Telephone Call Centres December 1996 CONTENTS Auditor-General's Foreword What is a telephone call centre? What type of organisations have call centres? Why have a call centre? What are the major costs associated with a call centre? What is the business case for establishing a call centre? What are some of the pitfalls of call centres? What steps are required before establishing a call centre? What are the key elements of a call centre? How do you measure performance in a call centre? How do you optimise performance? More information? Auditor-General's Foreword Telephone call centres are one service delivery option for organisations where there is a need to focus on a high volume and frequency of dispersed customer contacts across Australia. The Department of Social Security (DSS) was the first large Commonwealth department to implement such a service - referred to as Teleservice centres. These centres were introduced to give many DSS customers an alternative to visiting departmental regional offices for a range of inquiries and changes in circumstances. Teleservice centres are now a key aspect of DSS's interface with its customers, handling over 11.8 million calls in 1995-96. This guide has its origins in a performance audit of DSS Teleservice centres operations (Audit Report No. 9 1995-96). The audit identified accepted industry better practices and techniques which were applicable to DSS's operations and to the Australian Public Service generally. The results from these studies and the audit of DSS's operations have been represented in generic form in this document. A more detailed handbook accompanies this guide.
Utilisation of telephone call centres will not always be relevant or appropriate for every government agency. However, these documents are aimed at developing a body of material to improve the efficiency, economy and effectiveness of technology-based customer service delivery where it is relevant for the public sector. The production of this guide owes much to the ideas, dedication and hard work of staff of the ANAO but thanks are also due to officials in the Department of Social Security and our industry consultants. P J Barrett Auditor General What is a telephone call centre? A telephone call centre is an operation that uses telephone and computer technology in sophisticated ways to assist people to deliver services to customers. Call centres are one service delivery option for providing services and for providing and receiving information between an organisation and the community. Staff are employed to answer large volumes of telephone traffic: responding to queries, updating information databases and/or providing further written information or products through the post or facsimile as required. These staff are trained and skilled in customer service. They can be based at a single or multiple sites depending on the configuration of the call centre and the organisation. Telephone call centres are referred to hereafter in this guide generically as call centres. Call centres generally utilise the availability of a national number, ie beginning with 13... or 1800...... What type of organisations have call centres? Those industries and organisations where the use of call centres have become most widespread are those where there is a focus on customer service and a high volume of dispersed customer contact (for example previously undertaken through a network of branch offices). These include banking and finance; insurance; airlines; totalisator agencies; telecommunications; public utilities; travel services; and road services.
Public service agencies utilising call centre operations include the Department of Social Security, Australian Taxation Office, the Australian Securities Commission and the Department of Foreign Affairs and Trade. Why have a call centre? Call centres can: deliver improved customer service through increased access for customers and a more rapid completion of some inquiries and transactions leading ultimately to greater customer goodwill and increased efficiency and effectiveness in service delivery; facilitate rationalisation of operations through the removal of significant volumes of customer inquiries and reengineering of transactions. Through the telecommunications network, call centres can be located anywhere. The concentration of customer inquiries in a single, or small, number of centres enables economies of scale in staffing and related costs to be achieved; and enable remaining branch office operations to be re-engineered to specialise in providing customer services for walk-in customers and less time-critical aspects of the organisation's operations (leading to improved customer service, more streamlined organisational structures and increased productivity). Potential benefits include providing a more timely and focused customer service based on information being available to the customer anytime and anywhere. Although there are substantial benefits to be gained from the establishment of call centres, they require a significant investment in terms of technology, people and time. What are the major costs associated with a call centre? The major operating costs of a call centre are those related to labour, followed by telecommunications, information systems and administration costs such as accommodation, training, recruitment and supplies. Organisations have the choice of establishing their own call centre operations or choosing to outsource. Establishment costs include telecommunications and information systems, recruitment of staff and training and external expertise. What is the business case for establishing a call centre? Both quality and quantity issues, as well as cost, need to be considered prior to deciding whether to establish a call centre. The delivery of services and goods through a smaller number of access points may conflict with social or community obligations to have a presence in particular regions. Call centres can improve access especially to those in remote locations or where travel to offices has been required in the past. This aside however, private and public sector studies into the relative costs of face-to-face operations and call centre operations have shown that there are substantial benefits possible. Customer contact through use of the telephone has the potential to significantly lower operating costs over counter or face-to-face service as shown below:
