Wednesday, May 19, 2010

The Only Problem You Need to Solve to be a World Class Call Center

Here is the good news: if a call center wants to be recognized as one of the best call centers in the entire world, there is really only one problem it needs to solve: between-agent variation. That’s right. Fix that problem and you will have established a new standard of excellence. Of course there are other operational challenges that need to be solved, but between-agent variation is such a big problem with such huge costs associated with it, problems two through five or ten on the list are almost irrelevant.

Now for the bad news: 1) between-agent variation is not new…it has been an nagging issue for the entire four decade history of the industry, 2) billions have been spent on the problem, yet it really is not improving, and 3) though the problem can be drastically reduced with three simple steps, few centers have the ability and willingness to do what it takes to fix it.

Between agent variation is not a geeky, statistical, issue. It is a real visceral problem we all can relate to. Because of between-agent variation, when each and every one of you calls into a call center today, you have no idea what kind of experience you are going to have. Is my agent going to be empathetic, or am I going to get one of the downright surly ones? Am I going to get an experienced agent who knows how to solve the problem, or a brand new who is not fully prepared and who has to put me on hold a lot to get help? Am I going to get to speak to an agent I can understand or am I going to get someone with a barely intelligible accent? Is my agent going to be focused on listening to my problems or is my agent going to be texting their friends during the call? Is the agent I get going to be conscientious and do all the required steps and read me the required consumer protection information or is my agent going to be bored and burned out and skip steps to get off the call?

If you don’t think this is costing your center real money that your CFO can eat, think again. The costs associated with agent variation are not easy to track but know this: they are real and they are scary big.

Some of the costs are actually easy to track. If I have wide variation in agent performance, I have more costs in the form management resources and off phone coaching time to manage the under performers. There is also the added staff from a workforce planning standpoint to handle the lack of predictability of performance so that the center remains within service levels (so many calls answered within a targeted amount of time). There are also the added costs in the form of recruitment, hiring and training replacement workers.

But the true cost of poor quality (COPQ) is like an iceberg: some of the costs you can see, but the biggest costs are below the waterline. For example, there are huge, somewhat hidden costs associated with not adhering to the defined call handling process. Let’s say an agent forgets or decides to skip over parts of the correct procedure on checking if a product is still under warranty and then incorrectly authorizes a product return. A large technology client of ours had thousands of outsourced agents. It would be an understatement to say that the adherence rate across their outsourcers to the Return Materials Authorization call handling procedure was below the Six Sigma level…it wasn’t even close. The result was a huge hidden factory of costs associated with processing incorrect product returns. My guess is that a third of this company’s costs associated with handling RMAs for this product was due to agents not following the correct procedure during the calls. The costs here are only somewhat hidden here because they fall outside the call center’s budget.

Another category of invisible costs is lost opportunity costs. I taught an Operations class in the Stanford MBA program. There were about 120 MBAs in the class and we had them go buy a prepaid cell phone and call the provider to activate it. I didn’t know what the documented call handling procedure was for this company, but since one of our clients was a Telco, I was fairly certain that the company wanted the agents to tell the new clients how to check minutes, how to add minutes and that they also wanted the agents to cross-sell the new customers additional services. Yet when these MBA students called in to activate their new pre-paid cell phones, the agents did those three things less than 30% of the time. What did this lack of process adherence and between agent variation cost this company in the form of lost revenue?

A final element of these invisible costs lies in the effects of variation on the customer. Everyone reading iSixSigma articles knows the mantra, “Customers don’t experience your average. They experience your variation.” And when that experience is bad, you create detractors who can fail to renew or buy again and who speak out about their experience to friends or on social networking sites and even post calls on Measuring these kinds of costs has always been difficult, but that does not make them less real. The Stanford MBA students were asked to rate their impression of the brand after this one and only phone interaction. Fifty percent walked away with a negative brand impression and would be considered detractors using Fred Reichheld’s Net-Promoter measurement.

Believe it or not, despite the size and seeming intractability of the between agent variation problem, it is, in fact, very fixable. Three simple steps that we have known about forever, done in concert, would drive a stake in the heart of this problem. Sadly, few centers today do any of them let alone all three of them.

First, you have to define the correct process for each and every call. Every call type has to have the exact process for resolving it explicitly defined and kept up-to-date. Specify what the agents have to say to customers and do in their systems to correctly handle every call. If the correct procedure is not defined and understood, how can the agents be expected to execute it correctly?

And yet routinely, this step is skipped. When we go in to begin working with our clients and to documents call handling procedures, it is common for the subject matter experts to not know the correct procedure and, even worse, to disagree on the correct process.

Of course once the correct procedures are defined, they have to be thoroughly taught to all the agents and the quality monitoring team has to be able to rate every call as to whether the call was handled correctly. Too often, the QM team just rates whether the agent was polite, listened, used the customer’s name, etc, as opposed to finishing an evaluation with a clear rating of correctness of what the agents said to the customers and did in their systems against the defined process.

This step is sine qua non, but it is not enough.

