CitiStreet Scape. Superannuation Call Centres - How better measurement techniques can support a super fund s brand promise. Issue 02 August 2008

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1 Superannuation Call Centres - How better measurement techniques can support a super fund s brand promise Issue 02 August 2008 CitiStreet Scape A WHITEPAPER SERIES

2 Summary The introduction of Superannuation Choice of Funds (CoF) in July 2005 (and portability a year prior) has created increasingly fierce competition between super funds, driving fund marketing to a level never seen before. CitiStreet Australia s research suggests that 3.5% of members are switching funds annually and in our first CitiStreetSCAPE whitepaper we predicted this to double over the next five years. This competition has put a spotlight on a super fund s marketing department as pressure mounts to secure and increase a fund s membership base. Australia s trillion dollar superannuation industry is at the stage of its evolution where the focus is now on brand awareness strategies to attract and retain fund members. Call centres are increasingly recognised as a key part of a fund s marketing strategy as they play a vital role in driving member satisfaction and perception of the fund and, therefore, customer acquisition and retention. CitiStreet Australia research suggests that the role of call centres is becoming more important because: members are increasingly taking more interest in managing their super; members are increasingly consolidating funds; members are keen to understand changes to super legislation and its effect on them; super funds understand the value of being able to communicate directly with members to secure and increase their share of market voice; super funds are learning that call centre experience directly impacts on member loyalty; referrals to telephone advice will become a significant part of a call centre s focus in the future; and higher skilled telephone representatives who focus on first call resolution drive increased member retention and satisfaction.

3 Given the increasing importance of fund call centres, CitiStreet Australia has investigated the link between funds marketing strategies and the contribution of call centres to see if call centres are delivering the brand promise in super fund marketing campaigns. It was discovered that a fund s marketing strategy may be compromised as call centres are not measuring their performance and customer satisfaction in an appropriate way, and may even be decreasing customer satisfaction. A common error is a predisposition to productivity and efficiency measures, at the exclusion of customer-centric metrics. We found that often a fund s internal measurement of customer satisfaction is not congruent with actual customer satisfaction as determined by customers via other qualitative survey methods. In this paper we reveal how focusing on productivity metrics alone, compromises the member experience, and therefore can impact on a super fund s brand and promise. We also make suggestions on how this situation can be improved.

4 How better measurement techniques can support a super fund s brand promise 3 The Evolution of Super Funds as Marketers The introduction of CoF in July 2005 has driven super fund marketing to a level never seen before. Both retail and industry super funds now conduct innovative marketing campaigns using a variety of mediums (including prime-time TV) to build brand awareness. This is in stark contrast to the pre-cof era when industry funds didn t advertise and retail funds used mainly below the line marketing methods, such as direct mail. Funds are also now focusing more on increasing their investment in and promotion of their brand rather than marketing the concept of superannuation. High profile brand building examples include ING s advertising campaign using comedian Billy Connolly; the Industry Super TV campaign featuring everyday people comparing fees and making decisions about their super; and AMP s ongoing TV and print campaign. But is the call centre on the same page? The call centre experience is vital to delivery of the brand promise, which must occur at the moment of interaction, as often this is the only form of direct communication members have with a fund. A well-aligned call centre experience can enhance member perception and loyalty. This moment of truth will determine whether the invitation to continue the brand journey is accepted or not. Call Centres: Vital to Member Attraction and Retention It is now well understood that a call centre has the power to either make or break a deal in customer attraction and retention. Good customer service builds a member s loyalty to a fund, and this is the key to member retention, according to the 2007 Genesys Global Consumer Survey. The survey found that 74% of those surveyed would do business with a company based on a positive call centre experience, while 40% said they had stopped doing business with a company solely due to a poor experience with a call centre. 1 1 Genesys, September 2007, A Business White Paper: How Call Centres Can Drive a Higher Net Promoter Score, pp 1-13.

