My article on call centers translated to English, Banka magazine, February 2002

Call centers represent the very hearth of a CRM strategy. Why do we need call centers? How do we choose it and what is the experience of those who decided to modernize their customer interaction environments? These questions and more I tried to answer in this article, published in 2002 in Croatian Banka magazine. I have translated it to English for the convenience of all English speaking visitors of this blog.

Call centers in the mission of customer satisfaction – the thing is (not) about technology

If you will use this text for publishing or academic pursposes, be so kind to cite the author and source: Alen Gojceta, Banka, 02/2002. Thank you!

Call centers today are unavoidable part of a successful strategy of advanced customer relationship management, known as CRM (Customer Relationship Management). In brief, CRM is set of rules, technological procedures and applications that companies implement, on large customer base, to simulate close relationship, which is usual between customers and small corner shops. Large customer base, in this case means thousands, hundreds of thousands or millions of users.

CRM strategy was built during early nineties in economies where keeping the existing customer base became a priority due to high penetration of products or services and existing strong competition.

Looking from this perspective, the CRM strategy is a natural process that can be recognized already on economic models of ancient world – when the logistics and human resources where not capable for new conquests (which where very often the means of economic growth), fortification and preservation of existing properties used to take place.

Concept of CRM today suggests technology as being in the “first line” of relationship with the customer. This technology include applications for managing marketing, sales and provision of user services, including communication channels that allow managing interactions with individual persons, belonging to a large customer base, who influence buying decisions or is involved in use of products or services.

The heart of CRM strategy

Call center, as technological solution for efficient and effective telephone communication with a large customer base, most often represents the very heart of a CRM strategy.

Choice of the most appropriate call center solution depend on the form and level of integration of business processes, number of daily calls, intensity of marketing campaigns, ratio between inbound and outbound calls and integration of different communication channels that would be used. As higher the quantity of calls (interactions) is, the more advanced Call Center technology has to be for management of inbound and outbound calls.

Users want to do business with organizations in a simple way. Take as example a bank customer that wants to know how and under what conditions to refinance a housing loan. By dialing a free phone number of the bank, he quickly gets the right person with the right information and, preferably, a solution to the problem in a form of revised contract received at his home the next day. Interactions as described are proved to assuring increased customer’s commitment to a bank that provides such fast and efficient service. Study conducted in 1998 by the JD Power and Associates on a sample of 10400 users of services of five leading U.S. credit card issuers, revealed that price was not decisive. The study showed that the quality of service was the key to retention and customer satisfaction. In this type of business, the service is reflected in three major elements: the quality of call center contacts, transparency in payment processing and perceived financial strength and confidence about these companies.

Exactly due to the need for fast and quality interactions, some invisible items of call center operations can be critical to success. As larger the call center is (proportional of the number of daily contacts) as important becomes technological side of the solution to enabling the business success.

Success factors

There are two magic formulas that indicate the success of a call center supporting CRM strategy: service levels, and customer satisfaction.

The level of service is measured in percentage of calls that are received and processed in a certain time frame compared to the total number of calls. The level of service of a call center is directly connected with intelligent call routing capability. This would ideally mean that the system automatically recognizes the phone number and the individual customer, anticipating his or her reason of call, and addresses the most appropriate call center agent to handle the call. If the most appropriate agent is busy, the system will, in order to preserve the required service levels, make a compromise and forward the customer call to the following most appropriate available agent. Thus, the system will try not to let customers wait too long or ultimately hang up the call. You certainly have that experience when, after your call, you keep hearing the famous “Wait a minute …” phrase for some minutes more than you can stand.

Such behavior is unacceptable for a service provider who wants to build long-term relationship with satisfied customers. Customer satisfaction is a direct consequence of the level of service, and other processes that affect the speed, quality and efficient customer service. Advanced call center technologies ensure that your call is not infinitely rerouted among agents and departments.

Also, after a caller establishes communication, the agent has to be enabled to perform the desired transaction, provide information or to start a process. Customer satisfaction depends not only on call center technologies. In addition, it is supported by a whole set of CRM applications and processes, including internal company organization. It is therefore important, when deciding about call center technologies that the platform is open and capable to integrate with different CRM applications.