(Footnote 1) Telephone costs will be less than counter service where there is a large volume of customer contacts with consistent and predictable responses to issues that do not require face-to-face contact. As the graph in Figure 1 shows there is scope for even further reduction in the cost of service delivery through the internet. There are, however, issues relating to access and cost for the individual customer. The issue of establishing one or many centres is relevant for large organisations. The optimum configuration of call centres will result in part from technology planning, staff availability and the need for interaction with other functional areas. There are several basic options to consider when determining the number, size and location of call centres: one centralised operation - which allows for rapid response to change, ease of training and introduction of new procedures and systems; multiple stand alone centres - which are generally not preferred due to the increased flexibilities of networking outlined below; or multiple centres networked together - which operates as one 'virtual' call centre by providing overflow support to one another at times when incoming call volumes exceed staff capacity to respond to them. They can also provide some level of disaster recovery for each other. While many considerations go into making decisions about configuration, it is important that planning take into account the fundamental requirements of call queuing. The mathematics of queuing are complex, but in general the efficiency of handling and the volumes of calls that can be handled by a given number of staff is greatest when there are the maximum number of customer service officers on the minimum number of queues. Therefore multiple sites on separate queues are generally less efficient and more costly than operating as one or two sites unless the different sites can be networked together. Similarly multiple procedures and protocols being promulgated for different call centres within an organisation are less efficient, jeopardise quality and hamper call shedding. For large organisations there are many factors to consider in determining how the wider call centre network is arranged and how the centres interconnect. These include: size, number and costs of centres; location of centres; operational issues (such as staffing); whether to co-locate centres with other channels of service delivery or functional units within the organisation; load-shedding capacities and arrangements (how many telephone lines are there and what to do when they are all busy); and call costs (including STD costs and whether the organisation or the customer pays. This may depend on equity and access issues and the location of call centres).
There is a high degree of interconnection between all these factors and with the level of call centre performance. Once a call centre is established, their costs need to be monitored to take account of, for example, call volumes varying from forecast and to identify potential for further reengineering. A key factor when planning for call centres is therefore the relative cost efficiency of the operation. Overall efficiency is best measured through: cost per call handled (total operation costs of centre for period, divided by total number of calls handled for period). This gives a measure over time of the centre's efficiency; and cost per transaction (total operating costs including those outside the centre, such as information systems, functional work by other areas, transfer to other channels etc, to complete service delivery to one customer for one situation). This gives a comparative measure between service delivery channels, and helps identify when processes outside the call centre need to be re-engineered to achieve cost efficiency. Call centres have the potential to extend hours of service, and the relative costs and benefits of this should be taken into consideration in developing the business case, in particular: the improvements in customer service resulting from extended hours of access; ease of customer access compared with other service delivery options; the operational advantages of spreading call volumes more evenly across the day; and the efficiencies resulting from a more intensive utilisation of call centre capital. Cost benefit and feasibility studies should take into account the cost of external expertise, system improvements and projected service costs. An estimate of the return on investment can be obtained by comparing the cost per service transaction before and after the call centre is introduced. What are some of the pitfalls of call centres? Call centres present substantially different management and technology issues to a normal branch office network. If this is not recognised during early planning and subsequent implementation, experience has shown there can be costly and time consuming problems to redress. Operational changes of this magnitude have to be accompanied by appropriate and detailed planning and trialing, identifying potential problems, solutions and the full budgetary implications of achieving the results expected. Given the change involved in moving to a call centre operation it is necessary to develop realistic timeframes for the successful implementation of such initiatives and a clear indication of any risks that may flow from setting tight timeframes. Planning also needs to encompass what is achievable; it is a question of seeking a
cost-effective balance which adequately recognises what can be achieved and the trade-offs involved. Operating costs have been found to increase where the quality of implementation and integration of the call centre with other service channels is low. Increased costs result for example from: the escalation of repeat calls and complaints; negative publicity; loss of referrals; diversions; unnecessary service calls and visits to Branch Offices; and the costs of handling and rehandling customers. Staff morale can be affected where inefficiencies in operations occur leading to an increase in staff turnover. As staff need to be adequately trained to respond to calls, turnover adds to the cost of operations. Staffing flexibilities need to be established at the outset. Management of rosters to ensure peak call periods can be met requires ongoing monitoring of calls coming into the centre and additional staff available to meet peak demand times. Use of part time staff can assist in meeting peak flows. While call centres have the capacity to streamline operations and provide efficiencies, they also have the potential to provide a drain on the organisation if not effectively and comprehensively planned. Furthermore, experience has shown that it can be a long and costly process to fix and recover from mistakes. What steps are required before establishing a call centre? When an organisation develops multiple service delivery channels for customers, it must plan for: a clear understanding of when, why and how the customers are to access the different channels; allowance for the customers choice of a preferred channel. Some customers may prefer one channel over another for the same service or to obtain the same outcome; publicity and promotion for the service options available and how and when to access them; and the numbers of customers that will use each channel. Creation of a more easily accessible service delivery channel can, of itself, create additional demands on the organisation by its customers. This is particularly so for public sector agencies, where extra services and costs may not be offset by additional resources. There needs to be processes in place to ensure that the estimated demand can be adequately serviced, or moderated, before implementation occurs.
