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Call Center Articles

The Incredible Shrinking Call Center

Author Peter Lyle DeHaan

In retail, the term “shrinkage” euphemistically refers to stock which “disappears” before it can be sold. It is product that the retailer bought, but can’t sell because it is has been stolen or lost. In the call center, the inventory is labor and shrinkage is agents who are being paid but not working. This occurs when agents are not at their stations, not logged in, not “in rotation,” or employ some trick to block calls. Three metrics help track, explain, and understand agent shrinkage:

Adherence measures the time agents are scheduled compared to the time they actually work (logged in time divided by scheduled time). Since schedules are developed to match traffic projections, when the schedule is not fully followed, the result is understaffing.  Ideally,staff should adhere 100% to their schedules; in reality, this is not the case. Most call center managers are shocked to discover their adherence rates. It can represent a huge unnecessary cost,as well as contribute to lower service levels.

Several factors account for low adherence levels. The first is scheduled breaks, lunches, and training. This is the only acceptable contributor to adherence discrepancy. Depending on the length of breaks, the best resulting adherence will be around 90%. The second consideration is absences, late arrivals, and early departures. The third area is unscheduled breaks or distractions that cause agents to leave their positions. It is not uncommon for call centers to have adherence rates around 75%, although well-run operations will be in the low 90s.

Availability measures how much of that time agents are ready, or “available,” to answer calls. It is calculated by dividing time available (also called “on time,” “in rotation,” or “ready”) by logged in time. Agent availability is strictly within the control of agents, determined by their willingness to be ready to answer calls. Although the ideal goa lof 100% availability is achievable, 98% to 99% is more realistic.

Occupancy is the percentage of time agents spend talking to callers compared to the time they are turned on or available (talk-time plus wrap-up time divided by agent “on” time). One hundred percent occupancy means agents are talking to callers the entire time they are logged in. To achieve this, calls must continuously be in queue. The resulting efficiency is great, but caller wait time can be lengthy. Therefore, 100% occupancy does not produce quality service, plus leads to agent burnout and fatigue.

Interestingly, ideal occupancy rates vary greatly with the size of the call center. Smaller centers can only achieve a low occupancy rate (perhaps around 25%) while maintaining an acceptable service level. Conversely, large call centers can realize a much higher occupancy rate (90%and higher) and reach that same service level.

Call centers with poor adherence, availability, and occupancy rates can literally spend twice as much in labor to produce the same service level as a comparably sized well-run call center. Calculate your center’s adherence, availability, and occupancy numbers– and then take steps to improve them. Don’t let agent shrinkage lead to profitability shrinkage!

Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine, covering the call center teleservices industry.

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Call Center Articles

Strategic Call Distribution

By Peter Lyle DeHaan, PhD

Author Peter Lyle DeHaan

I will admit it – I have a propensity towards idealism. I think that life should be fair and that everyone, regardless of position or past, ought to be granted equality of opportunity. This perspective causes me to advocate impartiality when distributing calls in the call center, with each call handled in the order in which it was received, without distinction of origin or pre-determined importance. However, it seems that few teleservices companies concur with this conclusion; in fact, pragmatism and reality dictate a different course of action.

The first deviation is often to give primacy to sales calls, client check-in lines, or the main company number. After all, the speed and efficiency at which these calls are handled will form the callers’ perception of the level of service provided. It is this perception that attracts new business and retain existing clients, thereby influencing the bottom line.

The second departure from call equality is also self-imposed, whereby certain account groups are deemed more important than others. Although the determining factors vary – client profession, caller urgency, dollar value of the call, or type of service provided – the results are a definite segregation of callers into a tiered call-distribution scheme. Though this is a natural development, there is little merit for doing so and it should be abandoned.

