Sponsored by. Best Practices for Transforming Call Centers into Blended Sales/Service Organizations

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1 Sponsored by Best Practices for Transforming Call Centers into Blended Sales/Service Organizations

2 Table of Contents Executive Summary...1 Service-to-Sales Transformation: The Business Case...1 Finding the Balance Between Service and Sales...2 Steps for Building a Sales-Oriented Service Center...3 Service-to-Sales Best Practices...5 Systems to Support Call Center Sales...6 Establishing and Measuring Goals in Sales-Oriented Service Centers...8 Building a Balanced Service/Sales Scorecard...8 Best Practices for Converting, Training and Managing Customer-Centric Sales Advocates...11 Coaching to Improve Agent Sales Performance...13 Conclusion DMG Consulting LLC. - i - June 2008

3 Executive Summary DMG Consulting predicts that within the next eight to ten years, the majority of today s serviceoriented call centers whether focused on customer service, field service or technical support will become revenue-generating profit centers. Call centers that do not make this transition will either be outsourced to an offshore location to dramatically reduce the cost of service, or eliminated altogether and replaced by self-service applications. While this sounds harsh, it is a business reality. Senior executives have a fiduciary responsibility to shareholders and employees to reduce expenses and improve operating margins. They can no longer afford to have their company s profitability reduced by non-revenue-generating activities, such as customer service. At the same time as senior executives are facing intense pressure to improve their operating performance and bottom line, they are also recognizing the important role that customer service plays in retaining customers and enhancing their brand. Building a customer-centric organization is no longer an option; it is a strategic imperative. This white paper provides a roadmap for converting service-oriented call centers from cost centers into revenue generators. It makes the business case, addresses the systems, and provides best practices and tactics for succeeding with this essential transition. Service-to-Sales Transformation: The Business Case For years, customer service agents have actively participated in up-sell and cross-sell initiatives. They have contributed to their company s bottom line by selling when customers called for program clarifications, improving the effectiveness of marketing programs. In other organizations, they have been given lists of products to sell and asked to attempt a cross-sale at the end of every call. Recently, more technically sophisticated organizations have equipped agents with customer relationship management (CRM) systems that present them with a customized sales recommendation for each caller. Most inbound customer service call centers participate in some form of sales activity. These programs can be very successful; some customer service organizations have been credited with generating 10% to 40% of their company s new revenue. The degree of success is predictable, as it is correlated with the commitment of senior executives, the call center management team and agents DMG Consulting LLC June 2008

4 JPMorgan Chase Raises the Bar for the Sales Potential of Customer Service On November 8, 2007, Charlie Scharf, the Chief Executive Officer of Retail Financial Service at JPMorgan Chase, reviewed the performance of his company at the 2007 BancAnalysts Association Conference. During his presentation, Charlie shared that Chase had realized significant success in using their inbound call centers to increase sales. Overall, sales per 1,000 calls increased by a compounded annual growth rate (CAGR) of 24% from 2003 to Sales of credit cards increased at a CAGR of 155% and sales of online banking grew by a CAGR of 7%. * The bank s results publicly prove what customer service and marketing managers have known for years: Traditional inbound customer service organizations are extremely well positioned to sell, particularly if the sales program is supported by the right training, processes, systems, rewards and recognition. The bank s sales figures also demonstrate that some things are harder to sell than others. JPMorgan Chase s success underscores the benefits of using customer service staff to sell. In fact, with proper training, customer service agents can become some of the most effective salespeople in an enterprise. *The JPMorgan Chase 2007 BancAnalysts Association Conference Presentation is posted on under Investor Relations, Investor Presentations. Finding the Balance Between Service and Sales Despite the proven quantifiable benefits of using service agents to sell, transitioning dedicated customer service personnel to blended service/sales teams has proven challenging. The most significant impediment is the incremental cost of adding the sales activity to the majority of customer service calls. While the numbers vary by organization and function, enterprises should expect to realize a 10% to 15% increase in average talk time when agents are asked to sell. This means that in a bank where the call center s average talk time is 180 seconds for a customer service inquiry, call duration is likely to increase to an average of at least 198 seconds when upsells are attempted. And, if an inquiry typically lasts 10 minutes in a technical support organization, average talk time can be expected to increase by a full minute. This increases the call center s operating expenses, as more agents are required to handle the same number of calls DMG Consulting LLC June 2008