The role of each service delivery channel must be defined within the scope of the organisation's mission and principles. When roles overlap there should be clear procedures to ensure that the outcomes will be the same, regardless of which channel deals with the customer. For each channel, plans should define: objectives and key measurements; functions and authorities; overlaps with other service delivery channels; and processes that will ensure outcomes consistent with corporate goals and directions as well as other service delivery channels. Determining customers needs through customer surveys will help to ensure that planning and later modifications reflect customer needs. It is crucial that research, marketing, configuration and operation of call centres are integrated with other service channels and operations of the organisation. Computing, records, access to the system, standards and work practices should all be structured to provide a seamless operation for customers. As part of the development of a well coordinated implementation plan, special emphasis is required that: clearly sets out linkages between call centres and other organisational operations; establishes work practices and procedures; establishes the degree of automatic call handling at the outset; and is adequately resourced to handle peak flows of calls to the centre. Business reengineering is desirable prior to introducing call centre operations. This allows for a clear definition of the organisation's mission and principles in order for the call centre to know its role and how it supports the organisation's aims. There should be a common understanding throughout the organisation of how the call centre 'fits in' to the organisation. Service delivery mechanisms and arrangements should be defined and tested before they become operational. Appropriate review mechanisms should be instituted to ensure that service delivery mechanisms are well understood by all service channels and better practice from early lessons learned is incorporated into the operations. Future modifications or changes to the system should also undergo similar checks before being implemented. The technologies of call centres and the critical nature of managing call volumes make it desirable to use specialist expertise in several areas, including: redevelopment of the telecommunications strategy for the organisation encompassing: network design and configuration the use of call routing and distribution systems
management information systems to aid in monitoring and forecasting call volumes, staff rostering systems to help calculate the number of staff needed by hour of day to handle varying call volumes and flows; and operational design including job design, staffing flexibility, work process engineering and re-engineering and management methods and systems; and specification of information systems requirements, and design of adaptations of existing systems to meet call centre requirements to ensure quality service via telephone. What are the key elements of a call centre? The plan for any call centre must include and integrate a number of basic elements: telephone networks and equipment provide and control customer access to the call centre. Consideration needs to be given to matters such as call streaming through different access telephone numbers, automated voice response units (including automated call handling) or general receptionist teams/queues; the people who answer calls, customer service officers, are primarily responsible for the quality of the transaction, and the final outcome of the call. Competencies, job structure, shift composition and resourcing levels all need to be reviewed in detail during the planning phase and to be appropriate for the call centre environment; well planned call centre processes, systems and procedures ensure that the work is conducted in a manner appropriate to the telephone environment and that consistent outcomes are produced within the call centre and between and among the various service delivery channels. This means that face-to-face-based operations cannot be simply translated into the call centre environment. There is a need to reengineer processes appropriate to the needs of the new environment; management practices must take into account the unique qualities, demands and characteristics of working by telephone. Practices include forecasting of call loads and patterns, flexible staffing to meet uneven demand, regular work observation and monitoring for staff development and quality control, strong team leadership and staff participation, adaptation to the demands for timeliness in this work environment, and channel specific key performance indicators; and information and support systems must help to ensure that the centre staff can access relevant customer data, reference relevant information and process the results of the phone transaction. The design of screens and speed of response need to support telephone-based transactions. Information systems can also handle some types of calls automatically and this can free up centre staff for handling the more complex calls. Given the importance of timely, integrated and useable data in call centre operations, it is vital that organisations maintain an ongoing investment in the necessary software and systems. Plans for the development and management of any call centre must take account and plan for all of these critical elements. Only when people, technology and processes work together in an integrated fashion is a call centre effective, efficient and able to deliver quality service to customers.
