Out of the Woods: Optimizing Service Center Operations
Introduction
Businesses have been advised for years to “get closer to the customer,” yet the only part of many businesses that connects directly and regularly with customers is the customer service center. Oddly, these centers have long been stigmatized as mere back-office functions – necessary evils – rather than leveraged as tools for delivering key business objectives.
Forward-thinking executives now see the service center for what it is: an important nexus of operating cost, worker productivity and revenue. However, while they recognize the connection between service centers and overall business results, few understand how to optimize service center performance in their own organization.
To the extent they consider service center operations at all, many executives tend to focus on enablers (better customer data repositories, agent desktop tools), and on what we might consider incidental metrics (call handle time and call monitoring). Consequently, they lose sight of the real goal: to deliver the best possible customer experience at the lowest possible cost.
Our advice: Don’t lose sight of the trees for the forest. Identify what really matters when it comes to your service center operations, and don’t be afraid to question what you think you know.
Know Where You’ve Been
As many companies make growth a strategic priority, they are also rediscovering the importance of managing operating complexity and cost. Optimizing internal operations was a priority in the 1980s, but afterward, strategic focus turned outward. Having optimized internally, companies now wanted to optimize interactions with external customers.
This led to large investments in customer-facing technologies, labor and other infrastructure elements – an investment excused by a booming market and a long period of economic expansion. When this period ended, however, many organizations found themselves struggling to find a return on their investment.
We now recognize that a strong infrastructure for customer service is important, but it is only part of the story. When the goal is to maximize the value of customer interactions, what matters most is the customer experience – that which is most satisfying to the customer and most profitable for the company. Data marts, case management software and the like are essential to housing and managing a high volume of transactions data, but they do not, in themselves, define the customer experience.
Many organizations are still seeking the path to their customer objectives while trying to optimize their costly service infrastructures. If this scenario does not describe your organization, then call yourself lucky. If it does seem familiar, however, there is a way out of the woods.
Know Where You Stand
You can’t improve performance unless you know how your service operations perform today – and why.
Are you satisfied with your organization’s cost to serve? What about the cost of generating revenue in relationship to the revenue stream?
Do you need to provide the best possible service, or just better service than your competitors? How long before your existing customer service technology pays for itself? At what point will returns on your technology start to fall?
Who makes the decisions that determine performance results? Why do they make the decisions they do – and how? How invested are they in these methods? What impact will be realized by changing one, some or all of these factors?
If you have answers to these questions, you’re doing better than many. However, if your answer is based on gut feel or general information, it’s worth taking a closer look. An organization that has not optimized its service center operations based on a meaningful understanding of performance objectives and metrics is an organization at risk. If sales dip, for example, or if the cost of sales increase and service costs remain the same, both near-term profits and long-term growth plans will be undermined.
But take note: Optimizing your service operations may likely involve more than new processes or new technology. It may involve significant cultural changes as well, including changes in the way you look at your business.
Know Where You Want to Go
Outlining a basic path toward improved performance may take time, but is seldom the hard part. The service center industry is mature enough to offer a large body of best practices to draw on. The bigger challenge is more likely to be assembling the best team to adapt these practices to your business – translating them from abstract concepts into working methods designed for your environment, your employees and your customers.
This framework may need to extend beyond the call center proper; for example, into the corporate finance operations and the way customer service costs are factored into the annual operating budget. It may also need to dive deeper into day-to-day service operations than you expect; for example, into the way center supervisors call unscheduled team meetings that take agents off the phone.
In short, a successful translation involves a true and close analysis of the people who execute the work; the key decisions they make and when; the tools they need to make the right decisions; and of course, the operating metrics that will be used to manage performance.
Performance benchmarks are powerful tools – to a point. Our philosophy is that optimizing service center performance means operating at the best level for your business, which may not mean operating at the same level of performance as your competition. You should consider carefully what it will cost to reach that performance level, and whether the performance gain would justify the investment of time, effort and money required. Conversely, you should ask whether that level is good enough for your business.
Measure What You Manage; Manage What You Measure
Managers like results. They like seeing them and showing them. So you may be tempted to focus on optimizing very specific metrics. Avoid the trap of concentrating so closely on individual statistics that you neglect the overall health of your customer relationships – or allow your service agents to do so. Performance details are important, but keep the big picture in mind and know where to focus.
For example, if your end goal is to manage costs better, remember that call handle time – a metric that many call center managers focus on – is only one component of the entire cost picture. If you’ve recently implemented a new self-service channel, call handle time has probably increased because your live agents are now handling more complex customer issues – sthe easy ones are now being managed through the self-service channel.
Also consider that shortening calls simply to reduce handling time may result in ending calls before customers have fully resolved their issues, or in preventing agents from identifying a potential sales opportunity. Remember, forming a complete picture of service performance means taking into account multiple dimensions of cost, revenue and productivity.
When it’s time to dig into the numbers, we recommend looking at the key performance factors. Typically, labor costs account for 65 to 70 percent of the service center budget. Are you managing these resources to the level required to meet your goals for customer costs and revenues? Are you meeting these goals cost-effectively?
If the data you require to address these questions – cost per call, for example, costper- agent minutes – is suspect or simply not available, then you’ve identified the first issue that needs to be addressed. Assuming that the right information is available, performing a comprehensive analysis will take some time – here’s a relatively quick exercise that will help you and your team take the temperature of current workforce management practices.