5 Companies have spent years investing in programs to downsize call center staff by improving agent productivity and using self-service applications to automate calls. This means that without a very strong business case, it s going to be tough to convince senior management to invest in any initiative that increases staffing requirements, even a revenue-oriented program. Fortunately, it is relatively easy to create a compelling service-to-sales business case with a rapid return on investment. Here is an example that shows how the numbers work. Typically the fully loaded average cost per call increases by approximately 12.5% when selling is added to the servicing function. A call center needs additional agents to handle the increased average handle time and must also account for incremental hiring expenses, training time, supervisory and quality assurance overhead, IT expenses, and real estate needs. This increase in servicing costs is offset by the incremental revenue and margins realized from the sales made by agents. For example, let s assume that a financial services call center handles 250,000 live-agent calls per day, of which 60% are up-sell prospects. If agents are successful in selling to only a very conservative 5% of the prospects, the call center will generate 7,500 new sales per day. If the average sale is valued at $250 and the gross margin is 30% (margins are relatively low in financial service organizations), the enterprise will realize an incremental $1,875,000 in revenues and $562,500 in gross margin each day. If the average service-only cost per live handled call is $6.00, then adding an increment of 12.5% raises the cost by $0.75. Multiplying the call volume of 250,000 by this incremental cost increases servicing expenses by $187,500 per day. Thus, the net contribution margin from adding the upselling function to the call center is $375,000 per day. Assuming 250 business days per year, the annualized contribution to the enterprise is $93.8 million. This example addresses only the one-time benefit of the additional sales. When the lifetime value of these sales is considered, the benefits increase dramatically. Action Item: Build a business case that shows the large incremental financial contribution of using agents to increase sales and enhance customer relationships. Steps for Building a Sales-Oriented Service Center Converting a cost-oriented service center into a profit-oriented sales organization requires substantial changes to the department s strategy, management and systems. From a strategic perspective, management must shift from their traditional customer satisfaction orientation to 2008 DMG Consulting LLC June 2008

6 concentrate on: 1. Maximizing revenue from every customer-initiated transaction, and 2. Collaborating with Sales and Marketing to achieve revenue goals and enhance customer relationships. Profit-oriented call centers create new responsibilities for their management team, including the need to work more closely with Sales and Marketing. The defining management characteristics of profit-oriented call centers are: 1. They are profit centers While this seems obvious, it s not always easy to get senior management to agree to convert service centers to profit centers. For years, Sales and Marketing have received exclusive credit for the customer service organization s revenue contributions; this revenue allocation must change in order to pave the way for other modifications. 2. They have a combined service and sales culture It is challenging for call centers to adopt this mindset, as it is difficult to change the corporate/departmental culture and retrain agents. 3. They share information with sales and marketing to increase revenue Processes must be put in place to share customer information with all decision makers on a timely basis. 4. They identify opportunities and use personalized up-sell/cross-sell to increase revenue and customer satisfaction Call center agents must be motivated and rewarded for improving and enhancing customer relationships. Identifying incremental revenue opportunities must become as essential as satisfying each and every caller. 5. They have specific goals for lead generation and incremental revenue In the past, call centers were asked to generate revenue, but these objectives often conflicted with productivity goals, as suggesting new opportunities to customers adds time to a call. In profit-oriented call centers, generating revenue is a priority and measured at the agent, department, and overall call center levels with performance management tools. Agents still need to be evaluated on productivity, but a balanced scorecard must also consider revenue generation, attempted sales, quality, and customer satisfaction. 6. They are managed by politically adept leaders who are as knowledgeable about sales, and marketing as they are about service Call center managers need to reach out to peer organizations and form partnerships. Service-oriented call centers have been around for close to 30 years, and while most managers agree that incorporating sales is a good idea for customers and the enterprise, making this transition requires significant changes in the culture of the company and the mindset of agents. It 2008 DMG Consulting LLC June 2008