5 How better measurement techniques can support a super fund s brand promise Call centres play a major role in shaping a customer s perception of service as they handle up to 73% of customer interactions in many businesses, and as retaining customers costs up to five times less than acquiring new customers, the emphasis clearly needs to be on retention. 2 3 This means that each interaction with the fund must meet and exceed members service expectations, or even loyal members may be tempted to move funds a situation that is magnified by the intense competition for members attention heralded by CoF. Clearly, call centres are a key element in a fund s marketing strategy and those providing higher levels of customer satisfaction will enhance their competitive advantage. But how is customer satisfaction measured in call centres? And does it correlate with a fund s marketing campaign or the member s idea of customer satisfaction? Are innovative marketing strategies being supported or eroded by the way call centres measure their performance? Before we examine the existing measures and the types of call centre behaviour they drive, let s look at what members actually want from a call centre. What do Fund Members want from a Call Centre? CitiStreet Australia s experience is that fund members call centre expectations are becoming more demanding, both in terms of channels and service quality: members expect call centre staff to be knowledgeable about the topic they are enquiring about, but not necessarily in a position to supply all the information (members seek information from multiple sources); members expect to get advice over the phone that can help them make financial decisions; members expect call centres to be available over extended business hours; 2 Genesys, 2007, A Business White Paper: The Dynamic Call Centre, pp Genesys, September 2007, A Business White Paper: How Call Centres Can Drive a Higher Net Promoter Score, pp 1-13.

6 How better measurement techniques can support a super fund s brand promise 5 call centres are being used for both simple enquiries as well as more complex discussions on negative investment returns, claims and advice, and the member still expects the Call Centre Representative to resolve the enquiry, make a decision and explain it; and members expect each call centre interaction be equivalent to, or better than, the previous one. This demand for continuous improvement is a major challenge, especially in recent times where the Better Super System (introduced in July 2007) and market volatility has driven the highest call volumes ever experienced. So if this is what members expect, are call centres measuring how well these things are done? Let s look at how call centres currently measure their success. How do Call Centres measure their success? Traditionally, call centre measures have focused on five broad areas of performance: Resource availability the capability, efficiency and availability (adherence) of the call centre s representatives and automated systems (like IVRs) that handle interactions; Call volumes the volume of calls managed by the call centre; Queue length the time it takes to answer a call, e.g. 80% of calls must be answered in under 20 seconds (Grade of Service); Handle time the time it takes to complete a call, e.g. a call must be finished in less than 3 minutes; and Quality a subjective measure of the customer interaction, typically observed by listening to calls. But one has to ask, where does the customer make an appearance in these metrics? Lyn Trewenack, Manager of CitiStreet Australia s Member Service Centre and a leading industry specialist, says that the most common metrics currently being used in Australian super fund call centres (from within the above five broad areas of performance) are adherence, quality and Grade of Service (GOS).

7 How better measurement techniques can support a super fund s brand promise Adherence Progressive call centres define this as the percentage of time that a representative is doing what they should be doing down to the single minute (eg. at meetings, breaks, or on phones). Other less IT-sophisticated call centres define it as a percentage of logged in to rostered time. For example, if they are scheduled to work 7.5 hours a day, what percentage of that time have they actually been logged in. Sophisticated technology is required for reliable data on true adherence, which few fund administration call centres have, making an accurate measure of this difficult to achieve. Call Quality You might expect this measure to be about the customer, but you would be wrong at best it is a proxy for customer satisfaction. To assess call quality most super fund call centres use pre-determined, internal criteria such as whether a customer s name was used three times during a conversation and whether information supplied was correct. Large call centres have Quality Teams and use software, such as QFiniti or Nice, to record all calls and then use them to coach representatives. But is quality really about using Mr Smith in dialogue and ticking boxes against compliance checklists? Many call centres make a direct link between their quality metrics and member satisfaction. However, it is increasingly accepted that the quality metric alone is not an appropriate indicator of true customer satisfaction. Best practice call centres in North America are now splitting their customer satisfaction metric away from the accuracy and compliance elements of call quality. They are including an evaluation of the response given to a customer enquiry, as judged by the customer. Measurement of these qualitative metrics is often outsourced. This data is combined with internally generated accuracy and compliance data to create an overall customer satisfaction measure.

