The Many Opportunities to Improve Call Center Effectiveness and Efficiency

The American Customer Satisfaction Index is a cross-industry national indicator
that links customer satisfaction to financial returns. In the first quarter
2001, the utility industry satisfaction index fell to 69 percent, an 8 percent
drop from the performance a year before, placing the utility industry below
the national average (Figure 1).

Figure 1 – American Customer Satisfaction Index, First Quarter 2001

While some of the drop was fueled by the deep plunge in customer satisfaction
with the Pacific Gas and Electric Company, there were many other companies that
also registered lower quality indices in the last year.

The ACSI is not the only index that chronicles a sad tale of dissatisfaction
for energy industry customers. The Purdue University Center for Customer Driven
Quality, with its bellweather call center benchmarking database, has found that
caller satisfaction in the utility industry is at 56 percent, higher than only
one of eight other industries, as shown in Figure 2. Based on the findings from
these two studies, it seems clear that the “voice of the customer” is crying
out for change.

Figure 2 – Industry Segment vs. Performance Metrics
Source: BenchmarkPortal.com

There are many opportunities to improve utility call center performance. In
our studies of call centers within and outside the utility industry, we found
that there are significant opportunities for performance improvement —
often exceeding a 20 percent cost reduction and a 10 percent improvement in
customer satisfaction. These opportunities can be realized in a number of ways.
Based on our experiences with scores of customers, these improvements are quite
realistic. Let’s look at some examples, drawn from actual customer experience,
which confirm the opportunities realized.

• Self service: A large East Coast utility felt that their IVR processes
were optimized. After a review of their IVR menu and scripting, they improved
self-service utilization by 10 percent (to more than 30 percent) while improving
customer satisfaction 10 percent.
• Quality Improvements: A recently merged company changed the number of
CSR quality reviews from one per month to 10 per month, resulting in a five
percent improvement in customer satisfaction and cost reductions.
• Setting the right productivity goal: An East Coast utility recently improved
productivity 14 percent by establishing a competitive occupancy goal.
• Process changes: A large Midwest utility found their CSRs were using
very different approaches to solving common customer problems, resulting in
inconsistent answers and 20 percent longer call times.
• Organization: A large East- Coast utility consolidated five back-office
organizations into a single center, resulting in 10 percent savings.

Each of the examples resulted from the utility deciding to take action. For
these companies it was no longer acceptable to perform the same way they had
in the past. Instead, these companies recognized there were opportunities and
acted in a disciplined way to realize them. The starting point for each was
that they wanted to be more competitive, they wanted to be a high-performance
contact center.

What Is a High-Performance Contact Center?

Companies often claim that they want to provide “world-class service,” but
they seldom support the effort with the strategy, metrics, processes, organization,
and technology needed to be world class. The benchmark for “world-class” performance
is somewhat vague and perhaps inappropriate, since it may be difficult to identify
a comparable benchmark company. It is perhaps easier and more effective to define
a high-performance contact center by striving for the following goals (Figure
3):

Figure 3 – Typical cost savings from a diagnostic review

• Improve your performance to levels achieved by the leading companies
within the industry. As an example, reach the customer satisfaction index levels
achieved by Duke, Pennsylvania Power & Light, or Southern, each of which has
an ASCI index close to 80 percent. One definition of high performance is to
achieve performance in the top 10 percent of peers.

• Improve your performance to levels achieved by leading companies outside
the industry. There are companies outside the energy industry that consistently
perform better than their utility brethren, including H.J. Heinz (90 percent),
Maytag (87 percent), GM Cadillac (88 percent) and Coca Cola (86 percent). While
their products and services differ from those within the utility industry, they
have many customer situations that are parallel. Lessons can be learned, as
long as we understand their limitations.

• Improve your performance relative to your current situation. While this
approach seems to be insulated from the lessons learned by others, it nonetheless
allows an apples-to-apples comparison. High-performance initiatives can take
on a different tone, achieving a higher level than previously reached (for example,
20 percent improvements).

An appropriate mixture of goals and perspectives is needed to ensure that a
company’s eyes are open to opportunities achieved by benchmark companies (inside
and outside their industry) while still remaining focused on its specific business
realities.

The concept of high performance has changed in other ways, as well. Until recently,
most companies had three or fewer channels of customer contact: in-bound phone
calls, fax and mail. For many companies outside the utility industry (and for
some within the industry), the use of email and the Internet has materially
changed the mix of work received. Due to these increases in customer contact
points, we will refer to “contact centers” rather than “call centers.” A diagnostic
approach that we have found to be successful has four key steps (Figure 4).