7 will also require changes to procedures, systems, hiring, training and compensation. The best practices below will facilitate your initiative. Service-to-Sales Best Practices 1. Obtain a senior corporate sponsor from outside the call center to support the conversion from pure service to a profit-oriented call center. 2. Communicate the planned changes to the call center staff as early as possible. In this communication, explain the benefits of the changes for agents and customers. Be sure to discuss plans for agent training and compensation. 3. Involve sales and marketing departments in development of the program. 4. Use a phased in approach to implement the service-to-sales program. Begin with a pilot program that targets up-sell and cross-sell opportunities before migrating to outright sales. 5. Ask for agent volunteers to participate in the initial service-to-sales pilot. As additional teams migrate into the program, the initial group of agents can serve as job coaches who are highly valuable for mentoring new service-to-sales agents. 6. Identify a new set of key performance indicators (KPIs) that monitor both service and sales activities. 7. Modify agent goals to take into account both service and sales performance. Make sure the updated goals are appropriately reflected in agent review criteria, quality assurance evaluations and balanced scorecards. 8. Enhance systems and/or implement new ones that support both sales and service. 9. Develop a comprehensive service-to-sales training course. The training course should address the ability to recognize a sales opportunity and how to segue smoothly from handling a service issue into a sales interaction. 10. Build a coaching program to support the formal training. It is important to coach agents with directed feedback on a frequent, consistent and timely basis. 11. Establish commission and incentive programs that motivate both outstanding service and sales achievements. 12. Meet regularly and frequently with agents to obtain feedback about the program, address concerns and review the effectiveness of offers DMG Consulting LLC June 2008

8 13. Share the success of the program with agents on a regular basis to keep them motivated and generate excitement and enthusiasm. 14. Use performance management balanced scorecards and dashboards to share the success of the program with Sales, Marketing and senior management. Action Item: Make senior management aware of call center sales results by adding KPIs for revenue generation and attempted sales to the Executive Dashboard. Systems to Support Call Center Sales New systems and applications must be implemented to support the strategy and management changes required to transition from a pure service organization to a profit-oriented team that is equally dedicated to service and sales. System changes should include: 1. Enhancing the call center servicing application to include functionality that supports all types of sales activities. 2. Integrating the call center servicing application with the corporate applications that handle enterprise resource planning, supply chain and sales fulfillment. 3. Integrating stand-alone call center servicing analytics with sales and marketing applications to share customer data and opportunities. 4. Using surveying software to receive quick, direct input from customers about which programs work and which do not. 5. Using a commission/incentive program to automate new sales functions and ensure that agents are properly compensated for their additional responsibilities. 6. Implementing a coaching application to rapidly and cost effectively address agent training opportunities. 7. Implementing a performance management application to align call center and corporate goals and to identify when departmental performance does not meet goals. 8. Upgrading the recording application to ensure that 100% of calls are recorded, in order to comply with regulatory requirements DMG Consulting LLC June 2008

9 The more complex the operating environment, the more essential it is for call center managers to have tools that rapidly and accurately identify areas where performance varies from established goals. Call center performance management applications address these challenges. At a strategic level, call center performance management applications provide a framework for aligning the goals of the call center with those of the corporation. At a tactical level, the performance management process uses goals, KPIs, metrics, data sources and balanced scorecards to capture and report how well the call center delivers to its objectives, and identifies the actions necessary to address areas of strength or weakness. At a practical level, it provides action-oriented output that can be used to streamline and simplify contact center reporting, enabling managers to use a carefully selected set of KPIs, metrics and reports to manage their operation. See Figure 1. Figure 1: Call Center Performance Management Action New marketing programs New sales tools Training and coaching Changes in service delivery Changes to supply chain Operational enhancements Process changes Productivity improvements Output Scorecards & Real-time Dashboards Agents Supervisor/manager Contact Center Sales Marketing Operations R&D Executive Mgt. Goals Increase revenue by X Build brand loyalty Provide outstanding customer experience Increase FCR Reduce complaint calls by x% Improve agent productivity by x% ID top competitive challenges and develop marketing programs to address them Decrease customer attrition by X% Identify new product ideas and opportunities Identify & fix problems in service delivery chain Data Sources ACD/PBX (TDM/IP) CTI IVR/Speech Recognition eservice Quality management Recording Speech analytics elearning Coaching WFM Survey CRM/service app Sales/SFA Analytics & BI HR ERP KPIs/Metrics Productivity % within X seconds ASA ATT, AWT, AHT Calls per hour Schedule adherence Occupancy Quality QM scores Adherence to policies & procedures Communication skills Root cause analysis Emotion detection Script compliance Customer Experience/Satisfaction Customer satisfaction FCR Transfer & hold rates Sales Up-sell/Cross-sell New customers Incremental revenue Attempted sales Sales accuracy Marketing Retained customers ID customer needs & insights Competitive info. Operations ID broken operations & processes ID corporate service chain issues Source: DMG Consulting LLC, June DMG Consulting LLC June 2008

