Muir Sanderson. Smart Center? A New Way to Overcome Chronic Contact Center Underperformance

Transcription

1 Perspective Jorge Camarate Muir Sanderson Smart Center? A New Way to Overcome Chronic Contact Center Underperformance

2 Booz & Company is a leading global management consulting firm, helping the world s top businesses, governments, and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in Today, with more than 3,300 people in 58 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. For our management magazine strategy+business, visit Visit to learn more about Booz & Company. CONTACT INFORMATION London Muir Sanderson Partner muir.sanderson@booz.com Jorge Camarate Senior Associate jorge.camarate@booz.com Originally published as: Smart Center? A New Way to Overcome Chronic Contact Center Underpeformance, by Jorge Camarate, Piyush Doshi, and Muir Sanderson, Booz Allen Hamilton, 2007

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4 1 Smart Center A New Way to Overcome Chronic Contact Center Underperformance The case for change: For years, most contact center managers have placed increasing productivity and improving customer service at the top of their agenda. Many managers have rolled out a variety of technologies, such as IVR, front-end customer account management systems, and automatic call routing, in an attempt to meet these goals. Yet in spite of all this investment, not much has changed. Average utilization of a contact centre agent in the UK remains only 57%, substantially below the 70%+ benchmark achieved by agents in best-performing service centers. First contact resolution rate is stuck at about 70% and the percentage of customers satisfied by their contact still hovers at around 80%. Why the lack of progress, in spite of all the new hardware? The reason is that the cause of underperformance wasn t and isn t primarily technical. Among the many call centers we ve studied, the primary differentiator between top performers and average performers isn t technology but more structural. In our experience, centers that organize on more efficient lines, supported with necessary technology and processes, typically increase the level of agent utilization by nearly 25 p.p. and improve their customer satisfaction rates as well by 10 p.p. or more. Time for a Fresh Approach This unusual opportunity exists because most centers are organized in an extremely fragmented way. Roles are separated within processes, across processes, and across channels. Data collection is frequently separated from decision making, phonebased customer handling is separated from mail/ based handling, and enquiry calls are separated from processing calls. As a result, many agents have difficulty solving customer issues, since customer data is often divided between several systems and sales channels. Even procedures are hard to keep aligned, since representatives themselves were frequently geographically dispersed among a number of centers. This structure was unavoidable in the days when IT systems were primitive or nonexistent. The specialization of tasks was frequently the only option possible, although it resulted in multiple calls, frequent hand-offs, long lead times and dissatisfied customers. Although the advance of technology means that there is no longer a practical reason for this division of labor, it still endures. The fact that most customer service offices are still called call centers is one clue to just how fossilized the customer contact organization is in many enterprises. A recent Booz Allen study found that 75% of approximately 50 companies surveyed offer fragmented service delivery across contact centers and processing centers in terms of organization, footprint or both. Of course, many executives have understood that unifying customer contact processes is an essential next step. For more than a decade now, customer relationship specialists have recognized that thanks to advances in technology the boundaries between 1 Source: Global Contact Centre Benchmarking Report 2005, Dimension Data

5 2 information collection and processing have blurred even as the flexibility of managing across channels has increased. Not only is a high degree of specialization no longer necessary, it s also not desirable. It s cheaper to have the same advisor to take information, process a request, follow up on a request and answer queries and it s more effective. Some have even attempted to act on that understanding, making some attempts at reorganization during the BPR revolution of the late 1990s. But even those pioneers stopped short of a true unification of contact processes. Today, some businesses are trying again to create a unified customer contact system. Creating such a unified system, which we call a Smart Center, is a tremendous organizational and managerial challenge. The solution requires a fundamental reexamination of what customer contact is about, and challenges long standing assumptions of customer service management. It demands challenging many entrenched interests and processes, and a significant investment in money and internal political capital. And yet for many businesses, it seems to be the only way for their customer service centers to break away from years of chronic underperformance. Smart Center Benefits Smart Centers are organized in a variety of ways, depending on the industry they serve. Yet in spite of their diversity, they all share three common traits as shown in Exhibit 1: n Multi-channel. Smart Centers focus equally on hotline (phone), offline (mail) and online (internet/ ) channels. Agents at such centers are trained to work across these channels to maximize capacity utilization. n Multi Task. Smart Centers integrate front end data collection with back end processing and decisionmaking. n Complexity. Smart Centers integrate some of the simpler tasks like general enquiries with more complex tasks like claims handling. Exhibit 1 Smart Center Conceptual Model Task Data Capture Processing Source: Booz Allen Hamilton Complexity Simple Complex Smart Center Channels Online Offline This approach has several benefits. Smart Centers make it easier to encourage customers to use lowercost channels. Many senior executives believe the company has little or no influence in customer channel selection. They tend to think that customers who have only used face-to-face service, for example, can t be drawn to telephone or internet service instead. In fact, this can be done with a Smart Center. Our research suggests that the real source of reluctance to migration in many cases is because those cheaper channels have poorer support. Some studies suggest that service levels are particularly low for customers who attempt to use multiple channels which means, essentially, that many companies have essentially trained their customers to shun lower cost modes of communication. Providing higher quality service on a cheaper channel can lead to tremendous cost savings. Simply converting a customer contact from telephone to , for example, can result in a cost savings of more than 23% (see Exhibit 2).

