Benchmarking Call Center Operations

PREPARED BY: DAVID M. JASTREBSKI

October 2012
Pacific Associates

2002-2012, David M. Jastrebski, Seattle, Washington, United States of America. All rights reserved. No portion of this document may be reproduced, copied, or transmitted, whether electronically or otherwise, without the authors advance, express, written consent.

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Table of Contents

1. The Dangers of Call Center Benchmarking ............................................................................ 4 A. Achieving a Competitive Edge ........................................................................................... 4 B. Best Practice Versus Best Benchmark Indicators............................................................... 4 C. Attaining Best Practice.......................................................................................................... 5 D. What Good Is Benchmarking? ............................................................................................ 6 E. How Can Value Be Derived From Benchmarking? .......................................................... 7 F. Forms Of Benchmarking ....................................................................................................... 8 i. High Level Benchmarking ................................................................................................. 8 ii. Technical Benchmarking ................................................................................................... 9 iii. Performance Benchmarking ............................................................................................ 9 iv. Process Benchmarking ................................................................................................... 10 v. Best Of Breed Or World Class ........................................................................................ 10 G. Making Benchmarking Work ............................................................................................ 11 H. KPIs ....................................................................................................................................... 11

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1. The Dangers of Call Center Benchmarking

A. Achieving a Competitive Edge For years Call Center Managers have been using Benchmarking as a tool to evaluate and improve the performance of their operations. What exactly is benchmarking and is it a valuable weapon to increase a business competitiveness, or is it just another management fad that serves as little more than a distraction to management? To answer this question one must first recognize that organizations are increasingly using more and more sophisticated forms of telephone, smart phone, texting, social network, and software app based service to differentiate themselves from others in the marketplace. Yet behind all of these new forms of communication the Call Center still stands as the foundation of and for customer interaction. Because of this there seems an obvious need to benchmark the telephone service being provided by a Call Centers operation against some standard, if only to determine if the Call Center is being run and managed properly. Further, recognizing that to achieve a genuinely competitive edge, an organization must consistently deliver a level of service that is perceived by their customers to surpass that of the competition, one would surmise that benchmarking should be done in relation to ones competitors. Is this the case? Or is this a mistake?

B. Best Practice Versus Best Benchmark Indicators This desire to optimize quality is usually set against a background of strong pressures on the price of products sold and serviced by a Call Centers operation. With the exception of premium products, which generate high margins, organizations often cannot afford to invest more than their competitors do on the provision of service for their products. Therefore, to compete on the quality of the service being provided by the Call Center, a company must continually improve the standard of service that is being provided, while at the same time minimizing its cost by increasing the efficiency of its provision. In order to do this, managers of Call Centers have three factors which they must exercise control over. Controlling these factors can achieve the illusive goal of a higher customer satisfaction level than that being provided by the competition, at a cost that is acceptable to management. The three factors are: Assuring that there are adequate number of people to deliver the services, and that they are properly trained to perform the tasks they are undertaking, Assuring that the processes that are used to manage the Call Centers operations detail exactly how to deliver the service being provided, and Assuring that technology is integrated in a way that optimizes its effectiveness.

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In order to gain a market lead then, the combination of the deployment of people, processes and technology must be more effective than that of a competitor. In other words, the company must be adopting the best practices that exist within their industry.

C. Attaining Best Practice So how does one achieve this? In reality, most Call Centers, no matter how poorly run, will contain at least one element of innovation that may or may not give them some degree of lead over their competitors. Similarly, those companies which consistently perform well, i.e. leading edge companies, are usually found to have an ability to combine a number of best practices which are inherent and intrinsic to their operation, in a manner which together creates a significant advantage over their competitors. From this one can see that most best practices are in reality little more than unique and unusual practices that are specific to a company, and werent necessarily designed to represent best practice per se. Often, they were designed as expedient practices by a particularly creative manager who understood better than his/her contemporaries what the real problem was and how best to easily defeat it. Best practice then isnt real ly something that represents an industry wide approach to a problem or management process, instead its a unique well best practice, that happens to occur within an organization. Recognizing that best practice isnt a codified body of rules and regulati ons developed by the Harvard Business School to guide management, one can easily see that Benchmarking, if it is done for the purpose of measuring ones operation against the best practices of a competitor or an industry, can lead to dangerous results. If, in order to be a best practice, a practice is unique to a company and represents something that sets them apart from the remainder of the industry, then how can one measure oneself against such a practice? The answer is, one cant. Not unless one copies the best practice, implements it within their own organization, and then measures their use of the practice against that of the originating competitor. This is where the problem with Call Center Benchmarking comes from. Who says it is best practice to have an ABD rate of < 1%? Who says it is best to have an ASA of < 15 seconds? Why are these considered best practice, and why do we measure ourselves against these standards? Why not measure how happy the customer is with the service given by a particular agent, instead of how many calls the agent took today? The answer is that while best practices come from creative, original thinkers, most of us are not. And therefore the copying of best practice routines is often the only way we will ever approach getting a handle on our own operations. Further, with the increasing number of Call Centers in the world, anything we might spend our time inventing as a unique practice is likely to have already been discovered and implemented somewhere else, so why not copy what is going on out there and implement it rather than spend needless time trying one creative approach after another, only to find that in the end we are even more disorganized

