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Fault versus Value, What are you generating?

Every center anywhere has calls or transaction, whether in private for profit, not for profit or even government centers. In each center the calls or transactions fall into one of two categories: a fault call or a value transaction. This simple distinction is key to achieving a high performing call center in any environment. It is a powerful tool to unlock budgets, increase performance using any measures, especially the right ones for your organization.

Centers are awash in data: Average Speed to Answer; Grade of Service; Call Handle Time; Cost of Service both total and per transaction just to name a few. A few centers are also tracking some form of customer satisfaction using outside firms to gain a perspective from the customer’s point of view of their service. This wealth of data, focus on the details and overall model blinds many to the value of the center to the organization and most importantly HOW that value is realized or wasted.

Every center has an on-hold message that is some form of the “Your call is important to us, please hold for the next available agent” statement. Hold times after these statements belie the sentiment expressed. If the call was really important then the center would provide service that exceeds by a small margin the standard. This standard of course varies but is most commonly a variation of the 80% of calls, answered in 20 seconds with less then a 3% abandon.

Once the onion layers surrounding most centers are pealed back you discover that there are few forecasts of volume, leading to understaffing. Or even more common the center is understaffed or under funded for the call volume. The service level is a goal that management and the center staff strive for and ‘hope’ to achieve. Hope is not a strategy!

Achieving service level is a matter of calculation and formulas. X number of calls, y call length etc. We all know this or some version of these formulas. Less know however and more fuzzy is what is the cost of bad or good service? How much revenue is lost because customers could not get service? How many customers could not place an order, execute a transaction or inquire about a service because of long wait times?

Lets look at a hypothetical example, a center with a 30% abandon rate which = loss of x% of revenue calls as x% of total calls. Consider the center has an average of 60% value calls to 40% fault calls; and the 30% abandon rate.

Total Calls 10,000
Fault 60% 6,000
Value 40% 4,000
Abandon Rate 30%
Call Answered 7,000
Call Abandoned 3,000
Avg. Value Per Call $ 25.00
Abandoned Value Calls 1,200
Lost Revenue $30,000

The actual results are worse than this simple model above shows. Experience tells us that someone calling to get something fixed is far more likely to persist to try and get through than a person calling for the first time to buy. If we use a conservative 2:1 ratio, two tries for a fault fix versus one for a new sale. This means that the poor service level is degrading the sales ratio at higher rate than the model demonstrates. Poor service costs. It increases all calls length while callers vent about the long delay in getting through. It prevents revenue calls from being taken. It gums up the center with issues and problems that are usually not of the centers’ making. Bad service costs much more than good service. It is that simple.

Most frequently the root causes are: alignment of objectives and inability, misunderstanding or lack of will to resolve the cause of all fault calls. One client, a publisher, set the compensation and bonus for its marketing and sales department as a function of the revenue increase per period. The result was more and more campaigns that generated more and more cancel calls into the call center. Aside from the physical handling of the rejected books and magazines all of which had to be returned, the cost to handle the calls and change the transaction records reduced any margin to less than zero. It was only after everyone was shown the results of more campaigns and the revenue loss was the company actually able to change the compensation model. The changed resulted in improved alignment of goals and objectives. Better marketing resulted in more profit and much fewer fault calls to the center. The number of sales calls as a percentage of total calls increased dramatically.

What are the steps you need to take to analyze your center results if you think that might have a problem? First categorize all calls/transactions into four groups: fault or value calls and for each whether it is customer or company generated. Remember most fault calls start with the company. For instance lots of calls because customer did not either read the instructions or did not understand them. While it can be argued that this is just an example of the ‘dumb’ user. It is more likely either poorly designed or manufactured product, poorly written instructions.

No one wants to say to the company officers that the cause of many fault calls is management decisions. This analysis is one way to demonstrate this with supporting facts and data. Every call center is the canary in the corporate mine. When things start to go bad it is the canary that first notices.

More customer interactions take place through the call center than any other communication channel. It is therefore important that the center understands the customers point of view. Fault versus value analysis quickly shows if the company’s policies and practices are generating value or additional and unwanted costs.

Let us know what you think of this article or any suggestions you have for future issues by email at
feedback@thetaylorreachgroup.com.

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