Second, if you do step one, you will have less between-agent variation, but you will still have a lot. When you are ready to begin attacking that variation, W. Ed Deming’s Out of the Crisis is the lighthouse to navigate by. He recommended the use of p-charts and other statistical tools to separate out the agent variation that mattered from the performance of “the system.” Those agents that are statistically worse than their peers…not the arbitrary bottom 25-30% that centers use today to judge who is performing acceptably and who isn’t...but the ones that are statistically worse need to be coached. And it’s up or out with that group.

The agents that are statistically indistinguishable from each other should not be coached or uniquely rewarded or punished. The average and distribution of those agents represents the performance of “the system.” The system consists of the hiring process, the training process, the rewards process, the measurement and feedback process, the workforce management process, the policies, the operating mechanisms, the job aids, the systems, etc. And to improve the performance of this statistically indistinguishable group of agents, the performance of the system needs to be improved, not the performance of each agent, one-at-a-time.

The best place to start improving the performance of the system is to look at the performance of the agents who are statistically better. What are they doing? What process are they following? What best practices have they identified that we can clone or better yet automate, so that all the agents are following that process? This is a key part of Deming’s Scientific Management Approach and practicing it will have a huge impact on reducing agent variation.

The third and final step is to add automation. The call center industry, unfortunately, has a rather fixed, either/or mindset about automation. A call is either automated…that is handled by an IVR (press 1 for account balances, press 2 for billing questions)…or it’s handled by a live agent.

We need to start thinking about automation as a job aid for the agents. Our ProtoCallsm software is an example. It provides automation for the live agent to leverage where it makes sense. The agent is live on the call listening to the customer and using pre-built paths and pre-recorded voice files as long as it is appropriate. Sometimes the call goes beginning to end without the agent ever having to break in with their live voice. Most customers don’t notice or don’t seem to care because their issue that led them to call in is being resolved.

Usually, however, the call goes off the beaten path a bit or the customer wants more explanation or wants to make small talk. When this happens, the agent simply comes in with his or her live voice and does what they need to do to help the customer. And, before you ask, the customer does not care about hearing two voices. We have had Philippine agents using pre-recorded US voices and the customers never comment. We have handled millions of calls using this system and get few comments, let alone complaints.

Moreover, the agents absolutely love this automation. They know it makes them more accurate and consistent and it also allows them to not have to worry about remembering everything they are supposed to do, which allows them to really listen to the customer. It also means they don’t have to talk as much which greatly reduces their stress and fatigue levels.

Call Centers today face a number of problems that contribute to agent variation. There is a lot of agent turnover. There is a lot of agent movement inside the center. There is a lot to know and a lot that changes on a daily basis. How can the agents possibly be expected to stay on top of everything? But used as a job aid, the software and pre-recorded messages can easily be updated to counteract the effects of turnover and constant changes that increase the probability of errors.

The call center industry has used automation very effectively to eliminate phone calls. There is no doubt about that. But the untapped opportunity is to leverage automation to increases process adherence and reduces unneeded variation. Agent deployed automation is the best of both worlds…the flexibility and sensitivity of a human combined with the accuracy and consistency of a computer.

People who are versed in Six Sigma and read a lot of articles on this site must be scratching their heads at this point. They are saying to themselves, “Let’s see…excessive variation leads to huge hidden costs. You can reduce the variation if you define the correct process, use statistics to separate real agent variation from system variation, and leverage automation…where is the story here?”

From that perspective, there isn’t one. But the back story may lie in the mental models that need to change if we are going to cut the Gordian Knot on agent quality and variation.

First, GMs and CFOs need to be all over call center leaders to measure the true COPQ. Just measuring the costs you can see would be a good start but it would be a mistake to stop there. Here are some questions for the GMs to ask: How much extra staff are we carrying? Where are the rework factories? How much revenue are we leaving on the table? What could the negative word of mouth be costing us? Once GMs and CFOs realize how much this agent variation is costing them, they are going to be as focused as fighter pilots on fixing the problem.

Second, leaders need to start reflecting on the progress that has been made in reducing variation and improving quality in manufacturing operations, further think about the approaches used in manufacturing and then start holding their call centers to the same high quality standards that the leaders of manufacturing are held to. Customers are calling you for a reason. They might be looking for some understanding, but they probably aren’t looking for a friend. They want their issue resolved. Getting every agent to resolve the customers issue the right way every time…not 30% of the time, not even 85% of the time, every time…is the world we have to start living in. Manufacturing lives in that world and call center leaders can learn from them.

For example, you lost your credit card and I lost my credit card and we each call in. Those calls will be somewhat different…a little more explanation on one, a little more small talk on the other…but the bulk of those two calls will be exactly the same. There is a right way and a wrong way to handle this call. You will not get agents to do and say the right thing at the right time every time by trying to coach them one at a time. We have spent billions doing it this way and the problem is still rampant. There is simply too much to learn and it changes too often and there is too much agent turnover to ever be successful with training and coaching as the go-to quality approach.

Our manufacturing colleagues have a storied track-record of improving quality and reducing variation. They didn’t develop this reputation by trying to fix each worker one-at-a-time. Manufacturers define the correct process. They systematically improve the process with automation where it makes sense. And they systematically improve the workers with a scientific management approach.

Call Center leaders need to adopt this manufacturing mindset. It is the only way out of the agent variation wilderness we have been wandering in for the last forty years.