How do you measure performance in a call centre? The service targets of call centres are typically multidimensional. They seek to reflect the fact that customer service performance of individual call centres is based on many factors. Appropriate service targets and performance indicators recognise features such as: numbers of calls answered within particular time periods, for example one or two minutes; access to customer service officers; percentage of busy calls; labour costs per call; percentage of calls transferred to other operations; feedback on quality from both staff and customers; and priorities reflected in resource allocations. Quantitative targets should be balanced with quality of service. In particular, ambitious timeliness targets can be at odds with quality of service. Predominantly managers and customer service officers whose performance is judged by speed of service may be less likely to develop a service culture where checking of advice, recording transactions correctly or exploring all possibilities with customers is given a high priority. A balance between speed and quality has to be achieved, with targets and performance measures reflecting this. The relevant staff have to understand the balance struck and what is therefore expected of them. If this balance is not achieved customers may have to make contact again to resolve outstanding issues or follow up on tasks not completed through previous contacts with the call centre. How do you optimise performance? In addition to points mentioned previously in this summary, it is important to promote the features of the system and performance targets to customers to ensure usage is optimised. Educating customers on the relative benefits of one particular service delivery mechanism over others can influence behaviour, choice and ultimately lower costs for the organisation. It can also ensure customers have realistic expectations of service levels. For example aggravation of customers and pressure on staff can be ameliorated by advertising times when call volumes are lower and a more speedy response can be anticipated. Similarly promoting the advantage to the customer of the service will minimise pressure on other service outlets. Advantages over presenting at a face-to-face interview for the customer include ease of access, saved travelling time, and the benefits of doing business over the telephone (knowing what to take for subsequent interview if this is necessary). It is desirable to conduct regular independent reviews of customer service to continue to update information on customer needs and expectations and on perceived quality of service. Call centres can provide a measure of the
organisation's overall customer service, and may raise issues which the organisation should address promptly. It is important that staff receive adequate training and support in order to perform their duties efficiently and effectively. Without dedicated, skilled and capable staff, results from the best systems, processes and technology will be limited. A coaching mode of supervision has been found to be very effective in getting results from staff. Achieving staffing flexibilities is the most critical factor in achieving a workable and effective call centre operation. These include: significant use of part-time staff; staggered start and finish times covering peak demand periods; rostering systems (ensuring anticipated workloads can be met within existing flextime provisions); extended hours of operation; and across-product multiskilling. Systematic use of established call centre resourcing models (such as Erlang C) is required to effectively match service level targets to resources. The call centre environment is generally rich with management information. Extensive information available to managers includes reports matching responses to call loads, timeliness of responses and abandoned calls. In this real time environment, hands on utilisation of this information and comparison with performance in similar call centres is essential for effective management. It is essential that large organisations with many channels of service delivery have support and commitment by senior management to the worth of call centre operations. More information? More information on call centre operations and management is available in the accompanying handbook to this guide. Footnote 1 S. Saunders, 1995 and 1996. Unpublished benchmarking work with financial institutions. These are illustrative figures only to provide a picture of relative costs.