A third divergence is more insidious. This results from a natural reaction to the “squeaky wheel” syndrome. It is when the chronic complainers and those who are excessively demanding are given a higher call priority in order to appease their sense of self-worth or to mitigate their criticisms about the service level. This is the most ominous departure from ideal call-distribution – and most self-defeating. Examine the clients in this category. We have already defined them to be overly critical and implied them to be frequent users – and abusers – of customer service resources. Now dig a bit further. How do these clients treat your staff? Are they pleasant and a joy to talk to or do they challenge, threaten, and denigrate your agents with each interaction and at every opportunity? Are these the clients who take the joy out of your employee’s work and have the ability to reduce staff to tears? I suspect that this might be the case. If this is not enough, now look at their profitability level. If they badger both the customer service staff and the agent, they are likely treating accounting the same way, extracting credits, discounts, and other monetary concessions under the pretext of “poor service.” The conclusion is inescapable: these clients are given the highest level of service, treat your staff the worst, and are unprofitable! This is masochistic behavior; stop the madness!

I propose – in partial jest but with thought-provoking seriousness – that a different model be considered. If one must deviate from the idealism of universal call-distribution, do so with thoughtful analysis and self-serving diligence. First, implement call-distribution based on profitability. Perform a profitability analysis, dividing clients into five groups relative to your average revenue per minute. The top group is those clients whose revenue per minute is twice the average. This makes sense; you make a nice profit with every call you answer, so respond quickly and give it your best. Keep this group happy and retain them as clients. The second group will be those clients whose revenue per minute is 1.25 to two times your average. This, too, is an important group, which deserves prompt attention and above average service. The middle group will be those at the average revenue per minute and up to 1.25 times. This is the average group and they deserve – and pay for – average service. Although these three groups should include the majority of your client base, they will likely not comprise the majority of your traffic. Divide the remaining clients into two groups according to profitability. The exact cut-off point will be a result of how diligent you have been in attempting to make every client profitable. For the sake of example, assume that the fourth group will comprise those who are between seventy-five percent of the average and the average. Then the lowest call priority will be given to those with revenues per minute of under seventy-five percent of the average. Why not give these accounts the lowest priority? After all, it could be argued – on a micro level – that you lose money every time you answer their line! (On a macro level, it can conversely be argued that these accounts necessarily contribute to the overhead and the economies-of-scale of your organization.)

What I have advocated is likely a reversal of your current call-distribution configuration, thinking logically and tactically instead of being reactionary. Imagine if you will, handling yet another customer service call from a frequent complainer. “You took too long to answer my line,” the client asserts. “You are on our ‘economy’ rate plan,” you respond politely, “so your call is given a lower priority. You are getting exactly what you are paying for…now for an extra twenty-five cents a minute…”

If that sounds like fun, as well as being a good business strategy, take the concept to the next level. In the preceding discourse, I proposed five levels of service. Now expand that to eleven levels by inserting a grade between each of the original ones and by adding one at the very top and one beneath the lowest. The clients are still in the original five levels, but there is now a graduated step in between for fine-tuning. First, survey your staff. Which clients do they like and which cause undo consternation? For the nice clients – those who are kind and pleasant, who drop off a gift at Christmas, who treat your staff with dignity and respect – move them up one level in the call-distribution hierarchy. After all, these clients make your staff happy and a happy staff is an effective staff. Conversely, those clients cited for their undesirable characteristics – the ones your staff are afraid to talk to – move them down a notch. The clients will still be essentially ranked by profitability, but fine-tuned based on staff interactions.

Next, make a return visit to accounting. Look at payment history. Some clients will consistently remit payment soon after getting your invoice. Many will pay by the due date. Some will habitually stretch your terms out to 45 or 60 days and a small minority require an ongoing collection effort. Again, modify your call handling priorities based on payment history. Those who pay immediately are moved up one level; those who pay late, move down a notch. But those who present a constant challenge to collect, move down two steps. After all, it is likely that eventually they will leave you with an uncollectable debt, so why not give others a higher priority?

If this discussion has you excited – wonderful! If your mind is churning with revolutionary ideas to change client call handling priorities – great! However, do not attempt to implement these radical changes all at once, or even too quickly. The shock to your client base would be more than they – or your business – can tolerate. Rather, begin to think strategically about call-distribution, making small, incremental steps to prioritizing calls in the best interest of your organization; the change will be extraordinary.

[From Connection Magazine – Sept/Oct 2002]

Peter Lyle DeHaan, PhD, is the publisher and editor-in-chief of Connections Magazine, covering the call center teleservices industry.