Contact Centers: Keep the Hub Humming

No doubt your catalog’s customer contact center has changed dramatically in the past five years.

Your employees probably now support e-commerce initiatives, respond to e-mailed correspondence, track outbound customer shipments, access digital product images via the Internet or terminal-based systems, and much more.

Before you plot your contact center’s future strategies, answer these three basic questions:

1. How are you defining, measuring and improving customer service? Every cataloger preaches the gospel of customer service, but how does your corporate culture uniquely deliver it?

2. With your increased use of technology, have your productivity levels also risen? In many companies, productivity rates — as measured in calls per hour or sales per employee — have not markedly improved during the past five years, mostly because labor rates also have increased.

3. How can your contact center help increase your company’s overall sales? Your customer service representatives (CSRs) already have relationships with your customers. The challenge is to determine how you can proactively leverage those relationships to increase sales.

Appropriate strategies to answer these questions will vary depending on your average order value, profitability, and overall business plans and objectives. Sometimes to strategically move ahead, it’s imperative that you first take a step back to ensure you’ve accomplished important business basics outlined below.

Define, Measure, Improve

Your contact-center employees most likely are at the hub of most order activity at your company. This means that you’re dependent primarily on people to offer good service to your customers. For your catalog to prosper, then, you and your employees must have shared values — values that you reinforce by employee-empowerment, frequent training and expert management.

As your company grows, how are you teaching and reinforcing your vision and mission to employees? You want them to grow in their jobs, but you also want them to retain the values that are true to your company’s original objectives. To make matters even more challenging, as your e-commerce channels grow, you must create a parallel service path similar to that experienced by your phone customers. The following tactics may help improve your company’s overall customer service:

- Measure and report the appropriate customer service metrics, for example, percentage of calls answered in 20 seconds or less, call-abandonment rates and average time in queue.
- Implement call-monitoring processes to help CSRs improve their skills in what inevitably is an ever-changing and increasingly complex business environment.
- Improve product training. Multi-title businesses and large SKU breadth often make the job of answering customers’ queries a difficult one. Prior to the catalog mailing, have your merchants offer to the contact-center staffers product demonstrations on new items.
- Offer more training on systems, procedures and company policies. Many companies give only a couple of weeks training before putting new-hires on the phone. But some CSRs need more training before you let them loose in your contact center.

Productivity Improvements

In the chart, the call-to-order line for the three companies that we studied ranged from 1.8 to 2. An efficient ratio might be closer to 1.5. There’s a considerable expense in servicing non-order calls.

Do an analysis of your catalog’s call-to-order ratio to determine causes for things such as back-orders, operational problems (e.g., damaged shipments, billing errors), unclear creative or copy, catalog requests, and queries about returns. What programs can you use to reduce them? Today’s technologies can help, but like fulfillment operations, call centers will remain largely a labor-intensive business.

Without taking into account shipping fees, about 50 percent of the total cost per order can be attributed to contact-center costs. About half of the fully loaded total cost of an order, then, is direct labor. Other costs include indirect management, telecommunications, tenancy and cost of credit processing. After you’ve negotiated the best rates for these other costs, direct labor will be the largest expense you can affect on a daily basis.

Because labor will be at the heart of your contact center in the future, determine if your management and technology usage boost your contact center’s productivity. Following are tactics some contact-center managers employ:

- Examine key metrics, especially those that offer accurate and timely measurement of cost per contact, call and order.
- Improve management strategies. Often improvements in customer service and productivity can be achieved with better execution of daily processes. Specifically, many catalogers could use the services of more trainers, HR administrators and scheduling/staffing analysts.
- Implement a personnel scheduling software package. A good program can result in a 10-percent to 15-percent reduction in the cost per call. Our studies show that if you track CSR utilization, you’ll find that paid vacation/sick days, breaks, pre-shift meetings, training sessions, and off-phone and administrative time may account for more than 25 percent of a CSR’s time annually.
- Use part-time personnel more effectively to gain flexibility in scheduling and lowering paid labor hours, and cost per contact, call and order.
- Implement an incentive program and commissions to improve sales per employee.
- Adapt technology to decrease costs. Explore the use of interactive voice response, computer telephony integration, call-prompting systems and other solutions.

Sales Boosters

There are direct and indirect ways a contact center can increase sales.

Direct:

• Implement upsell/cross-sell. This can be done in a tasteful manner and may provide a significant increase in average order value. Several large catalogs even have implemented online upselling/cross-selling (similar to what Amazon does) and have benefited from the boost in average order size.

• Implement selective outbound calling to customers to sell and improve service. Effective use of outbound telemarketing is virtually untapped in the catalog industry. But with so much do-not-call legislation around, explore this sales channel carefully to ensure you comply with all state — and the newly enacted federal — laws.

Outbound also can be used to boost customer service and reduce returns. Recently our local Staples store called to ask how we liked their service when we returned a product. There was no pressure, just the questions: “Did we provide the service you expected? Is there any thing else we can do today for you?”

Indirect:

• Improve forecasting and inventory management systems and processes to increase sales, improve customer service and reduce operational expenses. At the heart of high call-to-order ratios often lie opportunities in forecasting and inventory management. In a study we did for a multi-title apparel company, we found that depending on title, the back-order rate average for the year was 15 percent to 28 percent. Total cancellations were 5 percent, and “shadow demand” not booked as orders was an additional 8 percent. Ten percent of the center’s calls were for inventory availability before the customer would give a name, address or source code. Another 20 percent of the calls were to ask about the status of backorders.

• Perform an operations assessment to discern the root causes within your forecasting and management processes that may be creating backorders. Such root causes may include pre-season planning problems, vendors’ broken promises and an inability to accurately forecast sales of new items. Rethink your processes, systems, vendor relationships and organizational structure. A re-engineering may offer benefits such as improved customer service and sales, and even a decrease of $7 to $12 for each back-ordered unit of merchandise. Some of this is from call-center savings in reduced calls for back-order data and telecom expenses.

• Implement contact center-based customer research and survey functions to improve marketing and merchandising. Your future contact center can increase sales by undertaking — and then being responsible for — a more pro-active role to collect and disseminate data to marketing and merchandising regarding what customers are saying.

Think about it: Much of the dialogue between customers and CSRs doesn’t get recorded and analyzed. Many companies tend to confine the activities of the call center to order-taking and answering customers’ questions. But your CSRs are the first line of people interacting with customers. As such, they’re in unique positions to offer helpful feedback to your marketing and merchandising personnel. What ideas for new products have they gleaned from customers’ questions? What products work and don’t work as depicted? What creative can be clearer and sell better?

In conclusion, your contact center has a significant role to play in building sales and doing research for merchandising and marketing.

Curt Barry is president of consultancy F. Curtis Barry & Co., which specializes in contact center and fulfillment consulting, benchmarking, and inventory management for multichannel companies. Contact: (804) 740-8743, or cbarry@fcbco.com.