Review of merchants Global Contact Centre Benchmarking report 2006

 

By Niels Kjellerup, Senior Partner of Resource International & Publisher of the Call Centre Managers Forum Website www.callcentres.com.au .

 

This study represents a New milestone for the global Contact Centre Industry.

 

For whatever reason you’re holding this Benchmark study in your hand, consider yourself lucky. This is the only truly global benchmark study of Contact Centres published. Those of us who still remember the first Merchant Benchmark study from 1994 can’t help but be impressed with how Dimension Data has continued the tradition, expanding the Contact Centre benchmarking concept and giving it a global scope.

 

What is benchmarking?

The pioneer of modern benchmarking, Robert C. Camp of Xerox fame, wrote in his 1989 book Benchmarking, “Benchmarking is the search for those best practices that will lead to the superior performance of a company”, and further, “the Japanese term dantotsu, which means striving to be the ‘best of the best’, incorporates the essence of the process they use to establish competitive advantage”.

 

Michael J Spendolini, author of The Benchmarking Book, defines benchmarking as “a continuous, systematic process for evaluating the products, services and work processes of organisations that are recognised as representing best practices for the purpose of organisational improvement”.

 

How to get benefits from this Global Contact Centre Benchmarking Report?

 

Before we get too carried away, it might be a good idea to examine the benefits this study can provide you as a senior Contact Centre Manager.

 

Firstly, I must congratulation you if you took part in this study. You got your hands dirty and probably learnt a lot about how your Contact Centre actually operates. Comparing your results with the report would have also given you comparisons of great value.

 

For those of you new to benchmarking, those who have acquired this report to get an easy comparison with your own Contact Centre (or maybe even as an alibi to prove you’re ‘not too bad’) – you have got some work cut out for yourself. Benchmarking is not a desk exercise.

 

What you think is happening in your Contact Centre is often very different from what is actually going on and seeking out Best Practice isn’t necessarily easy.  My best advice to you is to decide right now to take part in the next Benchmarking Report and use the opportunity to actually map out the processes and organisation structure that produce the results.

 

Let me stress, this report isn’t about IT and software integration – it’s about Management practices and results. The strength of this study lies in the fact that it asks the right questions, clearly based on a deep understanding and experience with all the operational facets of managing a Contact Centre. Some so-called Benchmark studies ask questions of more relevance to its sponsor than the Contact Centre Manager, which often lead the study in directions of little or no help to the reader.

 

What is the reason for having a Contact Centre?

 

This report will help you understand the role of the Contact Centre vis--vis the organisations business model. Ask yourself, ‘What is the business driver of the Contact Centre?’ In my experience your answer is likely to be very different from the views of your senior management.

 

From direct observation of 100’s of Contact Centres in all regions of the world, I would suggest most Contact Centres operate as if their purpose was ‘to keep customers at arms length from the organisation’s core-activities as cheaply as possible’. If this pretty much sums up the operational facts, no wonder Contact Centre Management finds it so hard to explain how the Contact Centre adds value to the organisation, which is paying the bills. Senior Management has a very different idea of the role of the Contact Centre, ‘create happy Customers who purchase more, more frequently, as an integral part of the business model’.

 

The discrepancy of what you actually do in the Contact Centre and what you say you do in order to put your best foot forward is of great importance to the future of your Contact Centre. By confronting this gap between WHAT IS and WHAT IS SUPPOSED TO BE, you can start work on narrowing this chasm and achieve real improvement. This report will show you what other Contact Centre Managers say is their primary business driver, but it won’t tell you what your own senior management thinks. It might be a good idea to get up from your desk and find out what the answer is - compare it to your own answer and the answers in the report.