Figure 4 – Question and results from Forrester Research, 2000

Establishing High-Performance Metrics

Typically, utilities have fewer performance metrics than companies outside
the industry. There are several reasons why this is so. For many utilities,
the strategy is to provide average levels of service at reasonably low cost.
These companies do not have sales goals for the contact center, since they do
not see its impact on revenue. Their customer satisfaction goals are often defined
by the public service commission and their employee satisfaction goals are frequently
defined by union contract.

Accordingly, utilities often fall into a customer service quagmire, believing
that there is no reason to provide improved service when there is little regulatory
incentive to do so. Thus, utilities are often far behind in adopting performance-improving
process changes or technology implementations.

Yet, some of the aforementioned high-performing utilities have established metrics
that promote good customer service and employee satisfaction, since they recognize
the cost-cutting and revenue-enhancing potential of these actions. Let’s list
ways in which changes in metrics can lead to a metamorphosis for the utility
contact center:

• Establish what quartile of performance you want to achieve, and establish
your benchmark group. Define whether you want to be a top-quartile or bottom-quartile
performer, and whether you even want to compare your performance with peers.
Once that decision and commitment has been made, ensure that the peer group
and measurement standards are well-defined and accurate. A second-quartile performer
trying to be a top-quartile performer will have made a decision that will likely
transform the organization, creating a rallying cry for organization-wide improvements.

• Understand the value of one-stop (once and done) customer service. The
Purdue benchmark data recently revealed that the metric most highly correlated
with customer satisfaction was the percentage of one-stop service provided.
This metric is seldom emphasized by utilities and, with only 75 percent of calls
answered one-stop, there is considerable room for improvement that can be realized
with relatively little investment. Improvements in this area can increase customer
satisfaction while simultaneously reducing costs.

• Elevate the importance of quality service. Ask the average utility contact
center manager how many times they review a CSR’s work in the course of a month.
Usually, the answer is “once” That equates to 12 reviews per year — less
than one-tenth of one percent of the calls answered by a CSR each year. Next,
ask the manager what part of the CSR’s (or manager’s) compensation is based
on meeting quality targets. Very likely, none of their compensation is based
on reaching quality goals. This lack of emphasis results in increased costs
(due to repeat calls and decreased customer satisfaction), because CSRs aren’t
doing the job correctly. To deliver quality service, it is important to establish
metrics to elevate the importance of quality.

• Recognize productivity opportunities. There are two frequently overlooked
opportunities for productivity improvement that can be realized by setting the
right objectives. First, establish the “occupancy” goal for the organization.
Occupancy is a measure of the productive time a CSR spends during the day, including
time on the phone answering calls, answering emails, etc. Most utilities have
less than 50 percent occupancy — far less than the 70-80 percent levels
achieved by high-performing companies. The second opportunity is to reduce the
percentage of time employees are absent from work. While some long-term illnesses
are to be expected, many companies are too loose in their administration of
this part of the productivity pie.

• Define what levels of self-service you want to achieve. One study from
several years ago suggested that 19 percent of all utility company contacts
were self-serviced. While this figure may not have the precision we want for
an industry perspective, it is not difficult to measure the level of self-service
within your own company. But what level of self-service do we want to provide
— 20 percent, 30 percent, or even more? Our recommendation is to survey
your customers about their self-service likes and dislikes, and balance their
preferences with business needs. Many leading companies can achieve up to 40
percent self-service and also achieve high customer satisfaction when the self-service
program is implemented well. Define the self-service goal, measure it, and reassess
the goal periodically to ensure it meets business needs optimally.

• Identify other objectives that lead to high performance. Too often, the
list of metrics for a contact center manager is very short — perhaps only
“average speed of answer” and “customer satisfaction during emergency calls,”
To achieve high performance, other goals are needed, including measurement of
cost per contact, employee satisfaction, and perhaps even the impact on revenue
— which is potentially important.

We believe that rate-making is an opportunity to improve revenue, particularly
if you are working with an enlightened public service commission. If the PSC
will approve incentives for customer service improvements, then a new return
on investment (ROI) figure has been established for future investments and business
decisions. It is wise to have a representative from the utility’s rate-making
organization as part of the team that defines contact center metrics (the team
should also include representation from field operations, marketing, and HR).

Having defined the metrics, ensure that they are well communicated, and consider
their role in incentive-based compensation.

