A West Coast call center woke up one day to the fact that its costs were too high and results were far from acceptable. It called in a consultant to analyze operations and suggest ways to improve efficiency and response rates. The findings were staggering - the training/hiring budget alone came to $2.4 million per year, more than double what the organization thought it was paying. Worse, the consultant discovered that the lack of a clear cut recruitment process meant that its customer service rep (CSR) turnover rate had escalated to 195 percent annually.
Faulty thinking within management meant that in response to high turnover, the company stinted on training. Instead, it invested lavishly in technology. What the executives overlooked, however, was the huge amounts it paid to trainees each month in wages, most of which was wasted in the long term due to attrition. Further, those few trainee CSR's who did make it took many months to achieve competence, making it even more expensive to reach the desired result of a productive agent in place who is happy in the job and willing to stay long term. And the technology? The consultant found that much of it lay unutilized. Even among veteran agents, a good portion of the functionality was ignored due to lack of training and familiarity.
This example highlights one of the burdens of living in a high tech society. While the technology itself offers a wonderful advantage over previous approaches, it can often cloud the fact that people are people no matter whether they are living in a stone age, an industrial age or an information age world. Whatever the level of technology, people must be grooved into its operation, trained to understand it, and made competent in its utilization.
This is particularly true in the world of the call center where technology investment has reached an all time high. According to Datamonitor, the global call center software market will reach $8.5 billion by 2003, up from $2.9 billion in 1999. The money is being spent primarily on CTI, IVR, CRM and call routing/queuing systems. As often as not, this investment doesn't pay off.
"Studies show that over 50 percent of CRM projects fail," said Gerhard Waterkamp, executive consultant for IBM's Siebel Practice. "It is essential to focus on applications that make it easier for staff to do their jobs."
Let's take a look then ways and means of improving people hiring/training/ management in order to achieve the end result of competent CSRs fully utilizing technology to create maximum call center response.
Economics of Turnover
Just how bad is turnover in North American call centers? A study by Purdue University's Center for Customer Driven Quality (CDQ), shows that the West Coast example discussed above is far from the worst on record. Turnover rates, in fact, vary from less than 10 percent to almost 500 percent annually (See Figure 1, Call Center Turnover Rates). The center gives an average across the industry of 32 percent.
Figure 1. Call Center Turnover Rates
| Median | Average | Highest | |
| Part-time Inbound | 20% | 33.6% | 300% |
| Full-time Inbound | 19% | 26% | 252% |
| Part-time Outbound | 15% | 35.5% | 480% |
| Part-time Outbound | 10% | 21.3% | 210% |
With attrition so high, thousands of dollars can be spent hiring/training people on technology tools only for most of them to walk out the door before they learn the job adequately. CDQ numbers also show that recruiting and training a call center rep costs anywhere from $5000 to $18,000.
But money wasted on hiring/training is only the start of the expense. While CSR's learn their jobs they have to be paid. This often means paying unproductive staff for months on end only for them finally to be let go or leave. Dr. Jon Anton, a researcher at Purdue CDQ calculates the average agent compensation to be over $32,000 annually.
The above numbers are backed up by another study by Merrill Lynch into the actual costs of call center turnover? Merrill Lynch estimates that attrition costs $9 million per year for a company with 1000 employees and annual revenue of $100 million.
If managers fully understood the full costs of attrition, then, it is probable that they'd be more effective in addressing it. Sadly, some take the short view and only consider obvious costs such as hiring and training of new employees, omitting to factor in other costs such as job advertising, interviewing, testing, on-the-job supervision to gain proficiency and lost revenues in the interim.
"The importance of employee retention has been largely ignored by businesses for years," said Michael Moe, former Director of Global Growth Research at Merrill Lynch. "Businesses must refocus on retention."
Attention to retention can make a major difference in overall profitability, as Bank of America, (B of A) Florida discovered. Its retention program resulted in a major drop in turnover among the many tellers and call center reps that make up most of its 20,000 employees at 800 branches around the state.
"B of A reduced turnover statewide from 41 percent to 25 percent in one year by making client satisfaction a priority and creating a more rewarding environment for employees. Interestingly, deposit growth was also up 4 percent year-to-year after two years of decline, and customer satisfaction ratings increased every month for a year.
Elements of a Retention Program
There are many factors that go into a successful retention program. But it all starts before you even hire somehow. Let's take a look at the various actions that contribute to employee longevity and productivity, particularly in a call center environment. By implementing these steps, technology investments can be better leveraged and response rates accelerated.
