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Source:
InformationWeek

"Opportunity On The Line:
Sometimes, keeping a customer on the phone longer can mean more sales and higher profits"

February 24, 2003

by David M. Ewalt

A lot has changed since some smart business put employees on a phone bank and opened up the first call center. In those days, fast service and short calls were the goal, and call-center agents were measured by the number of calls they handled per hour. Now savvy businesses understand that longer calls can pay big dividends.

PCs, digital telephony, and the Internet have given call-center agents new tools. But just as important, many businesses have changed their attitudes about what they want their call centers to accomplish.

At TV-shopping channel Home Shopping Network Inc., the number of calls handled per hour is no longer the key measurement. "We've moved from a purely metrics-centered world to much more of an impact-based, customer loyalty-centered world," says Gregg Stallwood, VP of customer care, operations, and technology.

The success of an agent is no longer measured by just call time. Performance is also measured in terms of cross-selling, where the agent pushes products related to what the customer is buying, and up-selling, where the agent successfully sells a higher-priced item than the customer originally inquired about. The technology can track how agents are doing and help them pitch the right products.

"Three years ago, 20% of all agents were offering up-sells," Stallwood says. "Now 99% of all representatives are doing it." The company tracks metrics monthly and quarterly and offers incentives for agents who reach a certain level. At the moment, 78% of all representatives receive bonuses based on the number of times they move customers to higher-priced items.

That's a big change. Until a few years ago, the metrics used to measure the success of call-center agents hadn't changed much. But analytic technologies available today have opened up new avenues of productivity, efficiency, and profitability.

"We're seeing a revolution in call centers," says Channing Rollo, business-intelligence manager for business-process outsourcer ClientLogic Corp. "A decade ago, call centers could measure their efficiency with a stopwatch and a chalk board. Now it's about these incredible systems that deliver profound customer value and generate revenues."

Worldwide, businesses run about 70,000 call centers, employing 3.5 million agents, says Art Schoeller, a Yankee Group senior analyst. Many of these businesses are adopting call-center metrics that work, says Bud Michael, executive VP of products and marketing for software vendor Kana Inc., which sells service and analytics tools for call centers. "You've got to look at this thing from a customer's perspective and not from an agent's perspective."

Businesses are doing that with the help of programs from companies such as Witness Systems Inc. Call centers in the past have been measured by things the agent has no control over, such as the average call duration, says Oscar Alban, a call-center industry veteran who is now Witness' principal market consultant. That leads to less customer service, because agents are rushing to get callers off the phone. "A lot of [call-center operators] are moving away from that, thankfully, more towards customer-service and -satisfaction metrics," he says.

Witness' software helps call centers optimize performance, Alban says. "We can collect and aggregate from a wide variety of call-center systems vast amounts of data that you can use to analyze performance."

Consider the call-duration or handle-time metric. In the past, agents were told it was key to get a caller off the line and move to the next call quickly, keeping call-center costs down by reducing the total number of agents needed.

One problem with this metric is that keeping calls quick might not always be in the best interest of the company. If an agent rushes to get a customer off the phone, he could alienate and anger customers. "Metrics can be a dangerous thing," Alban says. "Everyone is good at attaining a metric goal that's given to them. If we drove a bad behavior to reach that number, are the metrics that we're measuring correct?"

Focusing on call duration may not only hurt existing business, it might also keep a business from bringing in new revenue. With new analytic systems in place, companies can examine their records for any correlation between average product sale size and average call duration. "I may discover that longer handle time leads to larger sales," Alban says, "so I decide that an extra 30 seconds on the phone is worth it."

Businesses use that knowledge to help their call centers evolve from an expense to a process that adds to the bottom line. "Call centers are now becoming a strategic value," Alban says. "We'd never met with CEOs before, but now we are. They're understanding that this is critical to their business."

Other businesses are also looking at what they measure in new ways. ClientLogic operates 33 call centers around the world, and it handled 96 million customer-care calls in 2002 for its clients.

"Each client is unique in terms of what metrics are of value to them," Rollo says. "We measure things like loyalty, percentage of revenue from existing customers, and support-contract renewals. We like to look at the cost per case -- you may get a customer off the phone, but if they go to your Web site or send an E-mail, that still costs you money."

Convergys Corp., another call-center operator, handles about 25,000 agents for nearly 400 clients. "We're encouraging clients to look at things like cost per customer unit or cost per subscriber," says Renee Kuwahara, senior VP of operations for Convergys' customer-management group. "One of the metrics that continues to grow in popularity is what I call first-call resolution," where customer concerns are taken care of completely on the first call.

Home Shopping Network, which has three call centers and more than 800 agents that process an average of 50,000 calls a day, has changed its views on what's important. In the past, "we looked at our business as, 'Let's take the order, finish the call, and get to the next one,'" Stallwood says. But there was a problem with that model. "We weren't identifying other sales opportunities," he says. So the company brought in performance consulting firm Seurat Co. to develop tools and smarter ways of thinking about its call center. Seurat created a graphical user interface for agents to use and used analytics tools.

Home Shopping Network noticed that certain kinds of products were often associated with successful cross- or up-sales, and that some attempts to squeeze more cash out of customers were consistently unsuccessful. "We discovered that this type of customer or this type of product lends itself to this kind of up-sell," Stallwood says. "If we're selling a bracelet, here's a great opportunity to up-sell them the matching earrings. In the past, we might have tried to sell them snowshoes."

The TV-shopping channel has seen huge benefits as a result of its efforts, increasing the amount of annual revenue from cross- and up-sales from $9 million three years ago to $71 million today.

The next step for Home Shopping Network is to make the whole system work in real time. Currently, the analytics are run and metrics are set after the fact, in regular analyses. But Stallwood would like to see those metrics updated constantly -- an agent could see what his up-sell rate is for the day, for example -- and the system could also identify short-term opportunities for increasing sales.

"The whole idea is that we're not just a cost center. We really are the group of people who face the customers every day, can increase customer loyalty, and can increase revenue," Stallwood says. "And what's gotten us [there] is intelligence."


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