The Second Most Important Step:
Energize Key Business Processes

There are several reasons the review and change of key business processes is
usually the second-step to business transformation. We often find that process
reviews identify “low-hanging fruit.” Let’s look at the steps we would typically
review in a process analysis. Usually when we perform a diagnostic review of
an organization, our approach follows this sequence of actions:

• Identify the number of contacts received in each contact center by contact
type.
• Determine if the number of calls from one contact type is excessive,
either for one or all contact centers. For example, too many meter-reading complaints.
• Determine if contact should be self-serviced.
• Analyze the components of each contact, and apply best practices to reduce
processing time and improve quality. Evaluate each process by our enriched metrics.
• Review reports to determine if data is accurate and actionable.
• Assess whether outsourcing should be used or not used.

Figure 5 – The Four Keys to Creating a High-Performance Contact
Center

There are many small (and some large) actions that can be taken. Actions that
promote consistency usually inspire productivity and customer satisfaction.
Some common areas where improvements can be realized are with high bill complaints,
level billing inquiries and gas emergency processing (to improve safety and
avoid legal repercussions). If you wonder whether you need help in this area,
listen to 20 calls or read 20 letters prepared by CSRs to find out what customers
are experiencing.

We are not recommending a total re-engineering of processes. Instead, we suggest
that you focus on the top 20 percent of transactions that impact 80 percent
of costs and satisfaction. This triage approach remedies the most critical problems
and gains the greatest efficiencies. The improvements can be significant, and
the net result is beneficial to customer, company and employee.
Let’s examine the impact of small changes. An average utility call requires
three or four minutes to complete, including the greeting, accessing the customer
account, listening to the problem, identifying and communicating the solution,
and finishing the call. Let’s assume that the call is received in a medium-sized
contact center that receives approximately 500 calls per half-hour, and that
each call currently requires four minutes. As the result of our diagnostic analysis,
we can reduce by 15 seconds the average call- handling time through small changes,
such as developing a standard greeting, facilitating faster account look-up,
and guiding a smoother closing. That 15-second savings will result in a savings
of six CSRs — likely more than $250,000 of avoided cost — or the opportunity
to improve average response time.

Installing High-Value Technology

The next step in our sequence is to identify the return on investment for
various technological alternatives. This usually entails a two-pronged attack:
increase the percentage of self-service (with considerations for customer satisfaction)
and apply technology to contacts serviced by CSRs.

Self-service implementations often result in the highest return on investment,
if we measure ROI solely by cost reductions. The first action is to get maximum
benefits from your current IVR investment. To do so, the utility executive needs
to understand the total potential value of the IVR, including:
• Squeezing out more benefits by establishing better IVR menus and scripts

• Reducing the call length for calls that get routed to the CSRs
• Its role as a hub that can be used by other contact center technologies

• Adding voice recognition technology

Various analysts suggest voice recognition is a blossoming technology that will
provide cost reductions and improved customer satisfaction. In the past, the
cost of voice recognition has been high, but it is decreasing.

Web transactions have been less successful in the utility industry. In a recent
study, it was found that fewer than three percent of utility transactions were
being self-serviced through the Web. The potential, however, is that Web-based
transactions will be used more frequently. In another study, it was estimated
that more than 30 percent of contact center contacts will be either Web-based
or email in just a few years. This places a new emphasis on this form of self-service
and raises the questions of how to best service customers who use these channels.

Technology has also had a great influence on how CSRs do their work, particularly
outside the utility industry. Several desktop GUI vendors claim their clients
have realized cost reductions of 20 percent, concurrent with customer satisfaction
increases of more than 10 percent. While these findings may not apply to all
potential customers (particularly within the energy industry), they do reveal
a potential to improve performance in a significant way.

Almost all utilities have made multimillion-dollar investments in their customer
information systems (CIS). These systems usually perform three very different
tasks. On the one hand, they support billing processes and on the other, they
support customer interactions — both in the front and back offices. The
strength of these systems often lies in their ability to generate high volumes
of bills per day. They are often, however, less capable in their role as customer
relationship management and back-office support systems.

Figure 6 – High-Value Technologies Allow Functional Integration Across Departments

Accordingly, a utility executive preparing a technology investment plan must
assess how well each of the major subsystems fills its role, and whether one
or all of the subsystems should be upgraded with CRM technology.

As with any investment decision, it is important to determine how the investment
will be assessed i.e., with traditional ROI measurements, from a strategic perspective,
or using a different set of expanded metrics. Since the projects can require
the investment of millions of dollars, it is important to have a thorough diagnostic
completed beforehand, to truly understand and quantify the range of available
benefits.

The internal customer service team often has a limited view of potential changes.
In some cases, this is the result of their limited span of control (i.e., knowing
only one aspect of the total). In other cases, it is because they are unaware
of best practices outside their industry. And regrettably, in some instances,
they are hesitant to identify savings that they are aware of because they do
not want to see change.

