For years companies viewed their customer service hubs as cost centers, simply a piece of the organization that tried its best to soothe angry callers, answer their product questions, and keep them happy enough to not leave the company. There was no perceived additional value that the contact center could bring to the organization.
In today's business environment of rampant price and product commoditization, companies and industry pundits alike are starting to proclaim contact centers are taking on a whole new meaning to organizations. More agents are incorporating cross-selling and upselling when applicable, since many organizations now realize the contact center is the primary touch point for consumers. "The macro trend we're seeing is that customer service is the sole differentiator out in the competitive marketplace," explains Zachary McGeary, associate analyst at Boston-based industry analyst firm Forrester Research. "Not only acquiring new [consumers], but retaining them is that much more important today."
No matter where one may turn, doom-and-gloom news about the state of the global economy has gripped both businesses and consumers with fear about what will happen to their bank accounts and stock portfolios (see "Financial Frenzy," December 2008), making customer service more important than ever. "The way we're looking at this is that the economy itself shouldn't really change the way things should have been done," McGeary says.
That doesn't mean contact centers will still have the same amount of money to invest in delivering this quality experience. "Customer service is the last place that most companies will spend," declares Christine Henderson, manager of customer service for Brisbane, Calif.–based IGN Entertainment, a unit of Fox Interactive Media, an Internet media and services provider focused on the videogame and entertainment markets. "Being able to be a nonconcern during an economically concerning time is fantastic because it means I know I'm not putting any pressure on my company."
While Henderson's customer service team may be excelling during this time, it is the other contact centers that may have been treading water before the recession hit that need to do some soul-searching. But with tighter budgets, it is becoming harder to invest in sexy new technology or hire more agents to do a better job. Alternatively, many say to do more with what you have. "This isn't the time to be experimenting with new technology," McGeary warns. This means getting back to the core—revamping the people, processes, and technology your contact center already has available.
Remember the 80:20 Rule? Eighty percent of total potential value can be achieved from just 20 percent of the effort. General Electric's former chief executive officer, Jack Welch, took a different tack and said 20 percent of the people in an organization simply do not need to be there. To Wendy Hubbard, executive vice president and founder of Charlottesville, Va.–based communications provider Inova Solutions, letting underperforming agents go may be hard but it can reap great benefits. "The most difficult job is to cut people," she says. "Often when there is a downturn, we are forced to do so, and it turns out to be very positive. When you're left with the top 80 percent of performers you can have a more efficient operation."
While it may seem like a no-brainer to cut poor workers loose, a bigger problem in the contact center industry is watching perfectly qualified agents walk out the door of their own volition. "The biggest area that any company can focus on right way is agent attrition," says Oscar Alban, principal market consultant for contact center solution provider Verint Systems. He gives the example of a 200-seat contact center having a 30 percent attrition rate, losing five people per month—60 over the course of a year. "The average cost of hiring agents is $8,500 for that center, and for other centers the cost can be even more."
The result? For this particular center, it spends approximately $500,000 per year on restaffing alone. "We need to [proactively] address issues of what's causing agents to leave, because that's more money to the bottom line that can be used for other [initiatives]," Alban says. "One of the best things you can do is sit down with groups of agents and explain why the company is making any changes that bring fear to employees."
Oftentimes finding out what is sticking in agents' craws can cost very little, but reap great benefits. Take Knology, a West Point, Ga.–based telecommunications company. Knology is finalizing an acquisition of Prairie Wave Communications—now branded under the Knology name—first announced in January 2007.
"At that time we had a big capital expenditure, and we were putting a lot of work into it," recalls Troy Martin, project and resource manager for the customer care center at Knology. "The feedback from frontline customer service representatives (CSRs) was [a] concern, and they wanted additional hours to pay for the hiked-up gas prices. The company's stock price went down 60 percent during this time, and we needed to get ahead of the negativity we saw brewing out on the floor."
The negativity was starting to seep into the customer service the agents were providing, as more consumer complaint calls were being placed to the company's corporate hotline. In addition to a mandated soft-skills course, the company also added a new program through the workforce management system (WFM) provided by Verint, exemplifying the benefits of working for the telecommunications provider, and disclosing its company direction. "The cost of the course is already invested in the programs we utilize to do it [such as WFM]," Martin says. "Getting ahead of [the trend] with training and courses was important to help reduce our corporate complaint calls."
