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6 Ways to Maximize Contact Center Profitability
What follows are six strategies that companies are using to maximize contact center profitability while minimizing risk.
For the rest of the February 2005 issue of CRM magazine please click here
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In theory, transforming a contact center into a profitable operation is a widely accepted and straightforward proposition: cost center + new processes and new technologies = profit center. In practice, the equation is tricky to execute, and only a few contact centers consistently generate large bottom-line sums. Contact center managers who fail this basic math test are more likely to see their functions farmed out along with other corporate cost centers that add little value to the organization. "If cost-center transactions are purely tactical and contribute little to the organization aside from added nuisance or greater risk, senior executives are going to look longer and more closely at outsourcing the whole kit and caboodle," says Bill Durr, Blue Pumpkin chief evangelist. "It's just simple economics." 1. Communicate the Importance of Profitability Mark Porter, COO of High Wire Networks (HWN), has a simple message for his workforce: Everyone is a call center agent. The fast-growing telephony-services company considers its contact center, in which eight agents handle an average of 2,500 contacts each month, the "single most essential component of our corporation," Porter says. HWN installs and maintains voice and data systems and structured cabling throughout the United States for Avaya, NEC, Nortel, and Octel product lines. Service and maintenance comprise the vast majority of HWN's revenue. When a customer calls or emails, agents must first determine if the service request is under warranty. If so, it's not billed; if not, the moves, adds, or changes (MACs), scheduled or emergency systems maintenance, or other time-and-materials jobs qualify as revenue. Porter credits the NetSuite system and the Nortel call center application his company uses with ensuring that each call they receive is correctly classified. The technologies have also helped transform the contact center from a cost center to a profit center. HWN's call center revenue now exceeds $3 million per year. "I attribute the ability to scale to that revenue to NetSuite," Porter says. "Before that we were handling about $500,000 in maintenance and MAC revenue through our call center, and we were at our limit."
Porter also credits the hosted solution with providing limitless access to the contact center. When non--call center employees have a break from their sales, operational, and service responsibilities, they can log into the call center via IP telephony. Porter uses the high-speed connection in his hotel room to access the company's virtual private network and handle contact center calls and follow-up from his room. He figures that capability pushes the field staff's productivity level above 100 percent. It also communicates the contact center's strategic importance to all of the company's 92 employees. 2. Think Outside the (Data) Box TeleTech handles roughly 2.5 million customer interactions for the clients that trust all or part of their contact center needs to the customer management solutions company. For that reason, Rich Herbst, executive director of TeleTech OnDemand, believes that his company should know more about its clients' customers than even the clients themselves know. Herbst and his team rely on highly automated real-time analytics from the Sigma Dynamics solution TeleTech uses to "manage overall customer profitability, so that we're not just a call center vendor, [but a] client partner in managing end-to-end customer relationships." In one case, for example, TeleTech supplements data from a healthcare client's CRM system with information from the company's claims and customer-payment databases. After slicing and dicing all three sets of data, TeleTech identified which healthcare providers (one set of the client's customers) and which types of calls were responsible for the highest volume of calls to the contact center, so the client could address those issues, and in turn, reduce calls and cost. TeleTech also crunches contact center data with customer-defection data to determine why customers--or patients, the other set of the client's customers--leave. The results have helped form a profile of likely defection candidates. "The profile showed our client what customers [who] are leaving look like in terms of how much they've called, the types of claims issues they've had, how much money they've been denied," explains Herbst, whose team has developed similar profiles for a large cable and broadband provider. "Not only can we do proactive things like cross-sell and upsell based on customer profiles," Herbst says, "but we can also route callers who are defection candidates to a specialized 'save desk,' where a highly skilled agent can address their issues." 3. Act Like a CFO Knology, a high-speed Internet provider in the Southeast, leverages a similar type of customer analytics through its Blue Pumpkin workforce optimization application to deliver solid returns on its contact center operations. The approach enabled the contact center to deliver $750,000 worth of productivity gains to the business, and it has strengthened Knology Contact Center Director Steve Harrison's hand in the budgeting process. "We use the automated workforce management tool to run through what-if scenarios," he says. "What if we cut handle time by 20 seconds, how many hours and people does that save us? What if we add 20 seconds to each call from a service perspective? How will that likely translate to revenue gains?" Knology is currently evaluating the use of prescripted transactions to trouble-shoot over the phone before sending a technician out to customers' homes. "We can simulate that transaction to get a good feel for its length, and then we can translate how that change will affect headcount and revenue," Harrison says. According to Brad Wilson, vice president of Sigma Dynamics, those same financial considerations can be woven into the automated decision-making process that governs the flow of each call to the contact center. "If you can balance the cost of trying to sell someone something with the revenue opportunity from that attempt, you can make an intelligent decision about whether you try to make the sale," he says. "If you can't predict the duration of the attempt or its difficulty, then you're missing half the equation." 