Hiring: When it comes to hiring, most companies are resigned to throwing cash at the problem. They shell out large sums for web postings, job fairs, trade magazine job ads, employee referral bonuses, and many other ways of attracting resumes. But is this money well spent? Unfortunately, at least 50 percent of new CSR's leave before they ever achieve proficiency. Or to put it another way, half of the HR budget is effectively wasted.
Revolving door recruitment, where you take just about anyone in the hopes that a certain percent will make it, has no place in the call center. A better way is to survey your veteran high-producing reps to form a profile of common traits. This might indicate a particular education level, a pay rate, previous work experience, vicinity to the call center, and several other common denominators. By vetting potential hires against these traits, you can focus on attracting staff that are similar to those already deserving of a paycheck.
Recruitment ads can also mirror this approach. Instead of bland ads advertising a position to the human race in general, say the type of person you are looking for and what you want to pay them, etc.
Testing/screening: One way to significantly cut down on trainee waste is to implement an effective testing and screening system. There are many ways to go about this, including background checks, physical exams, drug testing, driving record checks and personality testing. While this may seem like an additional expense, companies that implement testing/screening well can save a lot of later grief in terms of call center budget inflation and general CSR ineffectiveness.
A simple screening of resumes and employees applications, for example, can have an immediate impact on hiring. If an applicant gives references, call them. Check out such factors as how long they stayed at previous jobs and education level before you decide to invite them in for an interview. This simple screening procedure will make an immediate and noticeable difference on retention.
For even better results, testing of applicants can pay big dividends. The cost of personality, aptitude or other tests may range from $100 to $250 per person. But compare that to the $18,000 per head that is typically spent in opening the doors and letting in hundreds of people you have to pay that will never become productive.
"We have studied the impact of the following pre-employment screening techniques for reducing turnover: 1. Aptitude testing can result in turnover reductions of about 10%; 2. Realistic job previews can result in turnover reductions of about 8% and; 3. Structured behavioral interviews can result in turnover reductions of about 3%," said Purdue CDQ's Anton.
Training: Assuming you attract better qualified CSR candidates due to more intelligent hiring and screening practices, you are still not guaranteed success. Training is absolutely essential, particularly these days when the technology deployed in the average call center is more advanced than ever.
Traditional instruction led-training programs, though, are inadequate. A lecturer standing in front of the class discussing technology or job-related data rarely produces knowledgeable and competent CSRs. According to a Deloitte and Touche study, the data retention rate from this educational method is only 15 percent. Yet the same study found that 84 percent of companies use stand-up instruction as their main method of delivery. Making matters worst, CSR training generally means one trainer for every 121 employees.
Better approaches include providing students with tools to increase learning ability, and placing a strong focus on hands-on learning. Rather than lecturing a new hire about a call center system, have the person read a little about it and then place them in a simulated work environment and make them USE the technology tools they need to do the job. Done well, employees graduate after a few weeks with a good grounding and often reach proficiency rapidly.
Apprenticeship: Once trained, though, on-the-job apprenticing of newcomers by managers and veteran CSRs is a must. New hires are at their most vulnerable immediately after training as their uncertainties quickly become apparent when forced to confront actual people over the phone. Good supervision and apprenticeship on HOW to do the job and how to best use technology tools boosts retention in that critical period between arrival and achieving proficiency. Instead of faltering and saying goodbye in the early days, new CSRs are encouraged by the support around them and tend to stay with the company.
Scheduling
Another retention point bears mention - schedules. It is a very different working world of that of a couple of decades ago. Companies, especially call centers, can no longer offer employees a choice of 9 till 5 or nothing. As well as the fact that employees demand more flexible shifts, customers have come to expect 24-7 customer service. When they call at 3 am on Christmas Day they expect the phones to be manned.
Instead of rigid shifts, therefore, schedule fluidity can improve agent performance and increase retention. "The traditional 8-hour schedule, 5 days a week, no longer works," said Larry Swain, principal consultant, at Coleman Consulting in San Francisco. "Agents these days are often attending school or have young children. It is important to offer them a variety of shift lengths, start times and off days that fit their lives."
At one Midwest call center, for instance, job satisfaction ratings sunk to 36 percent. Turnover was high, absenteeism chronic and productivity poor. Management efforts to implement state-of-the-art technology produced little improvement. A survey revealed that rigid schedules were contributing to the situation. By finding a good balance between business and employee needs in scheduling, employee satisfaction rose to 82 percent while significantly reducing turnover and absenteeism.