8 How better measurement techniques can support a super fund s brand promise Grade of Service (GOS) GOS is a typical call centre metric, measuring the number of calls answered within a pre-determined timeframe. The Australian standard is 80% of calls answered within 20 seconds (the 80/20 rule). This standard developed because the industry believed customers were satisfied with it and reflected a comfortable pace of work for Call Centre Representatives. With a higher standard (such as 90/20, i.e. 90% of calls answered within 20 seconds) the call response is faster, resulting in fewer calls in the queue. This can result in representatives having too much time on their hands, which can increase staff turnover unless lower call volume periods are used for staff learning and development and/ or outbound call or activities. Conversely, a GOS of 70/30 results in long queues and increased stress levels in staff, which is not sustainable in an industry notorious for its high staff attrition rates. Wall boards (i.e. digital displays of colour coded call queues) have also been found to increase stress levels, so are now less common in Australia. Industry research undertaken in the last year indicates that GOS (i.e. wait time in queue) is NOT a key driver of member satisfaction. The threshold is around two minutes and then may only becomes a driver if the call is not resolved. In November 2007, an Australian Teleservices Association Workshop researched GOS with 250 Brisbane call centres and compared this to the same research completed 18 months prior. In 2006, 80% of surveyed companies aimed for an 80/20 GOS, but by November 2007 not one was aiming for this standard it varied between 90/10 and 70/30. In response to these findings, some Australian call centres have changed their GOS standard as it was found that the customer was not concerned about wait time, as long as the focus is on other customer satisfaction drivers (to be examined in the next section). GOS also has a strong link to call centre costs and is used as a proxy for call cost. When a high standard is used, e.g. 90/10, the cost per call increases. Alternatively, the cost per call decreases as the GOS ratio drops.

9 How better measurement techniques can support a super fund s brand promise 8 Another proxy stemming from GOS is abandonment rate, which measures the number of hang ups due to length of time in the queue. It is CitiStreet Australia s observation that if a call centre has a less than 5% abandonment rate, then members are generally satisfied with the duration of their journey. On the other hand, if the abandonment rate is over 5%, this becomes the tipping point for frustration with the call centre. It is a balancing act for call centres to get the GOS as low as possible without sacrificing call quality (as judged by the customer), thereby achieving low costs per call and abandonment rates of less than 5%. New measures for Customer Satisfaction The last 18 months has seen a significant shift in the measurement of customer satisfaction in the call centre industry globally. Organisations are moving from internal proxies to external authentic customer evaluations. The industry has started to consider what the customer actually wants from a call centre experience. External authentic customer evaluation can be achieved by automated surveying, or by phone or interaction with the customer all post call. Until recently, SQM Group (SQM), a North American authority with over 12 years global experience in benchmarking, tracking, and improving call centre performance, were the only group measuring customer satisfaction from the customer s perspective. SQM transaction/interaction studies have identified key drivers for customer satisfaction. Using SQM techniques and data, call centres can compare what customers have said about their customer service experience with internal quality measurement data. There is generally only a 17% correlation between the quartiles of these two measures, indicating that internal measures of quality are not indicative of what a member actually thinks or is experiencing. It proves that the emphasis on efficiency and productivity-based statistics is not encouraging good service quality and appropriate call centre behaviours. This brings us to the next challenge facing outsourced super administration call centres, and that is that most of their clients usually dictate the measurement metrics through Service Level Agreements.

10 How better measurement techniques can support a super fund s brand promise Similarly, internal fund call centre performance metrics are generally driven by business management who are focused on product management, compliance and administration priorities. There is a fundamental difference in how call centres and administration processing business units operate. Call centres are driven by queuing theory that describes the random arrival pattern of calls. This theory has been mathematically represented by Erlang, a mathematician and statistician, who sought to depict the staff number required to answer a forecasted call volume within varying GOS levels. While some client organisations and management teams have recognised the measurement dilemma and are changing performance measures to more closely correlate with member satisfaction, the industry still has a long way to go. Generally speaking, clients and management may not be as conversant as call centre staff on member satisfaction, compliance or accuracy. Should the focus be on educating clients and management to use appropriate metrics to drive customer-satisfying, membercentric behaviours? Is there a better way to measure satisfaction? To measure member satisfaction we must identify its drivers. CitiStreet Australia endorses SQM Group s view of the key drivers for customer satisfaction: Resolution was the enquiry resolved (as measured by the customer)? Decision did the representative have the authority to make a decision? Knowledge did the representative have the knowledge to resolve the enquiry? Caring did the representative express genuine empathy and care to the customer? Helpfulness was the representative helpful? You may notice that none of the drivers measure whether the representative used the customer s name three times - the drivers are more focused on how the call is treated, handled and resolved.

