Here is the good news: To help their call centers improve, managers need to solve just one problem – between-agent variation. That’s right. Fixing that problem can take a call center to 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, that 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 as long as call centers have existed, 2) Billions have been spent on the problem, yet it really is not improving and 3) Although 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.
The Cost of Variation
Due to between-agent variation, when customers call into a call center, they have no idea what kind of experience they are going to have. The agent could be empathetic, or downright surly. The caller might reach an experienced agent who knows how to solve the problem, or a brand new agent who is not fully prepared. They may speak to someone who is easy to understand, or someone with a barely intelligible accent. The customer may have the pleasure of speaking with a conscientious, attentive agent who will go through all the required steps, or one who is distracted or burned out and quick to cut corners in order to get off the call.
This type of variation can cost call centers real money. Some of the costs are easy to track, while others are more difficult. For instance, a wide variation in agent performance can cost an organization in the form management resources and off-phone coaching time to manage the under performers. There is also the cost of added staff needed 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 added costs in the form of recruitment, hiring and training replacement workers.
But the true cost of poor quality (COPQ) is like an iceberg – the biggest costs are below the waterline. For example, there are somewhat hidden costs associated with not adhering to the defined call handling process. 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. Multiply this across the thousands of outsourced agents at large technology firms and this could lead to added factory costs associated with processing incorrect product returns – costs that won’t show up on the call center’s budget but that will affect the company’s bottom line.
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 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 students called in to activate their new prepaid cell phones, the agents did those three things less than 30 percent 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 type of invisible costs is the effect of variation on the customer. Customers don’t experience a call center’s average; they experience its variation. And when that experience is bad, it can create detractors who can fail to renew or buy again and who speak out about their experience to friends or on social networking sites – or even post calls on YouTube.com. 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.
Three Steps to Close the Gap
Despite the size and seeming intractability of the between-agent variation problem, it is fixable. Three steps, done in concert, can drive a stake into the heart of this problem. But few centers today do any of them, let alone all three of them.
First, managers have to define the correct process for each and every call. They must develop an explicit process for resolving every type of call, and keep the process up to date. The process should specify what the agents have to say to customers and do in their systems to correctly handle the 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.
Of course once the correct procedures are defined, they have need to be thoroughly taught to all the agents and the quality monitoring (QM) team has to be able to rate every call as to whether the call was handled correctly. Too often, the QM team just simply rates whether the agent was polite, listened, used the customer’s name and so on, 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.
This step will reduce between-agent variation, but it will not completely solve the problem. When managers are ready to begin attacking that variation, W. Ed Deming’s Out of the Crisis (MIT, Center for Advanced Educational Services, 1986) is the lighthouse to navigate by. Deming recommended the use of p-charts and other statistical tools to separate out the agent variation that mattered from the performance of “the system.” This means separating out the agents who are statistically worse than their peers – not the arbitrary bottom 25 percent to 30 percent that some centers use today to judge who is performing acceptably and who isn’t.
The ones who are statistically worse need to be coached. The agents who 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 and the job aids. 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 can be repeated or automated, 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 an impact on reducing agent variation.
The third 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 interactive voice response program (“press 1 for account balances, press 2 for billing questions…”) – or it is handled by a live agent. Managers need to start thinking about automation as a job aid for the agents.
There is software now on the market that can provide automation for the live agent to intervene 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. Agents are often pleased with the system because 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 face a number of problems that can contribute to agent variation, such as agent turnover and agent movement inside the center. There is a lot to know and a lot that changes on a daily basis. It can be difficult for agents to stay on top of everything. But used as a job aid, the software and pre-recorded messages can be updated to counteract the effects of turnover and constant changes that increase the probability of errors.
Six Sigma practitioners may be scratching their heads at this point. The concept seems simple — excessive variation leads to huge hidden costs. The solution also sounds relatively simple: variation can be reduced by defining the correct process, usinge statistics to separate real agent variation from system variation and leveraging automation. However, implementing the solutions can be difficult because they require a change in mindset.
To make these changes, general managers and CFOs first need to push call center leaders to measure the true COPQ. Simply measuring visible costs is a good start, but it would be a mistake to stop there. Here are some questions for the general managers 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 general managers and CFOs realize how much agent variation is costing them, they will get focused 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. They must start holding their call centers to the same high quality standards that the leaders of manufacturing are held to. Customers are calling for a reason — they want their issue resolved. Getting every agent to resolve the customer’s issue the right way every time is the world leaders must strive for. Manufacturing lives in that world and call center leaders can learn from them.
For example, say two people lose their credit cards, and they both 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 should be exactly the same. There is a right way and a wrong way to handle this call. Leaders 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. 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.
The manufacturing industry has a storied track record of improving quality and reducing variation. The organizations in the industry did not develop this reputation by trying to fix each worker individually. 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 will lead the way out of the agent variation wilderness.