 

One thing is certain; your Contact Centre wasn’t created to produce a lot of Calls. Such a Call-factory with no focus on Call Outcome (i.e. happy customers) always fails, because it has failed to add value to the business model. It rather resembles the old Soviet style centralised production system by elevating operational benchmarks and view them as strategic business drivers. The most successful Soviet shoe factory was the one that met its productions target measured in ‘tons of shoes produced’ by adding 5 cm thick soles to all shoes, ignoring that none of these shoes were ever sold - the customer was simply ignored in the equation. So it’s important that the overall Contact Centre Benchmark reflects why and how it Adds Value to the Business Model. Call Outcome and Customer propensity to continue doing business with you must be a key part of why the Contact Centre exists.

 


 

Vendor benchmarks are not your business drivers.

 

The fact that most Contact Centres vendors can only provide you with quantitative measures, which ignore the customer experience and the call outcome, has created lots of challenges to our Best Practices across the Contact Centres Industry. Remember the vendor benchmarks exist because that is the only measures they can register. Endless trouble has emanated from these Idiotic Vendor Measures - an entire generation of managers has mastered the intricate operational skills of the ACD, IVR, CTI and Workforce Management software, but along the way they forgot what the business drivers of the Contact Centres really are. Instead these managers adopted Soviet-style quantitative call statistics as the Business Drivers. Believe me, when you lose sight of how to add value to the business model, you’re forever condemned to be a cost-centre call factory. Still wondering why senior management is looking to outsource your Contact Centres to India?  You failed to document what value, if any, you add to the business model. The point is not how to cheaply get rid of a customer, but how you can turn the customer contact into future revenue and document that value transition.

 

How you can make good use of this Benchmarking Report.

 

First, it might be an idea to read the main chapters to familiarise yourself with all the issues being covered. Do you have the figures readily available for your Contact Centre?

Have a look at the ‘Customer Measures Used’. Here’s a significant trend: Today customer satisfaction is not the key measurement, in fact new measures have been introduced which is dominating the field:

 

1/ Customer retention

2/ Customer profitability

3/ Annual Customer value

4/ No of Customers

5/ Lifetime value of Customer.

 

Do you have any similar measures? Obviously, the above trend is to look at the Contact Centres actual contribution to the business model.

 

My view has always been that if the customer is satisfied, then surely it must translate into more purchases, more frequently, at less cost. Back in 1988, in a pilot project for a large US conglomerate, we documented that the Customer Satisfaction index didn’t necessarily relate to loyalty or repeat purchases, as it was found that customers often gave too high a score ‘to be nice’. An alternative measure of ‘Exceeding Expectations’ gave a more realistic evaluation of the customer experience and at the same time had a built-in dynamic that demanded constant improvement in service delivery. So if you’re still using a Customer Satisfaction measure beware, you really have to handle customers badly to get it below 84% satisfaction level.

 

 


 

Looking at the difference between operational and strategic Benchmarks.

 

By definition, the operational benchmark reflects a measure of operational nature. It’s used to help optimize operational procedures and keep cost under control. To staff the centre, you need to have a very clear idea of ‘how many calls are expected’, ‘average duration of a call’ and call volume fluctuations. In fact, it was the Danish mathematician A.K. Erlang who, while working for the Copenhagen Phone Company in 1922, developed the Erlang-B formula for predicting call volume by using past call patterns.(if you are mathematically inclined, Erlangs work with stochastic theories was ground breaking at the turn of  the last century).

 

Many operational statistics are available from the ACD and IVR, and as you move in to automate your workforce management practices even more statistics become available.

Just remember operational statistics are just that, statistics used for operational optimisation. Calling them benchmarks won’t alter that fact.

 

Strategic benchmarks on the other hand reflect how the call centre interacts with the business model and document how the Contact Centre Adds Value to the company or organisation. This is a life and death issue. Unless the Contact Centre’s strategic benchmarks are understood by senior management and seen to add good value to the business model, it becomes very hard to justify allocating more resources to service delivery.