Since implementing these programs at a low cost, Knology has already seen results. Martin says out of approximately 250 phone agents, the attrition rate has dropped from 12 percent to 8 percent. Customer retention rates have also risen, as the number of "rudes"—as Martin puts it—that found their way to the corporate hotline went from four per week to one. Also, the soft-skills training has enabled Knology to keep 10 percent more of its customer base that called to disconnect—from 15 percent to 25 percent. "We feel that we have a handle on the situation now," Martin says.
Ensuring agents are informed isn't the only way to keep them in the seats, though. Empowerment—giving agents the ability to take actions to solve a customer's problem that mere empathy can't cure—is another low-cost way to continue to innovate in service. "Giving CSRs the power to make decisions that there aren't necessarily business rules for, the exceptions in which the customer relationship may be most at risk, is important," McGeary says. "They then have the power to exceed the customer's expectations or make good on what may have been a bad or unfortunate experience for them."
Inova Solutions' Hubbard agrees, adding agents are a contact center's largest expense. Consequently, any investments in technology should help empower your most expensive asset. "If you can add a bit of technology to optimize these folks' performance, you're way ahead of the game and being proactive as opposed to firefighting," she says, explaining optimizing agent desktop technology to publish real-time information about the callers can make a great impact.
"Create a real-time communication system where agents understand call queue and then the second step, that many call centers need now, on reader boards, desktop, and digital signage," Hubbard adds. "Develop a culture around the real-time information, one of execution. Then, you walk into the call center and feel the buzz...people are really going for it because everything is in alignment."
IF IT'S BROKE...FIX IT
While many industry analysts, vendor executives, and contact center executives agree budgets are being constrained to a point, they don't all believe that customer service will be the first to be chopped—or even cut the most. Nonetheless, they do reach a consensus by stressing optimizing the existing technology is a small investment that can go a long way. "The mindset should be, ‘How do I do more with what I have?'" McGeary says. "That doesn't necessarily mean new technology. It's an opportunity to...fall back onto deploying best practices."
To McGeary, this means looking into proper workflow, call routing, queuing, looking at transition points from the interactive voice response (IVR) system to a live agent transition point. "I think companies generally have had difficulty figuring out where to begin even when there wasn't a recession," McGeary posits. "If you fix those high-level things it can reap great rewards in terms of efficiency."
Tom Smith, senior manager of contact center solutions product marketing for Basking Ridge, N.J.–based enterprise solutions provider Verizon Business, also sees his clientele looking at ways to boost efficiency and tie up loose ends with existing technology. He explains there is continued interest in first-call resolution due to its twofold benefit of cost savings and customer satisfaction.
Consequently, companies are revamping and fixing skills-based routing and CRM integration capabilities. This way, calls can get to the right agent and the information needed to successfully complete the call is at the CSR's fingertips. "We have taken the approach from the outset that ripping and replacing solutions will be extremely hard to justify economically," he says.
Verint's Alban explains that contact center solution vendors feel the same pain their customers do when it comes to underutilized technology. "It gnaws at me when I see this happen," he admits. "The reality is people buy technology but only use a portion of it." To try and counteract this, Alban explains, Verint is using its professional services arm to work with its larger clients deploying multiple solutions. In what he terms a customer success initiative, the goals are to ensure these organizations are getting the most bang for their buck and to educate them on some of the capabilities they have that can impact unforeseen business needs. "Take a look at what you have, and chances are there are [functions] you can do with that you haven't done yet," he says. "It won't cost you anything except maybe a consulting engagement, but it is far less expensive than buying new equipment or software."
One interesting facet within the dismal economic reports is that, while contact centers are involved with budgetary concerns, not all potential investments are frozen. Alban says companies are not stopping technology purchases, but are instead investing more selectively, essentially relying on a three-word mantra: return on investment (ROI). "It must have a direct impact on customer satisfaction or reduce cost in a very specific area of the business," he says. "Companies realize it's a Catch-22 because if they wait they might be behind the eight-ball [competitively], but they still need to be wiser in the way they're investing their dollars."
Experts say that in businesses' search for the absolute best technology to pick during this time, speech analytics and automation are coming up more frequently. Alban admits that the cost may be more in the medium range rather than a no-cost or low-cost initiative, but the benefits far outweigh the money spent. Particularly for the case of call elimination, if companies can use analytics to identify root cause issues and be proactive in fixing problems before they occur, it can save hard cash.
Peter Ryan, New York–based research firm Datamonitor's lead analyst for contact centers and business process outsourcing, agrees. He admits speech automation requires upfront investment, but it can save in variable cost over time in terms of live agents who—in the absence of speech—would be taking those calls. "It's important to find a proportion to automate calls, but just a percentage of them because you can reduce a tremendous amount of cost," he says. "That's the beauty of speech automation."