Figure 7 – Estimates are based on a 200-person contact center, using Boyd
Consulting data for cost by locale.

Many analysts have noted that the penetration of CRM technology in the utility
industry is less advanced than in other industries. As an example, the leading
CRM vendors (Siebel, Oracle, SAP, Peoplesoft) have made limited headway so far
with utilities, although they have substantial penetration in other industries.
Perhaps this is understandable in light of the different business imperatives
within different industries, but even though the ROI model may be different
and more challenging within a utility company, that does not suggest that CRM
benefits are not significant enough to warrant consideration.

Let’s look at computer telephone integration (CTI). For many industries, this
is a key part of call routing and handling. The anticipated and actual savings
have justified the investment for most industries, but the adoption of CTI has
not been as pronounced within the utility industry.

It was anticipated that the introduction of deregulation would place competitive
pressures on utilities, inducing them to pursue technology solutions already
proven to be valuable in other industries. Due to the slowdown of deregulation
these external competitive pressures have attenuated. Yet, there remains a need
to be competitive, to satisfy customer, stockholder, and PSC expectations, as
well as to establish a culture of competition within the utility workforce.

The opportunity to become more productive and to deliver better services through
technology has been demonstrated by many utilities. For example:
• Several utilities already have 40 percent of their calls serviced through
an IVR, and others are soon to install voice recognition — with the potential
to further improve performance.
• CTI implementations for utilities have consistently resulted in 15-second
savings, but at least one company has reached a one-minute average savings per
call with its CTI implementation.
• Call routing software has helped some companies to save 10 percent and
to deliver better service to their most important customer segments. These benefits
can also be extended to other contact channels, including email and Web-based
transactions.
• Voice and screen recording systems can increase the level of quality
by more than 10 percent and bring about associated cost reductions.

Becoming A Lean, Integrated Organization

All of these initiatives can result in material staffing reductions, and they
can also prompt new thinking about the way other processes operate. New thinking
can lead to revising operational goals, such as how many contact centers to
operate, how to integrate existing contact centers, and the role of CSRs and
staff. Many utility companies have more than one site from which they contact
customers. Some companies have always maintained separate regional call centers,
some separate their front- and back-office teams, and others have gained new
call centers due to mergers and acquisitions.

There are opportunities to achieve savings through either physical or “virtual”
consolidation. Figure 6 shows an example where virtual consolidation can lead
to an eight percent savings while physical consolidation to a low-cost site
could yield a 13 percent savings.
There are two different areas of opportunity that frequently result in savings.
The first is to look at layers of management and span of control. The ratio
of CSRs to a supervisor can vary based on many factors, but if the ration is
less than twelve to one, a review should be completed to determine if this is
optimal. Sometimes, the problem arises when companies have three levels of reporting
under the contact center manager: supervisors, team leads, and CSRs. It is also
important to determine what is preventing the supervisor from assuming a larger
span of control, including analysis of time spent per day and administrative
tasks being completed.

Table 1 – Virtual consolidation can lead to a 8% savings while physical consolidation
to a low cost site could yield a 13% savings (estimates are based on a 200 person
contact center, using Boyd Consulting data for cost by locale).

Not all organizational changes will be made solely to extract savings. In some
instances, it is to provide improved and uniform quality. As an example, many
utilities have the supervisor perform quality reviews, which can be inconsistent.
An alternative is to have a dedicated quality control staff. Another problem
we sometimes see is that the supervisor is a traffic cop, trying to balance
the workload as call and email volumes change. These tasks are better left to
automated systems that optimize work distribution.

It is also important to to see how the CSRs are working and to determine their
satisfaction. If CSR turnover is very high, it can have a significant impact
on the contact center’s cost and quality. In light of the significant costs
of high turnover, determine the root cause of the problem and assess corrective
action. Some companies have also found it beneficial to have a human resources
profile of each CSR — a balanced scorecard that reviews the employee’s
productivity, quality, attendance, adherence to schedule etc. The tool identifies
those employees who need remediation and helps focus your corrective actions.

Figure 8 – Prepare gap analysis and submit results sample deliverable.

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What next?

There are several possible steps to implement a High-Performance Contact Center.
The first step is to determine the gap between “as is” performance and the newly
defined target level of performance. Once the gap is identified by using experiences
drawn from other industries and other diagnostic reviews, the utility executive
needs to establish the target plan, including short- and long-term actions.
The plan should consider risks, including the capability of the organization
to implement changes with or without consulting support, and the “change management”
plans required to implement the performance-inducing actions.

The decision to become a competitive contact center is one that can transform
the organization, helping to better meet the needs of customers, employees and
stockholders.