Feed Fire

Devise a compensation program that galvanizes your contact center reps

By Donna Loyle

As the economy improves, labor markets no doubt will begin to open up in some regions, and turnover may become an issue in some catalogers' contact centers.

"Many customer service reps feel they're undercompensated for the value of the job they do, that is, in relation to the energy they exert on the job and the stress they encounter in dealing with customers all day," recounts Liz Kislik, president of Liz Kislik Associates, a management consultancy based in Rockville Centre, N.Y. "If they think they can get slightly higher compensation elsewhere, and they have a family to support, they're almost obligated to leave."

The question is, how do you keep the good customer service representatives (CSRs)?

The first task, says Kislik, is ensure you're paying a living wage. "Otherwise, employees will begin to ask themselves, 'How can it be that I'm a good, hard-working, honest person, and I can't afford to fill my gas tank?'" This is especially pertinent since the recent corporate scandals in which executives pulled down millions from their failing companies, says Kislik. "Employees say, 'Companies pay for all kinds of things. Why can't they pay me what I'm worth to them?'"

To determine a living wage, do a survey of average salaries and benefits in your region. At Tipton, Pa.-based New Pig catalog, a business-to-business merchant of industrial supplies, HR Manager Adam Ross surveys other companies in his area to see what they're paying comparable staff-level positions. "It turns out we're not the highest payer nor the lowest payer," says Ross. "But we also don't hire and lay off people. We offer career paths, training and longevity." At New Pig, corporate-wide staff turnover averaged only about 5 percent in 2004.

To determine appropriate compensation plans for his 65-seat call center, Tim Taggart, contact center manager at Sundance catalog in Salt Lake City periodically calls other area employers, checks out newspaper employment ads and discusses payment issues with an informal share group of 17 catalog contact center managers.

Once you've determined the base salary to pay competent CSRs to retain them, how do you motivate them to excel at their jobs? Here are some ideas that may work.

Determine What You Want to Reward

"Is it results, compliance or effort?" asks Kislik. "It's really important to determine this up front, otherwise you may end up in a different place than where you imagined."

For example, say you want to reward compliance, which is really a performance issue, she continues. But when you enforce compliance, such as requiring that CSRs ask each customer for an e-mail address or make an upsell offer, agents tend to think you're trying to make it hard for them to meet goals. "They think what you're really trying to do is take money away from them," says Kislik. "That's how they interpret this."

Or say you want to reward results. Measuring quantitative results, such as how much time a CSR spent on customer calls, is relatively easy. But measuring qualitative results, such as how many angry customers he appeased, is much more difficult.

At New Pig, agents are rewarded for their cross-sells and upsells. But rather than simply pushing the product of the day, the program is carefully devised to promote customer service. So if a client orders, say, a pipe, CSRs are prompted to mention quantity discounts on that item and the other merchandise the customer will need to properly install that pipe, such as special straps or bolts.

"We reward agents if they get customers to order what, in essence, we already know they'll need to use the product," says Kitty Dertinger, customer service manager. This satisfies both the CSRs' drive for commissions and the company's motivation to offer exceptional customer service.

"Before we adopted this system, we tested different programs," Dertinger recalls. "We tried having agents sell overstocks, then new products, but nothing seemed to work as well as what we do now. We started small, got feedback from reps, and then tailored the program so it would be of value to customers."

Angela Wolfe, contact center manager at Orvis, agrees you first must determine your compensation program's goals. "If you want good customer service, don't measure, for example, how many calls agents take in an hour, because they'll end up rushing through difficult calls so they don't hurt their scores."

Train for Success

Next, determine how you'll train both current and incoming CSRs so they can take full advantage of the compensation program.

At Sundance, Taggart uses a system of four staff levels. For example, Level One employees are trained to do basic work such as take customer orders. Level Twos are trained to do more customer service-related work, and they make more money. Each employee can apply to be promoted into the next level, and it's based on their knowledge and skills, not on sales commissions.

"This process gives reps a chance to learn new skills and make more money," says Taggart. "And since we're already offering them a competitive wage, this gives them a chance to earn even more." The challenge, he concedes, is accurately determining the performance that will propel each employee to the next level.

The catalog also recently opened Sundance University, a series of self-paced online lessons that agents are required to work through to refresh their skills. Agents' lessons include, for example, how to handle declined credit cards, take multiple-recipient orders or guard the company against fraudulent customer payments. Supervisors' lessons include staff coaching principles, disciplinary issues and how to use the company's management reporting software. Staffers don't make more money once they pass the modules, says Taggart; rather, they're offered prizes and certificates.

Officials at New Pig strongly believe proper training is the key to ensuring a compensation plan remains effective. That's why the cataloger employs two full-time trainers, one each for customer service and product training. Ross says the training program gives employees the tools they need to be successful. "It helps employees serve customers well. And what's more motivating than doing a good job?" he asks.

Track It, Measure It

So you've determined what you want to reward and how you'll train employees to succeed. Now how do you measure and track their performance?

At Orvis, Wolfe uses a score card system to rate her 150 CSRs. Each month, agents get a report on how well they did the previous month and the previous 11 months. The report actually grades them (e.g., A, B, C) on four components: attendance; quality of work as measured by Orvis' monitoring system; productivity (what percentage of their time they spent on the phone or in after-call service); and sales contribution, which includes upselling. Each component is graded separately, and the agent gets an average score. Their annual reviews are based on those scores.

"It's totally within each agent's ability to improve their score and hence their pay," says Wolfe. "Agents know throughout the year how they're doing. And the control to improve their pay is in their own hands."

She says the greatest challenge to setting up the program was finding a software program to use. "I started by using a database, but it blew up after just three months. Now we're using a vendor, Logisys in North Carolina, to help with the Web-based reporting. We're a pilot program for them, and it's going very well."

For its upsell program, New Pig uses a database system that prompts agents, so they know what product to offer and when.

Make It Simple Enough for Napkin Math

"If, using a calculator, your employees can't accurately determine how they're doing in the compensation program at any given time, or if they're unsure the calculation actually will match what's in their paychecks, you have a built-in disincentive to better agent performance," says Kislik.

Wolfe agrees, adding: "If agents don't understand how their pay is calculated, they'll be reluctant to support the program. Agents should be able to quickly run a tally to see what their score will be."

At New Pig, the database system automatically determines agents' commissions so the reps don't have to manually figure it out.

Says Wolf, "Once you've devised an agent compensation program, stick to the plan. If three months into it you encounter minor problems, don't take the knee-jerk reaction and change it wholesale. Tweak it. Otherwise you'll confuse agents.

"After all," she continues, "compensation is near and dear to employees' hearts. And you don't want to appear to be messing with that."

In summary, says Kislik, "You can't just dangle carrots in front of people and expect to get the performance you want. Rather, you must establish clear goals, and have a deep understanding of the job and what results you want to achieve. And those results have to entail something you can measure and reward. That is, you have to know exactly how agents can be successful in your organization."