Another automation area that can reap tremendous benefits is via knowledge bases (KBs). As more customers want to try and fix their own problems or issues, KBs can be a great way to save money and free up agents for more difficult or complex transactions. However, many companies have tried this avenue but not kept up-to-date with it, which can be lethal. "They are neglected, not updated enough, and there are gaps in content which many times is inaccurate," McGeary says. "The shortcomings of self-service aren't from the lack of willingness to try it; rather, the way it is executed."
He explains that many KBs are hard to find for consumers, who then turn to live agents, which is a much more costly channel for contact centers. If companies really focused on retooling this channel, it can be done without hiring additional people. Simply bring the agents you already employ into the fray and allow them to author articles and keep them current, as they are the ones who are interacting daily with consumers and have the pulse of common questions.
Gary McNeil, vice president of marketing at Parature, a Vienna, Va.–based provider of customer service solutions, agrees that beefing up self-service is a low-cost way to really boost service gains for any organization. Utilizing KBs and a help-ticketing system that can route more complex inquiries automatically to the right agent can help save time and money, while still providing the high-quality service experience consumers demand. "We say leverage technology through the Web; that way you don't have to make additional hires and can deliver responses to your customers immediately," he says. "You'll satisfy and—most importantly—keep the customer."
This is exemplified in the case of IGN's Henderson. Citing a tremendous boost in the amount of end-user support needed—77 percent—for its e-commerce business in 2007, her outfit only had to increase staffing by 30 percent. Why? IGN was able to automate processes such as help tickets, surveys, forums, and email-to-ticket conversion. "That was huge for us," she explains, adding that if her company didn't utilize Parature's automation offerings she would have had to boost staffing by at least 75 percent. "I now know my company isn't looking at my department with concerns about what we may need."
It's undeniable that many contact centers will be forced to learn some hard lessons and dig deep into the basics to find efficient ways to bolster production during this difficult economic time. One question that remains—and likely cannot be answered until the recessionary period ends—is whether or not companies will keep the same mindset or revert to throwing money at technology and not properly optimizing the offerings.
Looking ahead, Alban sees a rubberband effect for some companies. "When this situation does get better, some organizations will go back to their previous strategies but others will learn from the experience," he says. "One lesson that persisted after the last [downturn] was that companies demand more justification from vendors on what they can expect in terms of ROI. In the 1990s, organizations bought millions of dollars worth of CRM without requiring ROI and got burned. Many realized this, and have learned their lesson for the most part."
Ryan says that, in good or bad economic times, the way to determine quality, cost-effective contact center strategies will lie largely with the particular company in question. "The trick is to understand what a company needs to do with its CRM technology, what the end user will need, and then figure how to proceed from the cost-effectiveness angle," he says.
No matter what your industry vertical or current situation, McGeary believes it is best to put a positive spin on things. "Companies are in different states of disarray, but there is an opportunity here for customer service executives to buckle down on refining how they're interacting with consumers," he stresses. "Instead of looking at how [you] can cut as many resources as possible, keep in mind that you don't need to spend more money to fix many of the broken processes in the contact center that can bring great benefits."
SIDEBAR: Hosting a SaaS-y Center
A recent study from Gartner, the Stamford, Conn.–based information technology research and advisory company, finds an increasing number of contact centers are moving toward software-as-a-service (SaaS) deployments in favor of traditional on-premises implementations.
According to the study, "SaaS CRM Reduces Costs and Use of Consultants," the penetration of customer service applications delivered via SaaS to the contact center will grow by more than 20 percent per year through 2012, by which time they'll account for 30 percent of all new investments in this space.
Touting lower cost and coming from a different line on the balance ledger—on-premises deployments typically come from capital budgets, which are more scrutinized—the SaaS and larger hosted or on-demand market could find itself sitting pretty during a time in which companies are looking to spend less but still innovate. "As capital budgets are tight and enterprises want to remain focused on providing good services, that's where hosted solutions can fill in and bridge at first blush an uncloseable gap," says Tom Smith, senior manager of contact center solutions product marketing for Basking Ridge, N.J.–based enterprise solutions provider Verizon Business. "It's a good way to take what would be a high-cost, high-value solution and turn it into a low upfront cost, high-value [investment]."
Citing the economic recession and also the migration from Time-Division Multiplexing to Internet Protocol–based contact centers, hosted solutions are available to help outfits interested in boosting first-call resolution, self-service, and also speech capabilities. "Retaining customers is critical, and hosted solutions do offer a great way for enterprises to continue on with customer-facing projects in the face of constrained budgets," Smith says.