11 How better measurement techniques can support a super fund s brand promise 10 The graph below represents a typical call centre result based on these drivers. Call centre customer most important metrics ranking A CALL RESOLUTION VALUED DECISION CALL HANDLING FOLLOW-THROUGH HELPFULNESS CARING NEXT STEPS CONFIDENT LISTENING KNOWLEDGE CALL ON HOLD POLITE CLARITY GREETING WAIT TIME IVR The diagram above illustrates that out of the five drivers, First Call Resolution (FCR) is the one that matters most. It means that the customer s enquiry or problem is resolved in one call. According to SQM research FCR 4 : improves customer satisfaction/loyalty; increases opportunities to sell; improves employee satisfaction; reduces operating costs; and reduces revenue at risk. A Source: SQM Group article: FCR The Measure That Matters Most 4 SQM Group article: FCR The Measure That Matters Most.

12 How better measurement techniques can support a super fund s brand promise 11 Correlation between Customer Satisfaction and First Call Resolution B 82% 83% 65% 68% 53% 54% HIGH CUSTOMER SATISFACTION HIGH FIRST CALL RESOLUTION MEDIUM CUSTOMER SATISFACTION MEDIUM FIRST CALL RESOLUTION LOW CUSTOMER SATISFACTION LOW FIRST CALL RESOLUTION As can be seen from the diagram above, there is a direct correlation between FCR and customer satisfaction. While we are limiting our discussion to FCR as a customer satisfaction driver, it is also important to note its significant impact on employee satisfaction and call centre operating costs. From an employee satisfaction perspective, there is a direct link between handling repeat calls, during which the customer interaction tends to be more difficult, and employee dissatisfaction. Higher staff satisfaction results from fewer repeat calls, which is important as the call centre industry has annualised resignation rates as high as 35% (up from 29% in 2006 and even higher than 35% for larger call centres) 5. From a cost perspective, as much as 25% of a call centre s expenses can be put down to repeat calls, so if a call centre s average FCR can be reduced, it may make a significant difference to the bottom line. B Source: Hallis Turnover & Absenteeism Study 2006: Hallis Short Study (Qld) 2008 Other States are yet to be completed. Note that this metric measures resignation rate rather than turnover, that is, it excludes internal transfers and dismissals. 5 Hallis Turnover & Absenteeism Study 2006; Hallis Short Study (Qld) 2008 Other States are yet to be completed. Note that this metric measures resignation rate rather than turnover, that is, it excludes internal transfers and dismissals.

13 How better measurement techniques can support a super fund s brand promise 12 Increasing the validity of FCR Measurements It MUST be the customer who evaluates FCR, not the call centre. As the diagram below illustrates, there can be a huge discrepancy between what the customer reports and what the organisation believes via call quality observations or representative reporting. It is also important to consider how FCR data is collected and the impact this has on the validity of the data. Many call centres collect their own member satisfaction data through post-call surveys, but this has its pitfalls. Customer reported FCR performance compared to call centre reported C 68% 84% CUSTOMER AVERAGE CALL CENTRE AVERAGE Many call centres are starting to use an automated survey system; while customers are sitting in the queue they are asked if they would like to participate in a short survey after the call. If they say yes, post call, they are patched straight through to the survey. This approach tends to give skewed results as customers are more likely to hang up and not do the survey if they are satisfied, but will do it if they are dissatisfied with the experience they have just had. It is also common practice for representatives to offer a satisfaction survey to callers and then patch them through to the auto survey at the end of the call. This results in positive skewing because representatives cherry pick members they know who are more likely to be happy with their experience. This is to be expected when positive scores are directly linked to representatives individual performance statistics. C Source: SQM Group

