CRM is turning call centers into profit centers.
For the rest of the April 2003 issue of CRM magazine please click here
Cory Wiegert is intimately familiar with the inner workings of a call center. Yet recently he was perplexed by the actions of one agent.
For roughly two years in the mid-1990s Wiegert worked as a tech support agent for Centura Software, formerly Gupta Corp., a provider of embedded relational databases and 4GL 32-bit development tools. Since then he has worked his way up to his current role as senior product line manager on Siebel Systems' call center product line. But a recent visit to a call center showed him just how times have changed since his days of working the phones.
Wiegert was shadowing an agent at a call center for a major credit card company when a confused customer called to dispute some finance charges. Upon hearing the hesitancy in the caller's voice the agent immediately suspected this call might take an unusually long time, so she started her timer. The agent calmly and courteously explained to the customer the reason for the finance charges and the customer's responsibility to pay them. The customer wasn't catching on, and a skirmish ensued. The agent was polite but firm, and stood her ground, insisting the caller pay the finance charges. Four minutes into the conversation, however, the agent abruptly changed her position and said, "I'll revoke the current and past charges," and quickly completed the call 30 seconds later.
Baffled by this, Wiegert asked the agent why she suddenly switched her position. "At four minutes we break even on past due charges when you consider what it costs my company to keep me on the phone," she said, citing a tip she recently learned from her call center manager.
The agent, who hopes to become a call center manager, made a decision based on her company's understanding of customer profitability and ROI. The ability to identify and avoid cost burdens, such as lengthy phone conversations, is a necessary first step in a trend that is turning call centers into profit centers.
Stop the Bleeding
There are few things more difficult than measuring return on call center investments. Many technology buyers measure ROI in dollars. Yet historically, call centers have not been revenue generators. This has forced call center managers to achieve ROI by cutting costs.
Many of the call centers that in the past were hemorrhaging money and facing budget squeezes have, however, seen relief since technology solutions like Web self-help tools, Web chat, and email management hit the market. "For a while our clients said, 'Drive calls away from the call center and send customers to email and chat' " says Suzy Weaver, vice president of and COO at The Telvista Co., a call center outsourcing company based in Dallas.
The benefit of Web chat is a simple matter of mathematics: Contact center agents on average can handle three customer service requests simultaneously using Web chat, but only one customer phone call at a time. And Web self-service, which requires no agent involvement, translates to even bigger savings. For example, using Sento's Customer Choice self-service portal technology, Intuit was able to deflect about
60 percent of its customer inquiries to the Web, according to Erik Seone, director of service delivery for Intuit's TurboTax. Of the 40 percent requiring service from an agent, about 85 percent were helped via chat--only about 15 percent needed to talk to an agent by phone. This reduced Intuit's costs 65 percent, even though the number of overall transactions tripled. It also improved service in the call center: The call abandonment rate dropped from 35 percent to 5 percent.
Another key area of cost savings comes from deflecting customers to email, where they often follow links to the Web to use self-service tools. One firm that reduced call center costs by deflecting potential service inquiries to the Web via email is Hewlett-Packard. HP opted to be proactive with its support through cost-effective email campaigns. When a customer purchases an HP product, the company encourages customers to register via the HP Web site. It is here that HP can obtain vital customer contact information like email addresses. Using this information, HP sends periodic follow-up emails. These include thank-you notes, links to a site where customers can purchase printer toner cartridges, tips on how to print memos and calendars, and notices reminding customers of their product warranty expiration dates.
The project has been more successful than HP executives had anticipated. HP immediately benefited from a 30 percent click-through rate generated from the email program. "That is absolutely unheard of," says Paul Horstmeier, e-marketing manager for the business customer organization at HP.
The email marketing and support program is currently growing by 100,000 customers a month, Horstmeier says. "Total cost of managing the program and the content is eight cents per email, and the support cost savings is $173,000 per month from all customers," he says. "If our only objective was to save money, we did that."
HP and Intuit found creative and effective ways to cut costs, but as important as it is, it's only an initial step. Generating revenue is the next and most-important step in transforming a contact center into a profit center--an opportunity that until recently most call center operations have overlooked.
Why have so many organizations overlooked this opportunity? Industry pundits claim it's all about perception. Lior Arussy, president of call center consulting company Strativity Group and author of The Experience! How to Wow Your Customers and Create a Passionate Workplace, says too many organizations make the mistake of only viewing their call centers as a necessary and weighty cost burden. Indeed, call center executives spend countless hours trying to cut costs by dreaming up strategies for shaving 10 seconds off a call. This mindset is reinforced by digital displays notifying agents of how many calls are waiting to be answered, encouraging them to hurry to answer the next call. Compounding the problem are bonus structures, which are often designed to reward agents that do this well.
But a new strategy is emerging. Call center managers are now discovering they can generate revenue by selling to a customer who calls a contact center for support. In fact, Arussy asserts that customers are often most willing to buy when you fix their problem. "Think of it as a relationship bank account.... After solving a customer's problem, we can ask for reciprocity," he says.