- Compare forecasted staff hours to the hours actually worked and the hours actually needed. How do these numbers compare over time?
- A 95 to 98 percent rate of staffing accuracy is possible – how close are your results? What would it take to improve your ability to get the right people in place at the right time?
- What might be preventing you from making these changes – are they functional barriers or cultural conditions that need to be removed?
Gearing Up
Some organizations may also want to look at the tools used to forecast staffing requirements. Do service centers in different locations use the same forecasting tool? Can they easily share their plans and plan results? Many organizations rely heavily on spreadsheet applications for their forecasting and scheduling tasks – even companies with many thousands of agents and dozens of call center sites – because they are the only readily available tools for consolidating data from multiple locations. The process is timeintensive, error-prone and by any definition, suboptimal.
Deploying a standard technology platform supporting automated tools for workforce management can produce results in addition to more accurate forecasting; most companies also report higher customer satisfaction scores, improved employee morale and more time for management to focus on other tasks and other strategic benefits.
Standardizing metrics can also boost performance enterprisewide. Organizations experiencing rapid growth often develop different procedures and performance standards at different service locations, which impede corporate objectives for customer satisfaction and retention – and prevent senior management from gaining a complete, consistent view of service center performance.
Better Than Average
Traditional approaches to reporting performance metrics helped conceal opportunities for performance improvement, even those as obvious as a common set of performance standards. The corporate tendency is to report too much detail for managers to interpret effectively, or performance averages that hide the true effects of the service that customers really experience.
A customer who calls a contact center at 10:00 a.m. will likely be connected directly to a representative. Another customer, however, who calls at 3:00 p.m., will probably experience a much longer wait time before reaching a live service agent. Organizations that rely purely on performance averages are encouraged to believe that – on average – they provide their customers with an acceptable experience. In fact, one of these customers had a superb experience; the other a miserable one. In other words, what these customers really experience is in no way illustrated by the indicated average.
This situation has several negative consequences. One is that it encourages managers to oversupply resources to make up for previous staffing shortages, and thereby deliver a good net-average performance result. Apart from its high cost implications, this approach also produces an inconsistent service experience which customers find confusing and frustrating. In effect, customers who call during periods of peak staffing are led to expect the same level of support at all times, which the company does not provide as a matter of course.
When working with an organization to evaluate the performance of their service operations, we encourage call center managers to use interval performance to make decisions about staffing, routing calls, managing overflow volume and so forth. Looking at what happens in “real time” allows companies to see beyond averages, identify when and how they deviate from their target performance levels and then determine the significance of these deviations.
For example, if 85 percent of your callers are on hold for five seconds, what does the other 15 percent experience: a longer wait time or a shorter one? When do most of these deviations occur? Can you calculate the cost – or savings – of achieving a consistent hold period?
Answering questions like these will provide a much better indication of customer experience and its impact on your customers and your business. However, adopting this approach can be one of the most difficult changes for a service center to make. Averages are the easy math with which most of us are comfortable, whereas an interval-level approach – managing performance in 15- or 30-minute intervals – can feel like entering white-water rapids after years of drifting down a lazy river.
Human Interests
Managing performance in intervals depends on having meaningful metrics in place – for all members of the contact center workforce and their stakeholders. This includes setting and measuring performance targets for the business operations group, the staff management operations group, the senior management of the contact center and even the senior officers of the company.
Moreover, these metrics should be based on a chief mandate for the contact center workforce that includes providing the appropriate level of service to the customer, managing and optimizing staff to customer demand, ensuring all staff management decisions are based on cost management and revenue optimization criteria.
Organizations with large, complex service operations – those with multiple center locations in different regions, for example – may also benefit from centralizing workforce management processes under one leadership structure. Without centralized management, maintaining consistent performance across locations can be difficult, as local managers face constant distractions and conflicts.
Typically, the way forward is best cleared by making an organizational commitment to achieving “world-class” results. Essentially this means applying the same level of management discipline and rigor to managing the service center as is applied to managing other parts of the business.
It’s a safe bet that the bigger the potential value, the bigger the required change: Realizing an opportunity to save several hundred million dollars means reinventing service operations.
It’s virtually impossible to change any significant internal operation in isolation from the rest of the business. People at all levels of the organization will need not only to adopt different methods but also to embrace them, learn them and begin to make decisions differently – or even to make decisions they never had to make before.
Understanding the internal culture – how open or resistant it will be to change – is essential. Senior executives, for example, tend to view the challenge as merely a “process thing,” a simple retooling that should be easy for workers to accomplish. But frontline workers, who actually manage customer contact, and the people who supervise them, often have a deeper understanding of the magnitude of change involved and the effort and energy required to pull it off. They may also be far more attached to the current ways of doing things, and less likely to embrace change.
In certain cases, it might be easier to bring in fresh talent rather than to train those already in place to follow new processes and adhere to new metrics. For example, centers have traditionally been managed by people promoted from the agent ranks based solely on their performance as agents. Today more managers – with classic management training – are being brought in from outside the industry to run these operations.
Conclusion
No matter how much we manage to improve service center performance, there will always be room for improvement, as long as these operations involve people interacting with other people. And as long as these interactions affect cost and revenue, senior leadership will need to understand the fundamental elements of performance, and be willing and able to help their organizations rethink and, when necessary, reinvent their approach to managing performance.
