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Article : Forget the 80/20 Rule

If you are like most contact center managers, you are constantly battling high workload, shrinking budgets and hiring and training freezes. Still, management continuously pressures you to maintain service levels commitments, and to respond to customer requests within the timeframe you have committed to and to keep abandoned calls at current levels.

If you are like most contact center managers, you struggle to maintain the service level at all costs. You schedule overtime and shorten lunch breaks, ask supervisors to go back to the phones, and advise staff to answer e-mail after hours. And when you still miss your service level target here and there, you blame management for not understanding the challenges of running a contact center.


Joe Barkai

But before you prepare to fall on your sword again, you should ask yourself how your company has chosen these service level goals in the first place. Did they set goals based on the mythical "80/20" (80% of calls answered within 20 seconds) rule or another arbitrary "industry standard"? Does management make performance goals increasingly tougher to reach, believing it will drive better service? Or perhaps, like many, you have simply inherited these goals with the job.

Contact center managers must not only set performance targets and strive to meet them, but, more importantly, they must know how their customers perceive and value these goals. Managers must be aware of customers' perception of acceptable wait times and how long they are willing to wait before they consider it poor service, and how changes in the service experience might impact customer loyalty. In other words, contact center managers must determine their customers' service level elasticity.

Service Level Elasticity
So what is acceptable hold time? Because customers have different business needs and expectations, different priorities and service alternatives, they will have different level of tolerance, and there is no evidence that the "standard" 20 seconds threshold is "acceptable" to "most" customers. There is no way to answer this question without actually polling customers and establishing their wait time sensitivity through surveys and analysis of ACD call statistics.

Once we determine what our customers are willing to tolerate, we can define service level objectives that are specific to them, and recognize the business impact of failing to meet their expectation. The ability to weigh the benefits of satisfying customers against the cost of meeting their expectations provides the means to set service level goals that treat individual customers based on their value to the company.

To understand the impact of making even small changes in service levels, consider a contact center that receives 1000 per hour with average handling time of 4 minutes. In order to meet service level goal of 80% in 20 seconds, the call center needs 74 agents. But if the service level goal can be reduced to 80% in 60 seconds, the operation would require only 71 agents.

Changing the Perception of Wait Time
Because longer wait times lead to higher call abandonment and customer dissatisfaction, contact centers make every effort to shorten the wait time. However, Diagnostic Strategies research shows that once they are placed in the queue, callers do not abandon at a constant rate. Rather, a given population tends to wait some time before abandoning the call, and this wait time is fairly consistent for each population. As long as the service level target is longer than the abandonment threshold, callers will wait. In other words, optimal service level target should be set just below that time.

If we determine that customers indeed expect shorter wait time, adding expensive agents is not necessarily the only recourse. There are numerous ways to leverage human behavior and make callers feel that the wait time is shorter than it really is.

Research shows that unpredictable wait seems longer than certain wait. Informing customers how long they will wait will make the wait seem shorter and more tolerable, and as long as the wait time is acceptable and the time prediction relatively accurate, will reduce the number of abandoned calls.

Another solution that is easy to implement in some ACD systems and can be very effective, is to artificially increase the number of rings that the customer hears. In other words, the customer continues to hear the telephone ringing after she has already entered the waiting queue, which gives the caller the illusion of a shorter wait time.

First Contact Resolution
Research shows that the two key drivers of customer dissatisfaction are first contact resolution and response time. While the common approach to service level measurements includes response time, and many contact centers measure average speed of answer, far fewer measure resolution rates and, in particular first contact resolution. It is imperative that the managers of these call centers put more emphasis on the quality of problem resolution and consider it a key performance measurements.

Satisfaction and Loyalty
Meeting high service level goals is worthwhile only if they have direct impact on your business. Research reveals a complex relationship between service level metrics and customer satisfaction, because in most cases customer satisfaction is based on perceived quality of service delivery rather than on precise measurements. Long-term satisfaction depends more on the overall quality of the customer service experience than on discrete metrics such as wait time. Moreover, customer loyalty is not a guaranteed outcome of customer satisfaction.

A properly tuned service level recognizes the value of customer loyalty, as measured by repeat purchases, contract renewals and referrals, as well as the strategic and market recognition value of customer satisfaction. At the same time, service level goals must recognize that different customers represent different lifetime value and should focus on the more valuable and profitable customers.

Summary
Meeting high service level goals is costly. As a contact center manager you must ensure that they are aligned with corporate strategy and with customer expectations, and that adhering to them is money well spent.

Service level is never "one size fits all" and managers who stick to the old "80/20" rule without thinking it through are spending invaluable resources to no avail.


About The Author
Joe Barkai is the founder and principal of Diagnostic Strategies, a management and technology consulting practice specializing in Service Lifecycle Management (SLM), diagnostic knowledge management, service process optimization, and advanced diagnostic solutions. Joe brings over 15 years of consulting experience to Fortune and Global 1000 companies in the US, Canada, France, Germany, Finland, Italy and Israel, that include John Deere, DaimlerChrysler, General Dynamics, Lucent Technologies, IBM and the US Army and Navy. His business consulting practice covers service business strategy, service process reengineering, and implementing support automation technologies, diagnostic expert systems and advanced diagnostic and prognostics methods.

About The Company
Diagnostic Strategies is an innovative research, advisory and consulting firm focusing on service lifecycle (SLM) practices and technologies. Diagnostic Strategies works with Fortune 1000 companies on service business process and strategy development and implementing advanced solutions that include self-service, expert systems, remote diagnostics and prognostics in their service operations.

Today's Tip of the Day - Outsourcing Service Agreements

Read today's tip or listen to it on podcast.

Published: Monday, November 3, 2003

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