10 Senior management must be made aware of the call center s contributions to its new goals revenue generation, customer retention, and building the brand. Call centers know more about customers than any other organization in most companies because they interact with them during almost every stage of the customer lifecycle. It s essential for senior managers to appreciate customer service s strategic role in helping sales and marketing meet their revenue goals so that call center management can be invited to join the executive committee and help build a customercentric organization. Action Item: Upgrade the systems environment to support sales activities, in addition to service functions. Establishing and Measuring Goals in Sales-Oriented Service Centers As contact centers evolve into revenue generators, they must add and/or change goals, KPIs, agent requirements, quality assurance evaluation criteria, performance appraisals, hiring profiles and training materials, in addition to modifying systems and processes. The challenge is to build the infrastructure and culture necessary to support a new function, selling, which is very different from providing customer service. Agents who provide customer service are generally reacting to something they ve been told by a customer. While there is an increasing amount of proactive customer care in the market, customer service agents are fundamentally dedicated to either fixing problems or offering service. Selling demands a different skill set; it requires agents to be hunters and closers figuring out what customers want to buy and presenting these products/services to customers in a way that induces them to make an immediate purchase. Converting from a reactive customer service representative to a proactive and confident sales agent requires a major transformation. Expecting the staff to begin selling without the proper training and underlying infrastructure is a recipe for failure, as this transition impacts agents core values. Customer service groups have succeeded in transitioning from a pure customer service orientation to one that incorporates sales by slowly phasing in changes. They have also involved their agents in all stages of the transition. Building a Balanced Service/Sales Scorecard It is essential for management to find the right balance between fairness to agents and departmental performance and productivity. A balanced scorecard is a management tool that uses a pre-specified set of metrics or KPIs to measure the performance of an individual, group or 2008 DMG Consulting LLC June 2008

11 department. As enterprises transition their customer service teams to service/sales groups, they have to be sure to identify and measure the most appropriate set of KPIs. Additionally, for agents to take the KPIs seriously, they must be assigned appropriate weights. For example, when selling is initially introduced, KPIs that measure sales activities should have a lower weight than customer service tasks. However, as agents become more proficient at their new sales functions, they will expect to be rewarded based on how well they perform both their old customer service tasks and their new sales responsibilities. A good balanced scorecard is flexible and adapts as the department matures. See Figure 2 for an example of a Service/Sales Balanced Agent Scorecard. Figure 2: Service/Sales Balanced Agent Scorecard Service/Sales Balanced Agent Scorecard June 2008 Efficiency/Productivity Sales KPI Weight Goal Score Variance KPI Weight Goal Score Variance # Calls offered # Sales/hour # s offered # Calls completed Revenue/hour # s completed # Sales attempts/hour AHT Close rate # Calls/hour # s/hour Sales accuracy Occupancy rate Close rate: Offer 1 Schedule adherence Service Delivery Close rate: Offer 2 Quality KPI Weight Goal Score Variance KPI Weight Goal Score Variance Customer satisfaction score First call resolution Transfer rate Hold rate Average QA score Product/offer knowledge Accuracy of transactions processed Compliance rating 2008 DMG Consulting LLC June 2008

