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A brief history of contact centres: from costs to value

30th Aug 2007
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From airline reservations to cost control centres through to value-added services, it has been a colourful journey for the contact centre industry. Is it finally time it shook off its bad reputation?

By Paul White, Graham Technology

When I last phoned my local hairdresser to book my monthly short back and sides (dry), a friendly woman called Bev answered the telephone and greeted me warmly. “Hello, this is Bev at (Name of reasonably priced, good quality unisex salon with ample parking). How can I help?”

She was no doubt busy sweeping or preparing rollers in the bustling, noisy environment and probably could have done without my call, but was nonetheless able to deliver a positive customer experience only seconds after I dialled the number.

She asked my name, immediately located my preferred stylist’s next available appointment time, on the day I had requested, and booked me in. Furthermore, as they know I can be quite absent-minded, I later received a reminder by text message an hour before my appointment.

"Everybody has stories about being kept on hold for hours, subjected to rude agents and continually having to be transferred or called back."

With barely any technology to speak of, little training on phone etiquette and no headsets, I got what I wanted from the call and the hairdresser got a booking. And I wasn’t put on hold once!

How we long for such simplicity when contacting our banks, electricity suppliers and cable companies! Everybody has stories about being kept on hold for hours, subjected to rude agents and continually having to be transferred or called back. Meanwhile, call centre workers are portayed as a battery farm chicken, chained to the desk, and the media refers to call centres as the new economy, blue collar labour. It is no surprise then, that attrition rates are so high.

But when did managing customers become such a burden that some organisations are designing it out of frontline operations?

Call centre revolution

We are in an age when businesses spend big bucks on attracting new customers and regulatory compliance while wasting similarly large amounts on inefficient practices and leaky processes. Yet in this same age we have seen increasing apathy toward the mass market consumer from large B2C organisations.

This apathy has translated into cost saving directives as shareholders demand more short-term margin and boards call to exploit synergies in how customers are serviced.

It was with cost in mind that first the call centre was born. Originally hailing from the US aviation industry in the late 1960s, where they were used to handle reservations, it wasn’t long until businesses in other sectors had ‘bright’ ideas for call centres: “These could reduce the need for equipment in every branch or city and allow us to strip out redundant people, processes and technology.”

A genius step, it was thought. And it’s not that it didn’t work. It just didn’t work consistently enough and lost a lot of the intimacy, sense of rapport and urgency that was experienced in face-to-face interactions or direct calls to local outlets and branches.

It also had the undesirable effect of sending our expectations soaring, which is the source of the perception problem. Until the call centre revolution, if I wanted to discuss my loan position with my bank I would have got in my car, driven to the park-n-ride, hopped on a bus, wandered across the square, stood in a queue and then spoken to somebody face-face. But now we had call centres. Cool – I can ring these things any time I want and order a new game for my Super Nintendo one minute and apply for a car loan the next.

Except I couldn’t, because of two little things: queuing theory and consumer-behavioural chaos.

Cost pressures

In call centres, operational managers with enormous brains concern themselves with developing statistical models associated with capacity planning and simulations. These models don’t work and you end up waiting for ages and eventually speaking to somebody who doesn’t know who you are. This makes customers unhappy. But, of course, the cost to make them happy is staggering, especially when compared with the original business case for setting up the call centre.

Instead, someone invented dual-tone multi-frequency interactive voice response (IVR) technology. Enough said.

"In call centres, operational managers with enormous brains concern themselves with developing statistical models associated with capacity planning and simulations. These models don’t work."

Then, somebody from a large consultancy came up with the concept of core competencies. This was well timed because customers were apparently moving to competitors based solely on price, which was not surprising when you consider that the customer service was so universally below expectation. So cost pressures became top of mind! This drove decisions to outsource and sometimes offshore the contact centre altogether.

“Now this is good,” said the CEOs. “We don’t have to worry about those pesky customers at all now, it’s all budgeted and allocated for in the five year contract and I can concentrate on my new telly adverts. Something I enjoy spending money on.”

It wasn’t quite so successful at cutting costs as the original idea for call centres. Indeed, it actually ended up being a bit more expensive for some of those who went offshore and suffered crippling waves of fraud and soaring attrition rates. But many companies did manage to considerably reduce the cost-to-serve of their customers. Few, though, managed to increase customer loyalty or advocacy as a result of these initiatives.

Adding value

Today, businesses are becoming more engaged in a resurgent spirit of adding value. Yes, the realisation that value is not a zero-sum game and that both the provider and consumer can benefit – it’s not one or the other – is creeping back into fashion.

“How can I maximise the value of my customer base while managing my cost-to-serve?” Now that’s a wholly different question which was clearly not the governing concern that drove the industry-at-large to where it is today.

Organisations are becoming more lustful for information on customers’ behaviours and preferences. They seek to exploit previously undiscovered patterns to drive a greater share of the individual customer business. Progressive businesses are segmenting their customers by behaviour and value – managing the level (read 'cost') of service appropriate to each segment.

"Today’s call centres are designing out the repetitive tasks and outsourcing them back to the customer through more sophisticated self-service functions."

Emerging channels are stripping out cost, lean thinking is removing waste and shortening timelines, and customers are being offered to pay a premium for value-added services. Choice is back, and creativity in the value-driven management of customer relationships is very much in vogue.

Today’s call centres are designing out the repetitive tasks and outsourcing them back to the customer through more sophisticated self-service functions. Websites are becoming more intuitive and can now collaborate with additional contact channels so consumers can complete a query using multiple methods of contact, without losing their place in the process and having to begin all over again.

As simple operations become more accessible in self-service, we will choose them (including IVR-derivatives begrudgingly!). But that means when we want to speak to a human, our agenda is likely to require somebody of sufficient intellect who is loaded with accurate and timely information to assist my request.

This will be a relationship-building opportunity for the business and one that will likely affect my loyalty and the share of my business so it needs to be tip-top! My request for human interaction will be routed immediately to the best service agent who fits my needs, personality profile, propensity to moan and so on.

Advanced customer value management

Many businesses are ploughing towards the target of advanced customer value management. Richer knowledge about customer behaviour, preference and value is allowing organisations to more actively manage their customers. With a fresh choice of personally constructed offers, the customer can move smoothly between product types and value segments. Those that resist encouragement to shift into a ‘profitable segment’ may be asked to quietly leave and greater focus placed on those that remain!

This isn’t a new concept, but is remarkably different to the 'Call Centre = Cost Centre' equation. It is already in practice in the contact centres of the more progressive businesses and is highly bespoke by nature because it’s driven by dynamic and differentiating influences like ‘value propositions’, ‘personalised experience’ and ‘brand essence’.

But its bespoke nature doesn’t mean that outsourcing can’t work and IT packages should be discarded. It just means that technology must be capable of segmenting customers into finer-grained markets and the service must be personalised at the point of interaction… just like my hairdresser does.

Paul White is chief marketing officer at Graham Technology.

Read more features, practical case studies and white papers about contact centres.

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