So today some companies are tapping into this new revenue source by simply bringing the customer back into the call center and training agents to sell to them. "Manufacturers are starting to understand that since you have to make that investment anyway, look for unique ways to cross-sell and upsell, making sure you're not letting revenue leave," says Amy Sherman, senior director of business development at Affina, a 30-year-old Peoria, IL, call center outsourcing company.
Follow the Leaders
The shift from cost center to profit center is recognized firsthand by Telvista agents. Telvista started out as a division of CompUSA, delivering technical support to retail customers and help desk solutions to corporate clients. By 1998 the organization started servicing large corporate clients and spun off from CompUSA.
Since then Telvista has taken over customer support services for telecommunication companies and Internet service providers. But in it didn't stop there. The company also realized the potential of inbound telesales as an additional service it could provide to its support customers. One company benefiting from this strategy is Telvista customer MetroPCS, a wireless service provider based in Dallas.
In January 2002 MetroPCS started offering its unlimited local cell phone service to Atlanta, Miami, San Francisco, and Sacramento residents for $35 per month. To support this, MetroPCS selected Telvista as its only outsourcer of customer service and cell phone service activation. Anxious, frustrated, and inquiring MetroPCS customers call Telvista to activate their cell phones, call for technical support, or question their bill. Very few customers call intending to buy additional services.
Before working on the MetroPCS account, Telvista agents take a two-day customer support training course and a two- to four-day sales training class on product features and benefits. Instructors conduct role-playing exercises to help agents identify selling opportunities and to train agents on how to close a deal. Armed with the sales and support information, agents hit the phones.
Using a script agents collect pertinent data like the customer's name, address, phone number, and billing information. If nothing else Telvista's Weaver advises companies to simply get this data, which can be used later for marketing purposes. "That's where the CRM side of this plays in. A lot of companies talk about capturing data, but they don't do it."
Telvista agents are given MetroPCS sales and marketing collateral to offer customers additional cell phone features when they call, which include three options (for additional fees): voicemail, call waiting, and caller ID; text messaging; and handset insurance for the phone. When MetroPCS began offering these feature packages to customers, executives at the company were expecting a 50 percent take rate. Surprisingly, though, the overwhelming majority of customers purchase the add-on features, says Greg Pressly, staff vice president of customer operations at MetroPCS. "There's so much opportunity when you have a customer on the phone, whether you provide support so they won't call you back, or sell them products and services--features they need--which helps your company generate more revenue," he says.
Home Shopping Network also recognizes that opportunity, which is why, defying conventional call center wisdom, it is encouraging agents to keep customers on the phone longer. "It's difficult to create a sales mentality when you're measuring agents on average call time or orders per hour," says Siebel's Wiegert. "Under the new paradigm it's not unusual to see agents spending much more time on the phone with a customer, making targeted offers based on a customer's history. Once you start buying, they're going to continue to sell."
HSN implemented call scripting technology with follow-up questions that helps agents overcome customer objections. While many industry insiders say short calls work best even when selling, HSN believes customers' propensity to buy increases as agents spend more time with them, because it allows the agents to uncover additional sales opportunities, Wiegert says. "It turns the traditional call center metrics on its head."
This aggressive selling approach has yielded HSN a 35 percent increase in nontelevised products sold in the second quarter of last year, and the additional projected revenue from this new selling strategy is in the tens of millions of dollars range, according to Wiegert.
Some customer support agents, however, are not cut out to sell. Strativity's Arussy finds that customer service agents who are already programmed to quickly get the customer off the phone may not be able to handle a transition to the different pace needed for selling. In Telvista's case, it will look outside the company for that talent.
Once contact center managers find agents with a winning sales attitude, however, they need to compensate them accordingly. Arussy suggests changing bonus structures in a way that motivates agents to sell, and not rush customers off the phone.
HSN understands this. No longer are HSN agents being held accountable for average handle times. Instead, they are measuring how much weekly revenue they bring in, and how many offers they make each week, according to Wiegert.
This strategy can help save companies money, too. Integrating sales into an inbound service center can boost employee retention, because it establishes career path options for agents. Reducing turnover saves companies a bundle on the cost of hiring and training new agents. "Agents get burned out after six months, so it's important to set up growth tracks for people who can make the mental shift from support to sales. The people who don't recognize the value of both won't succeed, no matter what," Wiegert says.
This holds true for call center managers and decision-makers as well. Success will never meet those who focus solely on cutting costs. "With budgets steadily shrinking, you need to find a way to bring value to your company," Telvista's Weaver says. "We're finding that regardless of what kind of support you're offering, there is an opportunity to sell."
Contact Senior Editor David Myron at dmyron@destinationCRM.com
How to Realize Call Center Profits
Do not equate call centers with being cost centers
Connect databases across the enterprise
Survey customers when they call
Provide agents with tech- and soft-skills training and sales training
Reorganize bonus structures to motivate agents to sell --D.M.
Jay H. Baker Retailing Initiative/Wharton Interactive Media Initiative '10: The chief executive officer of Home Shopping Network details how to engage customers and improve service.