12 This balanced scorecard includes the four major categories that all service/sales call centers need to address: Efficiency/Productivity, Sales, Service Delivery and Quality. The first category is call center efficiency/productivity, average handle time, calls per hour, occupancy rate and schedule adherence. It is important to service and sell, but management must balance agent productivity and efficiency goals with core sales functions. The next category is call center sales, which is near the top of the balanced scorecard because of its importance to the enterprise. Agents still have to provide an outstanding customer experience in order to earn the right to sell to a customer, but generating revenue must become a priority for all call centers. While KPIs are likely to vary slightly by company, these five metrics give management the information required to determine the success of call center sales initiatives: dollars sold per hour or per call, number of sales per hour or per day, number of sales attempts per hour or day, close rate and sales accuracy. The third category in the balanced agent scorecard is service delivery, also referred to as customer service. This category should include KPIs that measure the following four metrics: customer satisfaction score, first call resolution (FCR) rate, transfer rate and hold rate. The customer satisfaction score should come from an external survey tool. FCR is a unique metric that reflects productivity, customer satisfaction and quality. (See Call Center First Call Resolution Guide.) The transfer and hold rates measure two activities that annoy customers and add a great deal of cost to call centers. The fourth category that should be reflected in a service/sales call center balanced scorecard of is quality. This category should address KPIs that measure agent average quality evaluation scores and compliance ratings. There are many other KPIs that call center managers may want to add to a balanced scorecard. For example, call centers that also concentrate on customer retention will want to include metrics that measure the number of retention offers made and how many were accepted by high, medium and low-value customers. Call centers that handle many types of interactions, such as calls, s and chat sessions, will likely want KPIs that capture volumes and agent performance in handling each category. Regardless of the KPIs tracked, it s essential for call center management to get agent buy-in, if the metrics are to be taken seriously. Agents must understand how each KPI is calculated and used in measuring their performance. Additionally, Sales and Marketing management must also review and provide their support for relevant KPIs, so that all groups can agree that the call center is delivering to the right goals. Lastly, it would be ideal for call center managers to obtain 2008 DMG Consulting LLC June 2008

13 support for their KPIs from executive management so that the contact center can get the credit it deserves. Corporate executives may be interested in a one-screen dashboard view or incorporating call center KPIs into their daily statistics. Action Item: Create balanced agent and departmental scorecards that incorporate metrics for efficiency/productivity, sales, service delivery and quality. Obtain buy-in from agents, Sales, Marketing and executive management for all proposed KPIs. Best Practices for Converting, Training and Managing Customer-Centric Sales Advocates Selling is essential for the success of the company, and is also an important element in building a customer-centric culture. Customers want to have all of their issues anticipated and resolved in one call or interaction with a service center. Sometimes, just answering a customer s question or resolving their issue is enough. In other situations, customers highly appreciate hearing about a new product or service. Customer service agents understand customer needs and wants and are excellent listeners; with the appropriate tools and support, they can be trained to be outstanding sales people, as well. Figure 3: Do s and Don ts for Developing Customer-Centric Sales Agents Don t Assume that agents will happily and easily buy in to their new sales role. Introduce the program as a sales program. Expect that an agent with good or excellent customer service skills will be an outstanding salesperson. Overwhelm agents who are apprehensive about selling with a full-blown sales program. Require customer service agents to deliver sales scripts. Do Explain the reasons for adding the sales function and explain how it will benefit customers, agents and the enterprise. Position the program as an extension of providing an outstanding customer experience. Explain how selling builds customer loyalty by delivering value-added products and services that benefit customers. Deliver an effective sales training program that is supported with ongoing coaching. Roll out the service-to-sales initiative in phases, beginning with cross-sell/up-sell offers. Once initial success is achieved, new offers can be introduced into the program. Train agents to focus on listening for customer cues during the service interaction to determine the most appropriate product or service to offer. Allows agents to incorporate offers as a natural progression in the 2008 DMG Consulting LLC June 2008

