call. The problem with that approach is that the newbies were somewhat overwhelmed. Plus, they could very easily receive calls on the toughest problems on Day 1 (and often did)! Talk about stressful. The second challenge was, because they were taking all these different calls, it would typically be several months before they had taken enough calls of each type to feel comfortable and be competent. The result was three to six months of stress on the new agents and three to six months of under-achievement from a performance standpoint. Note: The data in Figures 2, 3, and 4 are actually from ACME. You can see that junior agents who received complex calls typically had two to three times the talk time compared to the same call being handled by a senior agent. The first step in improving new agent performance and reducing the negative impact on organizational performance required a redesign of their call-routing structure. We implemented a very simple SBR design that sorted calls first by major category, and then essentially sorted calls into three types: simple, medium, and complex. The Hidden Cost of Newbies 10
11 Figure 6: ACME s New Phone Menu (SBR Design) As our example demonstrates, skills-based routing does not need to be complex. The model in Figure 6 is intentionally simple. There are only two levels, which means customers only make two menu selections from a maximum of four options presented. The result achieves our goal: 80% of the time, the caller will be routed to an agent with the appropriate skill. Simple, but effective. The second half of the solution was to restructure the training program to be compatible with the new SBR design. In the new model, we give newbies only three weeks of training (see Figure 7). This reduces the elapsed time from date of initial hire to date of taking calls by 50%. Now, when these new recruits hit the phones, they only have the basic skill in their phone profile. This allows them to take the easier calls which they are comfortable handling. By limiting their calls to those that they can effectively handle, their AHT and FCR is good from the very beginning. The Hidden Cost of Newbies 11
12 Figure 7: ACME s Revised Training Program Organizational Performance Impact After implementing these changes, an organization should perform another study, such as the one we described in the Quantifying the Impact section above. Figure 8 represents the revised performance based on the 80% success rate. Figure 8: AHT with SBR & New Training Program Basic Advanced Complex Overall 0 Average Handle Time (in minutes) The revised overall AHT in this chart is a 12% improvement (Figure 8 vs. Figure 4). For most organizations, this would be considered substantial. It s very important to note that this is achievable simply by changing the process model. The Hidden Cost of Newbies 12
13 What we ve done is eliminate waste. We ve designed a process that gets the caller to the most appropriately skilled agent. At the same time, we ve reduced our initial training time and shortened the time it takes to get new hires on the phone and productive. In doing the above, we ve also made those initial months less stressful for new agents. As a bonus, customers receive better service! Conclusion It s important to realize the real cost of attrition in your organization including those hidden costs. Armed with this understanding, implementing the required improvements can be justified. Taking the steps outlined in this paper will ease the assimilation of new employees into the contact center. These changes will also improve organizational performance particularly average handle time and first-contact resolution. Since these two factors are the primary drivers of customer satisfaction, you will see improvements in customer satisfaction metrics, too. We ve discussed how these changes will address the problem of having a large number of new agents and the negative impact those agents have on organizational performance. The solution also has a positive side-effect. It breaks the cycle. By making the job less frustrating and more fulfilling for the newbies, we actually reduce attrition. The result will be a better-performing organization, and it s the reverse of a self-fulfilling prophecy. The cure actually helps prevents the problem. NOTE: The primary example used in this paper was AHT (average handle time). We could just as easily have used first-contact resolution (FCR) to make the point. Both AHT and FCR are improved as a result of these process changes. The Hidden Cost of Newbies 13
14 About Support Center University Providing management consulting and training services. Offering operational assessments, efficiency improvement projects, and staffing level analysis/requirements planning. Specializing in reducing customer wait times and case-handle times (therefore improving employee/customer satisfaction) through efficient design of call and routing (including skills-based routing). Support Center University has assisted numerous companies to achieve significant improvements (20-40% typical). For additional information or to request a no-obligation discussion, please visit About Citrix GoToAssist Citrix GoToAssist Corporate is a secure, comprehensive remote support solution for multi-agent support organizations. Instantly view and control customer and employee desktops to resolve technical issues fast. With GoToAssist Corporate, managers can streamline internal operations and manage support teams to maximize efficiency, improve first-time call resolution and boost customer satisfaction. For a free trial or to learn more, please visit
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