Customer Service Helper

Metrics to Optimize Contact Center Economics

The traditional role of the contact center is to improve the economics of service functions within the corporation by hiring staff with appropriate service competencies and compensation levels; training representatives in a standardized, highly productive work flow; increasing productive loads through uniform work queuing, providing an efficient automated environment, measuring the various inputs and outcomes to ensure work is completed effectively; maintaining a communication tone and resolution quality that builds customer loyalty; and effectively managing a diverse range of resources through skilled, experienced leaders who effectively communicate a shared vision that incorporates relevant business priorities.Layered on to this traditional role, in the past ten years, is a telesales function which provides offers to inbound customers at the appropriate time during the service call–based on marketing triggers that are actuated by sophisticated models or intuitive judgment supported by simple scripts.

Within this relatively complex bundle of activities there is also the continued drive to reduce the overall expense of the contact center. Often times, expense reduction becomes the raison d’etre for center management and other goals associated with the customer, the work environment, and the quality of service suffer.

To counter an excessive focus on pure expense reduction it is critical for contact center leaders to shift performance measurement of the center from unit costs to operating expense ratios that are tied to key business drivers.Traditional unit cost measures are important indicators, but the strategic assessment of the contact center by executive management should be done with metrics that account for the end-to-end impacts of cost differences across the entirety of the business system.Unit costs, and other narrow measures, can be misleading or disastrous if used out of context.

Process measures take into account the impact of any change on the value delivered to customers and the subsequent revenue impacts that may follow these changes.Simple linear relationships between value and revenue, particularly over the short term, are difficult to find, but a failure to look at customer impacts from pure cost reduction initiatives doesn’t mean that the business won’t suffer terribly in the long term.

A classic example of overly narrow measurements can be seen with cross-sell triggers on inbound service calls.Initial success with cross-sell can lead to a quick push for ever higher quotas and ever higher bonuses for successful sales.The initial philosophy of cross-sell-to increase customer loyalty by educating people about additional value potential in an expanded relationship-becomes lost.Cross-sell done well, increases satisfaction with the service interaction and increases customer loyalty.Done poorly, i.e., with too many out-of-context offers or a pushy tone, destroys both satisfaction and loyalty.Cross-sell revenue will continue to rise for quite some time, until customers find alternative suppliers and attrite en masse.

Similarly an excessive focus on cost per account, without regard for profitability per account, can miss opportunities for incremental investments that drive revenue up faster than servicing costs.For example, spending incremental time with a new customer on account setup, can improve loyalty and spend significantly over the life of the relationship and pay appropriate dividends.

Overall improvements in business margins should be a key strategic objective of contact center managers, but this balanced approach all too often is lost because the proper measurements, at a high enough level to represent important business results, are sacrificed to the short term for expense reductions.

Executive management should be more interested in operating expense ratios improvements resulting from revenue enhancements rather than margin increases driven by expense reductions.After all analysts reward companies with a higher P/E ratio on revenue trajectories, incremental margin improvements only drive growth if they’re related to process improvements that maintain customer loyalty.

All too often contact center leaders need to invest a significant amount of time educating the business about the need for strategic measurements that truly reflect the center’s impact on the entire business system.This is incredibly important time to invest, the alternative is a continued rush to the bottom and a continued inability to delivery customer loyalty which maximizes long-term revenue.

Copyright 2009, Lotus Pond Media

Steven Grant is a Managing Partner at the Customer Research Center. The Customer Research Center specializes in helping companies transform their processes and exceed their revenue targets. Through training, work process optimization and automation the Customer Research Center can dramatically improve the client experience and grow revenue. Visit the Customer Research Center http://www.customerresearchcenter.com or email Mr. Grant at scgrant@customerresearchcenter.com.