14 Don t Set unrealistically high sales goals at the outset of the program. Implement a sales program without changing agent evaluation criteria, QA evaluation forms and KPIs. Assume agents will understand the new performance metrics and KPIs on which their performance will be evaluated. Expect agents to do it for nothing. Implement the program and forget it, or put it on auto pilot. Do context of the customer service conversation and engage the customer on a personal level. Provide agents with any mandatory compliance disclosures so that they can be recited, as needed. Phase in incremental goals that are realistic and achievable to motivate agents while they become proficient at selling. Clearly communicate all new goals and explain what it takes to achieve them. Be sure agents are aware of all rewards. Establish a balanced scorecard that addresses productivity/efficiency, sales, customer experience and quality. Make sure to use the right KPIs, evaluation criteria and QA categories. Clearly explain the new metrics and KPIs and how they are calculated and weighted. Use a performance management application to provide agents with easy access to scorecards and dashboards so that they can self-monitor their performance. Establish a commission-based incentive program to properly compensate, recognize and reward performance improvements and sales goal achievements. Perform constant program maintenance. Conduct frequent coaching sessions with agents to recognize strengths and address performance opportunities. Have highly successful sales performers mentor agents who are under-performing. Meet regularly with agents to gather feedback about the program which offers are working and which are not. Consult regularly with Sales/Marketing staff to address agent concerns and develop new or modified offers. Use customer insights and feedback to develop relevant offers. Modify goals and KPIs over time. Action Item: Develop an internal campaign and sell the sales program to your customer service agents. Be sure agents are clear about how the sales program benefits them and your customers DMG Consulting LLC June 2008

15 Coaching to Improve Agent Sales Performance Coaching has proven to be the most successful approach for training adults and, therefore, it is a valuable technique for motivating call center agents. Once the initial sales training is concluded, it is imperative to provide directed feedback on a frequent, consistent and timely basis. Best practices include: Evaluate coaching effectiveness and recognize incremental performance improvements. Selling, like any new skill, takes time to learn, and agents will be motivated by ongoing feedback. Tailor coaching sessions to individual agents or groups using performance management systems to rapidly identify areas of performance (good and bad). Share best practice calls and have successful sales performers demonstrate effective sales techniques so that agents can emulate them. Action Item: Invest in coaching programs to improve your agents performance and facilitate their transition and acceptance of the new sales function. Conclusion Converting reactive, cost-oriented call centers into proactive, engaging real-time revenue generators is a strategic imperative for call centers and their enterprises. It s essential for call centers to continue to respond to inquiries and solve customer problems, but it s also time for these departments to expand their value to customers and increase their contribution to the enterprise by using their strong customer advocacy skills to enhance customer relationships and generate incremental revenue. To succeed, call centers must enhance their operating environments, systems infrastructure, and staffing policies DMG Consulting LLC June 2008

16 About the Author Donna Fluss is the founder and President of DMG Consulting LLC, the leading provider of contact center and analytics research, market analysis and consulting. Ms. Fluss is a recognized thought leader and innovator in contact center and real-time analytics. For over 25 years, she has helped end users build world-class differentiated contact centers and vendors develop high-value solutions for the market. She is the author of the book, The Real-Time Contact Center, and many leading annual industry reports, including the Contact Center Performance Management Report, the Quality Management/Liability Recording Product and Market Report, the Hosted Contact Center Infrastructure Report, the Speech Analytics Market Report, and the Contact Center Surveying and Analytics Report. Donna s articles and columns are carried by publications around the world. More information is available at or contact DMG at or send an to info@dmgconsult.com DMG Consulting LLC June 2008

17 About the Sponsor Enkata is the market and technology leader in Software-as-a-Service (SaaS) Performance Management for customer operations. Enkata s analytics-powered applications combine bestpractice metrics, personalized dashboards, decision analytics and integrated workflow to improve the effectiveness of organizations contact and claim centers every minute, every day. Fortune 500 companies choose Enkata for advanced analytics, proven ability to eliminate rework and SaaS delivery model. For more information, contact Enkata at or info@enkata.com DMG Consulting LLC June 2008