6 3 Exhibit 2 Exhibit 3 Self-service Interactive Service Mail Inbound Telephone Fax SMS IVR Internet Average Transaction Cost per Channel (US$) 0.4 Hotline channels Offline/online channels Sector Financial Services Telecommunications Utilities Potential opportunities for increasing penetration of online channels Online banking enquiries (e.g. authentication, website navigation, troubleshooting) Clarification of service charges Customer complaints Billing and service provision enquiries Customer complaints Billing enquiries Customer complaints Channel Penetration in Service Centers 10% Source: Dimension Data (Janurary 2005) Internet 4% SMS 0.5% Travel and transportation Online booking enquiries (e.g. authentication, website navigation, troubleshooting) Pricing clarification Customer complaints Mail/fax 15.5% Government Benefit application and maintenance Information about benefit and citizen rights Customer complaints Source: Dimension Data (2006) Telephone 70% Managing hotline and online channels in an integrated manner also boosts service levels across all channels, since agents not busy with one channel can easily take up the slack in another. Needless to say, this serves to improve agent utilization levels as well (see Exhibit 3). Implementing the Smart Center While the concept of the Smart Center is easy to articulate and understand, building one can be quite challenging. Converting from the conventional fragmented approach toward customer contact to a unified approach requires changing people, process, and technology (see Exhibit 4). Exhibit 4 Top Five Consumer Requirements from Contact Centers and Respective + Satisfaction Levels 1 Staff proactively suggests the right products 2.7 Smart Centers also reduce some of customers top quality complaints: the inability of advisors to deal with their problem immediately and the annoyance of multiple handoffs (see Exhibit 4). A Smart Center eliminates both problems. Since both complaints are the result of fragmented processes, it should come as no surprise that they can be eliminated once those processes are integrated. Level of Importance for Consumer Requirements _ Adequate security/password checks Information provided quickly Wide range of services available by telephone Staff able to handle inquiry without follow-up contact Very dissatisfied Very satisfied Source: Booz Allen Hamilton

7 4 Exhibit 5 Multi-Skilled Specialist Generalist Split People streamlined, and/or standardized to a point where the contact can be handled comfortably by a less specialized agent. The rule of thumb, as one of our clients once said, is to make it common where possible, custom when needed. Process Multi-tiered Integrated Smart Center Technology Integrated Data Links Capacity Planning Tools Process Most service centers today create artificial splits in processes (e.g. data capture separate from processing). Smart Centers, on the other hand, design process flows and supporting technology for end-toend processing of 80% of all cases, and allow the remainder to be handed-off to specialists. Source: Booz Allen Hamilton People The biggest challenge in creating a Smart Centers is staffing. Many contact centers use advisors who have an extremely low level of communications skills, who are only able to work with customers by following a tight script. Creating such a human robot is easier and cheaper than training an agent for a Smart Center, since the latter needs to be a skilled, knowledgeable human being. The first step, of course, is making a business case to budget more in order to hire a more capable staff. In our experience, this is not difficult: many companies have found that the higher investment in people a Smart Center demands more than pays for itself. Call volumes are reduced as customers are dealt with quickly and in one pass. Agents are utilized more effectively. And because the skill level is higher, the work is more rewarding and of necessity, better paid staff retention is higher. Most of all, Smart Center managers say their companies increase revenues through an improved customer satisfaction rate of 10 p.p. or higher. While in general Smart Centers require higher skilled levels, not every advisor needs to be trained to the same level. In fact a broad generalist-specialist (80:20) split is often sufficient. Typically, only 20% of the staff needs to be trained in the most complex tasks, and able to handle specialized tasks that require decisionmaking. The remaining 80% can often be automated, This separation between simple and complex flows can often be accomplished with surprisingly little process reengineering. For instance, when diagnosing the existing operations of a UK governmental contact center network handling approximately 15 million customer contacts per year, we realized that 75% of those required only simple straight-through processes. Examples of such processes include changes of name, address and contact details or payment-related questions. The proportion of simple flows was particularly high for general customer enquiries, where it reached 95% of all contacts. As such, the transition from a fragmented model with multiple hand-offs to a Smart Center approach where 80% of all contacts where handled by generalist agents through standardized processes, allowed our client to capture substantial productivity improvements with very little investment or disruption. Technology Although it is not the most important factor in building a Smart Center, having the right technology is still essential. Generalist agents may not be able to take on the full 80% workload for which the system is designed without the support of the right technology. In order to provide a seamless cross-channel experience, agents need to have access to the same information and interfaces regardless of the channel and underlying IT system. To do this, Smart Centers usually deploy a common front-end customer management system across products and channels. This front-end then interacts with the different product or channel-specific back-end legacy systems via some

