Beyond Reasonable Doubt: Presenting the Call Center in the Best Light for Better Budget Opportunities
1 Jul, 2007
By: Dr. Jon AntonYou know that you’re constantly being told that best-of-breed solutions can make the difference between a contact center being a cost to a company’s bottom line versus a profit enhancer that adds to earnings per share. But how can it be proved? How can you validate that products and services actually result in high returns on investment (ROI) and improved bottom-line performance?
In a word, benchmarking, a methodology that’s becoming increasingly recognized as an essential function for a properly managed CRM center.
Peer benchmarking is a structured, analytical method of comparing the performance of two or more customer service centers to determine best-practice goals and to ensure competitive customer relationship management functionality leading to market dominance.
The insights, efficiencies and aids to decision making that are offered through benchmarking are so compelling that managers cannot do without it and still consider themselves in line with professional standards. It’s the best way to determine if the money you are spending on CRM is returning your investment and providing the customer service functions you want.
Putting Research into Practice
A rigorous, patented research process using benchmarking to determine the ROI of contact center performance improvement initiatives has proven very effective to achieve this goal.
A great example is Air Jamaica. One year after it implemented a new sales and service strategy into its call center, the company had generated $2,300,000 in additional earnings.
That’s impressive – but equally so is that it has the means to prove it.
In Air Jamaica’s case, the airline had selected a customer contact suite to manage customer interactions in its reservations contact center and the airline wanted to measure and quantify the financial impact it was realizing from the new technology strategy.
The first task was to determine which key performance indicators (KPIs) for Air Jamaica Vacations’ contact center were impacted by this new strategy, then to quantify the change in these metrics following implementation of the strategy and, last, to compute the economic value of these changes. The premise of the research was to be quantitative, i.e., objective rather than qualitative.
The Impact of Air Jamaica Vacations’ Destination Specialist Strategy
The results of the research show that all of Air Jamaica Vacations’ key constituencies are being better served – including travel agents, travelers and resort partners. Also:
• The number of bookings per 100 agent-handled calls increased 61 percent.
• The total number of bookings generated increased 35 percent.
• The gross margin per booking increased 18 percent.
• Total gross margin generated increased 44 percent.
• Agent turnover decreased 44 percent.
• On a one-time, initial investment of $750,000, Air Jamaica Vacations is generating $2,300,000 per year in additional earnings.
Increased gross margin $ 3,100,000
Less increase in HR costs $ (800,000)
Total annual economic value added $ 2,300,000
Estimated investment $ 750,000
First year ROI 206%
Project payback in months 3.9
Clearly, by leveraging the functionality provided by the customer contact suite, Air Jamaica Vacations has enjoyed greatly improved sales and service. The company repaid its investment in a matter of months, but for years to come, it will realize the increased economic value. For Air Jamaica, being able to prove payback in less than four months, and a 200+ percent return in the first year clearly demonstrates the power that customer service contact centers can bring to the table.
The Impact of an Outbound Contact Management System on Agent Productivity
Another example of benchmarking to prove impact is Greenpoint Financial Services, which had selected an outbound contact management system to improve the productivity and effectiveness of its agents who handle loan account receivable collections. Again, the aim was to determine which KPIs would be impacted and by how much.
The research identified a number of significant productivity benefits:
• The predictive dialer increased the number of “dials” attempted per agent hour by 257 percent as compared to the previous manual dial process.
• With the outbound contact management system in place, Greenpoint is placing 3.6 times more calls per agent hour than in the previous manual dialing environment.
• Increased “connects” per agent hour by 150 percent (2.5 times more calls per agent per hour) as compared to the previous manual dial process.
• After installing the outbound contact management system, customer contacts and “promises to pay” per agent hour increased by 129 percent, as compared to results of the manual process.
• This means that Greenpoint is reaching 2.3 times more loan holders per agent hour with the contact management system in place.
• After implementing this solution, the average agent time on the system (talk time, wrap time and available time) increased by 9 percent, from 6.6 to 7.2 hours per agent day.
That’s a lot of information to digest, but that’s benchmarking at work.
With contact center executives always being challenged to determine whether or not improvement initiatives really make a quantifiable difference – this is the type of information they need at their fingertips.
The studies went on to show cost reductions and significant ROI implications:
• The new system allowed Greenpoint to reduce its collections staff of full-time equivalents, who were doing collections in the “15 to 29 days” past-due accounts, by 60 percent, from 100 to 40.
• Greenpoint realized an ROI from its consolidation and predictive dialer project of more than 300 percent.
• Greenpoint recovered the costs associated with its consolidation and predictive dialer project, including the deployment of the call management system, in less than 4 months.
Improving Call Center Efficiencies and Effectiveness
Of course, there are plenty of other examples of new solutions that have greatly improved call center efficiencies and effectiveness – and resulted in significant cost savings.
ICON Health and Fitness, Inc., a multinational manufacturer of leading home exercise equipment, selected a hosted solution to help reduce its call center operating costs. ICON was seeking ways to reduce operating costs by implementing more efficient business processes – in this case automating various call-handling activities – with little to no impact on IT expenditures.
Some of ICON’s challenges were because it has a seasonal business. With a premise-based solution, it had to build-out its capacity to cover peak periods, only to carry those costs on the books during slower periods. ICON estimates it handles 5,000 to 8,000 calls per week during low season, spiking to 75,000 to 100,000 calls per week during high season. It also wanted better reporting from an aging ACD system, which had a limited number of voice recorders and agent capacity – compounding its capacity challenges during peak season.
By outsourcing its contact-handling technology it found a small increase in service costs. But this was offset drastically by cost savings in several others areas. For example, it could easily scale capacity up during peak season and back down during low season. As a result, the carrying cost of excess on-premises capacity was significantly reduced. On-hold calls are held in the hosted solution provider’s network, so the business no longer had to pull T1 capacity to handle on-hold calls during peak season.
ICON was able to acquire the services without a huge upfront capital outlay. There was no associated on-site hardware or software equipment, so the company saved thousands in annual maintenance fees. The robust reporting and programming tools provided as part of the services enabled the company to handle its own adds, moves and changes and significantly improve its tracking and reporting visibility from the ACD.
With the more advanced feature set available, the company was able to automate inbound message taking—a process that had been handled by 20 temporary workers working 40-hour weeks during high season. Additionally, ICON was able to automate an order status system for inbound callers seeking information on the shipment of repair parts and a credit update system.
After all the improvements and changes were made, ICON estimated it was saving about $30,000 (net) per month.
Achieving a Position of Strength
Today’s contact centers are deploying very powerful technology and highly sophisticated management practices, allowing imaginative executives to effect sales and service strategies that could not have been implemented even a few years ago. These innovative strategies allow businesses to better meet client needs, increase customer satisfaction, increase market share, increase revenues, reduce transaction costs, improve employee relations and retention and, ultimately, increase profitability and shareholder value.
The challenge, however, is often proving quantitative benefits; fact and figures that put the validity of results beyond reasonable doubt.
Benchmarking offers the best chance to present your operation in the best light, not only for greater appreciation by others in the company, but also to put you in a position of strength when it comes to better budgeting opportunities.