 

A case in point – in the late 80s I worked with a Danish Bank very eager to expand its phone-banking operation. To get started, my first request was to read the management report which was complied weekly for senior management. This 32-40 page book with colour graphs was the pride of the manager. It was basically full of operational statistics, sorry benchmarks. When I questioned its value to senior management quite a row ensued, but in the end it was agreed to withhold the report and it was not circulated to senior management for three weeks. Not a single request for this ’vital’ report was received from senior management. We then proceeded to define the strategic measures which reflected how the Phone bank was actually doing in relation to its core banking business, much to the satisfaction of senior management.

 

Strategic Benchmarks tell senior management what their money is buying when investing in a Contact Centre. They’re focussed on the customer and on achieving a business objective with every single customer. The fact that the IT and software applications can’t provide you with an easy answer is no excuse - real strategic benchmarks set the tone for your entire Contact Centre. Lack of such measures has a significant impact on your staff motivation. Producing completed calls with no regard for what was achieved for the business is the key reason your have burnout and high staff turn over. Nobody, not even a customer service representative, likes to be told that the handling of the customer to their satisfaction means nothing compared to the extra minutes added to the call-length. Contact Centre Managers who treat their staff and their senior management like this, are in great need to review their understanding of the difference between operational and strategic benchmarks.

 

Defining 3 key strategic benchmarks for a Contact Centre.

 

Every Contact Centre is different, not because of the way it operates, but because of the difference in how it’s expected to add value to the customer and to the business model.

For some it’s easy to focus on revenue creation, which is fairly easily measured and documented. Other Contact Centres operate as help desks or pure service delivery platforms; the answer here is to spend some time understanding your organisations business model – do we create revenue? Is a happy customer a better source of revenue? Are we a monopoly? How can the Contact Centre add value?

 

The 3 key areas of any Contact Centre are:

 

  1. Are the customers left waiting?
  2. Do we provide first call resolution?
  3. Does the staff feel they’re contributing to the success of the organisation.

 

For each we can define a strategic benchmark, such as –

 

1. 90% of all calls answered within 20 seconds by a LIVE person. So admit it, you’re using the IVR to save on staff costs; in fact customer dislike of IVR is a growing world wide trend. You lack the staff to handle the call volume only because senior management doesn’t clearly see how you’re contributing to the business model. If you were contributing well and could document how your staff created value in every call, then it would be a good investment to add more staff.

 

2. 90% of all calls completed to the customer’s satisfaction by the rep who took the call.

 

Our analyses and studies show that repeat calls from customers adds up to 30% of your call volume. It further adds up to 35-40% of your operating costs in a Contact Centre. So please don’t tell me you can’t afford to focus on First Call Resolution. This is where you’re wasting your precious resources. Identifying types of calls that are not resolved, will allow you to document the need to change processes and procedures and integrate better with the rest of the organisation. The bonus of FCR is that customers love it and your customer measurements will jump upward.

 

3. Staff turnover at less than 5% p.a. or in exceptional circumstance at the same level as the rest of the organisation.

 

Lack or bad motivation is caused by staff not feeling they are contributing anything of value. Leadership which is focussed on producing Calls rather than call outcomes is the cause of this. Successful companies know this and treasure their staff. Bad management practices invent new Nomenclature such as ‘burnout’, ‘natural attrition’ or ‘nobody would want to spend a career on the phone’ to gloss over the seriousness of high staff turnover. You can trust me on this; it really takes hard work to make good people want to leave. Take away the staff’s feeling of pride in what they do and you will first lose the energy they bring to work, and then you’ll lose them.

 

Your common sense will help you extract real value from this Benchmarking report.

The vendors gave us their benchmarks. Unfortunately we adopted them as if they were the Gospel and we developed a whole new pseudo management model in which the Customers and senior managements satisfaction was missing or seen as unimportant. There is no need to dwell on the why and how of this extraordinary occurrence of events. Suffice to say, your common sense and this Benchmarking report can help you regain the confidence of your customers and, maybe more importantly, your senior management.

 

Enjoy the report and don’t accept anything that contradicts your own common sense.

 

Niels Kjellerup

Ashgrove March 22nd 2006.

Copyright 2005-2006 by Niels Kjellerup. All rights reserved.

 

 

 

 

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