4. Seek New Customers When Florida reduced its funding to state universities, the University of South Florida (USF)'s IT operations staff asked how it could help out. The answer, explains USF Assistant Director of IT Christopher Akin, was to transform the help desk into a profitable enterprise. USF's main campus is in Tampa, and the school also operates branches in Sarasota, St. Petersburg, and Lakeland. The university's help desk, which provides desktop, laptop, and other technology troubleshooting to university employees, has long been a top-notch operation. So the school used that operation to establish a for-profit corporation, comprising entirely USF employees, that now handles help desk calls for eight state and local government agencies, including educational institutions and the Tampa Port Authority. The contracts generate more than a million dollars per year for USF; that money compensates for budgetary cuts, as well as seed scholarships. Akin says the move to profit center comes with two major risks: keeping existing customers (i.e., USF employees) satisfied, and ensuring the help desk could handle the spike in business activity. To mitigate the first risk the help desk blends its profit-generation model with USF's educational mission: Hire graduate students to work in the new business. USF relies on a RightNow solution, which Akin credits with being scalable enough to meet the needs of a growing customer base, to address the second risk. His new business's bottom line may be growing, but Akin emphasizes that the growth is carefully targeted. "We're not going to compete with private industry," he says. "We're sticking with local government and state agencies, arenas that we know very well." 5. Take Risk Management Seriously As Akin points out, risk management is a vital component of succeeding as a profitable organization. The USF help desk's transformation into a profitable enterprise parallels the new reality contact centers encounter when they shed the "cost center" label and start contributing to the top line. "You face the same risks as any service business faces," Akin says. "There is a risk of being in breach of contract if you don't provide a specific service." HWN's Porter recognizes those risks, too. Now that the revenue streaming through the company's contact center has increased by roughly 600 percent, there is a lot more to lose if the unexpected occurs. Porter says NetSuite's hosted model has helped mitigate down-time risk at an affordable price. "Our call center is mission-critical, so we can't have down time," he says. "If we handled our own contact center technology platform in house, we would need an elaborate disaster-recovery plan. That's expensive and I don't have the necessary IT staff to support the technology. Many companies don't take that into consideration when they have a call center. We have, and we've never had down time." The company's contact center is backed up with several areas of redundancy, including telephone lines, Internet connections, and multiple offices. "I can move call center agents around if need be," Porter says, "and I can access the call center from anywhere in the world with great reliability." 6. Address the Soft Spots in the Profit Equation Managers of profitable contact centers agree that training is a vital way to mitigate risk and maximize profits. Training and other "people issues" represent hidden factors that determine whether the profit center equation will successfully add up. At Knology, Harrison and his team take softer workforce risks very seriously. In each management meeting, one member serves as an advocate of the company's 325 customer service representatives (CSRs) to ensure that any decisions that warrant CSR input receive it. After its workforce optimization implementation, contact center agents requested three 10-minute breaks throughout the day (in addition to lunch) rather than two 15-minute breaks. "We listened to them and talked it over with them," Harrison says. "One of their points was that the extra break would help them adjust to the higher volume of calls they were handling through the new system." A focus group was formed, a consensus was reached, and the new break scheduling was piloted. Sixty days after doing so, schedule adherence remained constant and morale increased, according to Harrison. In fact, overall employee satisfaction has increased 30 percent in the 10 months since the new technology was implemented. Organizations like Knology, USF, and HWN that succeed with the profit center equation will likely do so by addressing both hard and soft factors. Blue Pumpkin's Durr predicts that profitability pressures will shrink the number of employees in many U.S. contact centers during the next five years. "But the skill sets the agents have will be much, much higher," he says, "and the value being derived from the transactions will be much, much greater." Making the Math Work
  • Company: Knology, a high-speed Internet provider in the Southeast United States
  • Problem: To determine the potential ROI of an upsell effort before implementing it.
  • Equation: Tested the upsell script on a focus group of agents that showed that the sales pitches would add 30 seconds to each call. Ran what-if scenarios in the Blue Pumpkin workforce optimization system to determine how many additional agents were needed to maintain service levels while adding 30 seconds per call. Weighed the additional expense against projected revenue gains from additional upselling.
  • Solution: A $100,000 per month increase in add-on revenue after a three-month test period. Journalist Eric Krell, based in Austin, TX, regularly covers CRM strategies
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