8 5 A practical application of Smart Center Increasing civil service efficiency is often seen as a difficult job at best. Hampered by bureaucracy, politics, and a job-secure staff that can be motivated by neither carrots or sticks, most government efficiency initiatives aim for improvements of just a few percentage points. Yet by implementing a Smart Center in a UK government department, agent utilization increased by an average of 25 percentage points in less than two years. In that recent assignment, Booz Allen Hamilton was asked to devise a new operating model for a network of 10 service centers which handle either mail or telephone-based customer contacts through separate, though co-located, processing sections. Given the strong limitations on redeploying staff in the UK civil service, we quickly understood that the best lever to increase utilization was to create a Smart Center and train agents to handle both mail and telephone queries. But how? What would be the ideal channel mix? Should the department be steering its customers into paper or telephone-based claims? We addressed these questions by following the same four-step approach we typically use in all our Smart Channel implementations (see Exhibit 6). Exhibit 6 Steps Required to Determine Optimal Channel Mix on-site research) The next step is to determine the number of agents required to handle hotline traffic under pre-defined service levels (such as call abandonment or average waiting time) through the application of commonly available statistical models. Even with the application of the most flexible contractual arrangements, it is virtually impossible to adjust intraday agent capacity to match the projected call volume profile exactly. But the unused capacity does not necessarily need to be wasted. Under a Smart Center structure, it can provide the required capacity to handle online and offline channels such as mail, or fax. Having identified the spare intra-day agent capacity, the total potential volume of online and offline cases can easily be determined by factoring in the last variable of the equation: the average processing time of a mail-, or fax-based task. In the specific case of our client, since mail and telephone-base claims required approximately the same amount of time to be processed, the optimal channel ratio turned out to be roughly ¾ telephone and ¼ mail. The results achieved through the application of the Smart Center model were nothing short of impressive. By reorganizing the contact center, and encouraging the Determine average intra-day volume profile of hotline channel Define staff shifts required to handle peak volumes of hotline channel Determine staff available intra-day to handle online/ offline channels Calculate volume of online/offline channels that can be processed by available staff Source: Booz Allen Hamilton The first step entails determining the average number of calls received in each minute slot during the regular service center working hours. (This is usually a straightforward analysis that requires either the compilation of management information produced by existing telephony systems or volume sampling through majority of its customers to use new hotline facilities, agent utilization increased by an average of 25 p.p. in less than two years, which resulted in annual savings of approximately $300 million to UK taxpayers.

9 6 kind of modular architecture, an integration backbone that requires little or no agent interaction. Other kinds of software are needed as well. Smart Center managers need enhanced capacity planning tools that can project and schedule capacity to handle multiple sources of work. Such programs aren t difficult to find. There is a variety of off-the-shelve software that allows capacity planners to project future workload originated through different channels and dynamically allocate it to a common pool of generalists agents in 15 to 30 minute slots. Such allocation takes into account the intra-day profile of hotline workload (such as call handling), scheduling online and offline work during periods of projected agent downtime (see side box). With the right people, right processes, and right technology in place, the old limits to agent utilization and customer satisfaction no longer apply. Based on our past experience, a company taking a Smart Center approach often sees its average agent utilization rise by 25 p.p., even as its customer satisfaction rate rises by 10 p.p. or more. And that s only the beginning, because a Smart Center can provide a firm foundation for managers and agents to make incremental process improvements.

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