So what is a good schedule? Flexibility seems to be the answer. Some prefer nights or would be willing to work late for a little more pay. Others like the option of starting very early and being done with work soon after lunch. By catering to all needs, workforce morale can be raised leading to greater retention.
Once a good schedule is worked out that both management and employees can live with, it might be wise to invest in workforce management software. This technology helps call centers cope with the many variables involved in flexibility scheduling a large operation.
Here, though, it's important to avoid technology that is difficult to implement. Studies have shown that many call centers only utilize 20% of the features of their scheduling software due to its complexity. Find an easy-to-use alternative, even if it is lacking some of the sophisticated functionality of other packages.
Case Study: Balancing People and Tech
By improving hiring, screening and training practices, then, any organization can significantly cut costs. Take the example of Inteleservices Inc., a Tampa, FL-based call center. The company was caught on a hiring/attrition treadmill with attrition rates higher than average. In response it tried to overcome the problem by continually hiring more people but quickly realized that this was not the best option.
"You can sink weeks into training a new rep only to see them walk," said Ron Benson, President of Inteleservices. "I'd much rather spend my time on operational excellence than on the continual battle to keep new recruits coming in the door."
Instead, Inteleservices hired the Bellaire Group, a Bellaire, Florida-based firm that specializes in helping call centers reduce personnel attrition. Result: attrition rates more than halved by improving personnel screening, hiring and training. Recruits became effective in weeks rather than months. According to Benson, ninety percent of new hires immediately joined the ranks of the top ten percent of performers. Normally, few new hires ever made it into the high performance bracket.
What was done exactly? First, Bellaire Group put attention on the right ad.
Instead of general 'situation vacant' type ads, they gave exact specs, touting good pay and bonuses. The response was overwhelming - 1000 applicants within a few days. However, the screening procedures were so thorough that only 50 made it to interview and of these, 35 were finally employed.
Benson reports that he would have hired two to three times more applicants, wasted time and money in training/paying for people who were never going to make it. Few of the new hires, he said, would have graduated into the ranks of the top performers.
"The people we hired could see we were being very choosy," said Benson. "Those selected felt they had really achieved something. They valued the job much more than typical hires and wanted to perform well from the start."
Belleair Group screened applicants using used tailored questionnaires based on the strongest attributes of Inteleservices top performers. They wanted to only hire individuals who approximated the profile of the best CSR's. Those chosen underwent longer-than-normal training on self-paced courses.
The first part of the training addressed study techniques and communication skills developed by humanitarian L. Ron Hubbard to increase data retention. Cisco Systems, AT&T and Chevron and other large companies use these methods to improve people skills, increase job performance and reduce attrition.
"Although new recruits spend more time than before on training, it's costing us a lot less due to high retention and performance," said Benson. "These study methods really speed time to competence."
The new hires were also taught basic computer skills, something Benson admits his organization had taken for granted before. This training demonstrated that most recruits lacked such skills. Additionally, training addressed communication skills.
"Every customer knows the frustration of dealing with calling in to someone with poor phone communication skills," said Matt Feshbach, president of Belleair Group. "We have a communication module that trains the reps on how to build affinity with the customer and resolve upsets, tensions and frustration."
The effectiveness of this program helped the new CSRs at Inteleservices to earn well from the start as they are paid a bonus for every call correctly handled. Instead of spending months becoming acclimatized to the job before they slowly began to earn a decent wage, they hit the floor running and rapidly became high earners.
"Ninety percent of the people sent to us are now performing in the top ten percent," said Benson.
The Right Balance
With the enormous expense involved in modern call center technology, there is clearly a middle ground between technology spending and personnel investment that companies should strive to arrive at. Comprehensive large-scale solutions like CRM and CTI rarely come cheap. Prices come in at hundreds, and sometimes thousands per seat. Technology selection, then, must take into account ease of use more so than width of functionality. A limited, but simple tool is probably going to have higher ROI than a leading edge application that takes months to master.
"Companies need to ensure they are investing their dollars wisely," said Rod Johnson, service director, customer management strategies practice of Boston-based AMR Research. "To avoid overbuying and mismatched vendor selection, determine your organization's best fit by focusing on usability over functionality."
About the Author
Drew Robb is a Los Angeles-based freelance writer specializing in technology issues. He has had over 100 articles published in the past two years, both under his own name and ghostwritten for corporate executives too busy to take care of the writing themselves. He is author of
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