While hosted offerings may have raised many questions in terms of functionality and scalability, Smith believes hard economic times and some early-adopter proof points will help usher along acceptance throughout the contact center. "Many customers over the past few years have gone hosted and been happy," he recalls. "Once [prospective clients] get over that hump, I think that hosting will play a
SIDEBAR: Outsourcing: A Historical Cost-Saving Mainstay
Saving money in customer service has traditionally meant outsourcing. Peter Ryan, lead analyst for contact centers and business process outsourcing at New York–based research firm Datamonitor, believes that this can still be the case, although the manner in which you proceed largely depends on your organizational needs.
Though hesitant to classify outsourcing by its relative cost and value, Ryan says that a viable case can still be made for its budgetary benefits. “Outsourcing [delivers] all aspects,” he maintains. “For example, offshoring has been renowned for [its] tremendous value in terms of low-cost agents, wages, and benefit packages, while at the same time offering high quality.”
While there’s still offshoring to countries such as China, India, and the Philippines, Ryan explains that companies looking to outsource should seriously consider Latin America, particularly Argentina, Chile, Colombia, and the Caribbean region. Businesses in the United States, he says, can take advantage of these lower-cost locales while at the same time satisfying the bilingual requirements of the growing Hispanic population.
Don’t want to go nearshore or offshore? Consider the growing home-agent force, more popularly known as work-at-home agents, who can work flexible hours and usher significant cost savings while maintaining high service levels. (For more on this burgeoning market, check out “There's No Place Like Home,” October 2008.)
“[They’re] a great solution for organizations that don’t have as much budget as they may have hoped for or want to go offshore,” Ryan says. “That’s certainly [another] arrow in the quiver.”
SIDEBAR: Fight Smarter—and Harder—for Budget Spend
The typical recession-era challenge involves innovation in the face of shrinking budgets. There may come a time, however, when a C-level executive will call upon a line-of-business manager to inquire about current return on investment for strategies already unfolding.
For customer service projects, nothing's more important than stressing business drivers when proving your worth in the boardroom, according to Howard Lax, senior vice president and senior consultant at Rochester, N.Y.–based advisory and research firm Harris Interactive Loyalty.
Hint: it's not satisfaction, delight, or delivering on the customer experience. "It's about driving customer loyalty and value in terms of real cash," Lax said during his talk at the recent North American Conference on Customer Management (NACCM) in Anaheim, Calif. "Loyalty is talking about behaviors, not attitudes."
This means customers may claim a commitment and an intention not only to buy more, but also to recommend you to others. Still, that's hardly etched in stone.
"Intentions don't pay the rent," Lax said. Instead, use metrics that reflect a change resulting from the new strategy, such as share of wallet, number of new accounts, account share, or estimated lifetime spend. "[It's] major work, integrating customer data to quantify this value, but it's absolutely necessary," he stressed.
Lax also stressed that customer satisfaction remains important, but that it's just one piece of the pie.
Another NACCM presenter, Michel Cubric, director of post-funding and call center operations for First Line Mortgages, a division of Canadian Imperial Bank of Commerce, clearly stated that there are three things that matter in banking—or any for-profit organization:
- employee satisfaction;
- customer satisfaction; and
- shareholder return.
What ties them together? Cash. "They all bring you the money, and everyone in your company should be busy fulfilling one of these three areas," Cubric said. "If you're in a for-profit business, don't be afraid to say you're focused on the dollar."
SIDEBAR: When the Bottom Line is the Top Priority
Here are some low-cost or no-cost CRM strategies for when money is tight—plus counterintuitive approaches to spending your way out of the recession.
- Sit down with agents and explain the rationale behind certain company decisions.
- Optimize current technology.
- Develop a process/culture around utilizing equipment to its fullest potential.
- Trim the lowest 20 percent of your performers/agents.
- Empower agents to author knowledge articles in real-time to keep answers current.
- Pursue proactive messaging outreach that’s automated (or hosted, if cost is a factor).
- Deploy speech self-service applications (which, though often costly, provide a high value).
- Utilize workforce management tools to increase agent efficiency.
- Intensify training initiatives for agents (also potentially costly, depending on the technology).
- Move CSRs out of the contact center, either through offshore outsourcing or to a home-agent model.
Assistant Editor Christopher Musico can be reached at cmusico@destinationCRM.com.
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.
Here's a quick link to more of this month's special coverage — The Recession Issue.