14 How better measurement techniques can support a super fund s brand promise 13 Another way of collecting customer satisfaction data is for representatives to make outbound calls to members they have had an interaction with in between inbound calls. Again, this results in positive skewing as representatives are good at establishing rapport this is what they are trained to do so they achieve positive results because they are nice to the surveyed member. The better option is to collect data using an external skilled supplier as they will not cherry pick respondents, use verbal intonation, or develop a relationship with the member. This method is more likely to produce authentic results. The diagram below depicts the triangulation approach to measuring FCR and represents best practice in collecting meaningful FCR data. This approach uses a combination of post-call surveys, call-back tracking and a robust Quality Assurance (QA) monitoring program. Call-back tracking measures the percentage of members that have called in a pre-determined timeframe. Data is drawn from Caller Line Identification (CLI), or in sophisticated call centres from their Customer Relationship Management System. In a QA monitoring program, quality specialists or team leaders measure calls against a measurement tool that specifies characteristics in a call. The results of each of these methods are collated to produce a meaningful FCR metric. Best practice in FCR data D CALL BACK TRACKING POST-CALL SURVEYS ROBUST QA MONITORING PROGRAM D Source: Corporate Executive Board, Customer Contact Council

15 How better measurement techniques can support a super fund s brand promise 14 Moving Forward CitiStreet Australia proposes that a more effective way to ensure that the right customer experience is delivered by super fund call centres is to: Use appropriate metrics to drive the right call centre staff behaviour metrics that focus on actual customer service, not just productivity. For example, call centres need to engage staff to focus on FCR, not average call length. Customer-focused metrics allow representatives to service members better and increase staff satisfaction and customer loyalty; Focus on the top five drivers for customer satisfaction, i.e. resolution, decision, knowledge, caring and helping as this puts the focus of the call centre on meeting the needs of members. Continue to reassess what those top drivers are for your fund or member groups; Collect performance and customer satisfaction data in an appropriate way this increases the validity and reliability of data. As internal evaluations of customer satisfaction often focus on internal measurement criteria, consider adding the use of external, third party surveyors to ensure data integrity; and Move toward more sophisticated measures that progressive call centres are striving to implement the table on the following page outlines the metrics journey that super fund call centres could take to implement best practice and become progressive contact centres. This journey is not necessarily about strictly moving from one stage to the next, it s about: removing measures that are no longer appropriate; relegating some metrics to secondary sources of performance information; continuing to use relevant measures; and using new and more sophisticated measures where appropriate.

16 How better measurement techniques can support a super fund s brand promise 15 The Metrics Journey Traditional call centres Transition stage Progressive contact centres Measure: Introduce (where relevant): Consider using: ß Grade of Service ß Average Handling Time ß Member satisfaction (internally measured) ß Call resolution (internally measured) ß Enquiry resolution (measured by member, end-to-end) ß Member Satisfaction (measured by member) ß Average ß Call quality and compliance ß Cost to resolve enquiry Speed of Answer ß Average Call Waiting ß Forecast variance ß Ave. # contacts to resolve enquiry ß Headcount ß Adherence to shift ß Speed to resolve ß Turnover ß Occupancy/Productivity ß Member loyalty ß # Calls/Rep ß Absenteeism ß Compliance/Breaches/Incidents ß Call quality ß FTE to budget ß Employee engagement (benchmarked against other centres) ß Breaches/errors ß Employee satisfaction ß Recruit for attitude, use knowledge and train for skill ß Recruit for knowledge ß Recruit for skill ß Quality by Key Satisfaction drivers (measured by member) ß Supported by internal metrics (as per earlier stage) ß Process focused productivity metrics ß Sales/Referral rate ß Cost per Referral/Sale ß Referral/Sale profitability

17 For further information please contact: Alex Kleiman Head of Marketing & Strategy CitiStreet Australia Pty Ltd Phone: Mobile: Sydney Level 11, 9 Hunter Street Sydney NSW 2000 Melbourne Level 1, 1 Collins Street Melbourne VIC 3000 Brisbane 30 Little Cribb Street Milton QLD 4064 Citistreet Australia Pty Ltd CitiStreet Australia Pty Ltd. All rights reserved. All trademarks remain the property of their respective owners. Disclaimer: The information is provided in good faith and is to the best of our knowledge accurate. We provide it without any warranty as to its correctness of statement or opinion or its suitability for any particular purpose. Any comment is of necessity general in nature and not specifically tailored to suit differing individual circumstances. For that, you must seek independent advice. CitiStreet Australia Pty Limited can accept no liability for any decisions made based on the information contained