Despite the fact that it is hard to intuitively perceive measurable results of usage of advanced call center technologies, the experience is positive. On larger call center solutions that engage fifty or more agent seats, advanced technology may affect increase of service levels to from 20% to 95%. It means that the number of calls not solved would be reduced from 80% to 5%.

Problem solving solutions

Faced with deregulation of the market in Eastern Europe and aggressive new competitors who where realizing multiple growth rates, one of the leading telecommunications company in its region find itself in situation of redefinition of their business model, including managing of relationships with existing customers. After decades of enjoying the benefits of monopolist position, the company was forced to change the approach.

Given the relatively low market penetration, the challenge was twofold: to attract new customers and preserve the existing ones. Preservation of the existing customer base was the task of the customer care department. For the first time in their history, they started to measure the effectiveness of the existing call center. The results were disappointing. In some periods, almost 80% of the calls happened to be lost or otherwise unresolved. Users where giving up because of infinite redirections of calls. The existing system was not capable to support traffic peaks, so it simply used to refuse the calls or let them for long waiting.

A decision was made to implement a call center solution with advanced technologies and intelligent call routing, where agents where divided into dynamic groups based on their expert knowledge and skills. Transformation that followed was amazing – calls where positively solved within first attempt in 90% of cases. Users were satisfied and, combined with the efforts of the marketing department; the service provider has adopted growth rates comparable with the new competitors.

This is just one of dozens of similar examples. One well known case concerns Capital One, the credit card issuer. PricewaterhouseCoopers brings this case in their book on the CRM (Stanley A. Brown, Customer Relationship Management). After strong growth rates of customer acquisition, based on aggressive pricing policies and marketing approach, Capital One has lost its pace showing below market average growth rates.
After measurement of customer satisfaction, they realized that the ineffectiveness of their call center significantly increased with the enlarged customer base. Due to the increased diversity of their products and services, the need for segmentation and customized approach became more important.

With the introduction of technologically very advanced call center in combination with advanced CRM technologies, the level of customer satisfaction increased significantly. The average length of calls as consequence of increased efficiency fell to one third of the previously measured.

The cost reducing factor

Modern Call center technologies do not only bring the benefit of satisfied customers. The same solutions that contribute to increased customer satisfaction reduce the costs of call center management, where human resources cover 60 to 70% of its total costs. Five to ten thousands of daily interactions make a very common number for a market of Croatian size. Such amount of calls can be generated by customers of a company which is among market leaders and puts strategic focus on modern channels of communication with customers.

Assuming an average call time of four minutes, saving thirty seconds per call, on pattern of 5000 calls a day, would mean saving more than forty man-hours per day. For the same functionality it would take five agents less. In the same way savings in network costs and other call center costs occur. This calculation is very approximate and does not include the distribution of calls during time, queuing, traffic peaks and a host of other factors. But the message is clear. Significant are savings than can be achieved by changing the business channel model. Good integration of business processes within the call center can significantly unload or even replace the traditional and costly forms of interaction with users, such as “brick and mortar” offices.

Call centers are a paradox of today’s business philosophy that is focused on close customer relationship. From organizational perspective they look like sophisticated, automated mass production factories, while their end product is intimacy of corner stores and, consequently, user satisfaction.

In the next issue of Banka magazine’s Computers and business, we will address technologies that enable automatic service provisioning, without direct client’s contact with the call center agent, such as IVR (Interactive Voice Response) and CTI (Computer Telephony Integration).

Hi folks – the blog intro post

This is my first post. After having brought a difficult decision on which blog platform to use, I have chosen to install the WordPress on my domain. I must say that the people from Google’s Blogger are great and I’ll probably never know if my decision was really right.

My vision is to provide here 3 different categories of blog posts:

  1. Posts in English about leadership, sales and marketing (mostly on CRM)
  2. Posts in Croatian language about same as above + some thoughts about how to make my country better
  3. My articles, published in different Croatian business magazines. Translated here in English (I’ll post as translated one by one – the first one right after this post)

In addition there will be a separate page with my academic work. I plan to provide this work in English and Croatian (I’ll probably need a sponsor for translation :-))

You can follow me on Twitter (search agojceta, untill I install a widget on this web site).

Enjoj