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than when we started. In order to achieve best practice in a Call Center then, it has become expected that managers should look beyond the walls of their own organization to identify what others are doing, copy it, and then apply that practice to their own particular environment. But does this really work? While this is industry standard today, and hundreds of companies have sprung up around the concept of teaching us how to implement and measure ourselves against best practice, the reader can readily see that this approach doesnt really result in best practice, it re sults in industry practice. Industry practice is little more than mediocre practice. It is not best practice. Simply copying methods from competitors will never create an advantage on its own, as the best copying can do is bring a company closer to the lead the competitor has, not surpass it. Real advantage is achieved by studying other organizations to understand not only the practices that they use, but their strengths and weaknesses, and from this creating ones own melded best practice. If managers understand both the strengths and weakness of their competitors offerings, they can apply a combination of the best practices they have seen across the industry as a whole, to create a service that surpasses any other individual offering. One competitor in an outbound telesales environment, for example, may boast higher contact rates through automated dialing, while another might gain a higher conversion rate with excellent scripting and training. By studying both organizations it is possible to combine the separate leads each has in their respective markets, in one case attained through technology while in the other attained via good people skills, to develop an overall advantage. Thus copying may be taking place, but not in its purest sense, as the practice being copied is not being applied in its original form. Instead, it is being melded with another practice from another competitor to create a unique practice exclusive to the company doing the melding. In this way a practice unique and specific to the copying company is being created and it results (or may not result) in a best practice. One comes back again to the question of Benchmarking: if best practice is represented by practices unique to a company, how can one measure oneself against these? The answer has not changed: one can not. One can only Benchmark against ones own operation. Benchmarking against a competitor, or benchmark standards representative of an entire industry (read: Call Center industry) says very little about the effectiveness of ones operation and in fact may be misleading enough to disrupt the organizations operation rather than improve it.

D. What Good Is Benchmarking? Benchmarkings value comes about not in terms of proving that one is attaining best practice, but that one is achieving industry practice levels. And while this may come as a shock to some readers, it is not necessarily a bad thing to measure and know with assurance that ones Call Center operation is at least as good as that of the rest of the people operating Call Centers in this world. Why is this so? Because the operation of Call Centers on the whole are frequently the same, even between different industry sectors and nations. Because of this it is possible to study and apply practices between non-competing organizations and even

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dissimilar industries. Further, if this is done with creativity and determination it can actually result in a best practice being discovered and copied from one industry to another. For example, staff contract arrangements being used in a regional electricity companys Call Center might be found to be useful in a finance or telecommunications Call Center. If these are seen, understood, and copied into the telecom industry, for a while they may represent a best practice that helps the telecom company recruit and employ superior people, stealing them from the competition for not much more in cost than would be involved in employing untrained new staff. After a while of course, the competitor will figure out why they are losing their employees, and will move to copy the best practice into their own organization, at which point it will no longer represent a best practice. Even so, likely as not both telecom companies will continue to Benchmark themselves against this practice, notwithstanding the fact that it is no longer a best practice. Worse, whatever metrics they use to perform the benchmarking will probably stem from how the practice was used in the electricity industry, not the telecom industry where it is being practiced. The pit fall shows up again then: is what is being Benchmarked against representative of best practice, or simply industry practice? Likely as not, it is industry practice. And again, there is nothing wrong with this by itself, as long as management does not think that the Benchmarking that is taking place relates to best practice. In general, measuring ASA, ABD, CPC, and all of the usually metrics involved in Call Center operations says little about the quality of operations or of whether a company is leading its competitors. All it says is that if the industry standards are being met it is likely that the Call Center is operating at least to the level of the industry standard. Discouraging? Yes, it is, if one is Benchmarking against all of the usual nonsense that Benchmarking companies charge fees for measuring. However, if one is using this form of Benchmarking as a means to assure that basic operations are moving along nicely, there is nothing wrong with the approach, and it may in fact provide a good deal of value

E. How Can Value Be Derived From Benchmarking? As discouraging as all of this sounds, value can be derived from Benchmarking. To understand how one must first recognize that significant leaps in performance and quality come and often do come about as a result the re-application of a concept or technology that was originally invented for a different purpose. The value of steam driven power, for example, was not realized until the invention was modified by placing it on four wheels. Similarly in the Call Center, software agents, which automatically perform complex transaction processing routines, can boost the potential for the delivery of telephone service (i.e. Call Center service) without the need for human agents. In this case, the heart of this technology was originally conceived to automate the distribution of eMail within an office. Somewhere along the way an enterprising company discovered that it could be used to automate transaction processing, with the result that this companys Call Center was able to handle more transactions per unit of time, more accurately, with less stress to the customer, and less cost to the company, than could be done

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previously. Having studied how things were automated in other organizations, this particular manager decided to copy the process into his/her own Call Center. The rest is history. ATP is now a standard part of most Call Center operations. The comparison exercise in this case is valuable, as it confirms that an organization can adopt a best practice by copying from another organization, provided that what is copied is implemented in a unique manner. If not, then the practice will result in catching up with the competitor, not in surpassing it. Proving that a best practice was implemented and led to superior operational results was easy in this case: the company that copied the process and adapted it benchmarked their own transaction processing operations against that of their competitors, and found that they were processing far more work than the competition was. The conclusion: Benchmarking can indicate a best practice has been achieved, but only if one is testing a new process against an older one, and not as a normal manner of course. If used as a normal manner of course all it tells you is that your organization is operating normally (or abnormally, as the case may be). It is for this reason that many of the worlds leaders in the provision of customer service are also the most active users of Benchmarking techniques. In their case, they arent measuring ASA and ABD to see if they are achieving < 15 seconds or < 1%, they are testing their own ASA against a competitor because they have just finished implementing a new process.

F. Forms Of Benchmarking So what is Benchmarking? Benchmarking is simply the process of analyzing organizations or products, using as similar a group of measures as possible, so that like can be compared with like. Benchmarking is about metrics analysis, not about finding and copying better processes than ones own. In this regard, Benchmarking should not be confused with unstructured visits to other organizations, an increasingly popular trend dubbed Industrial Tourism in the Call Center industry. Industrial Tourism, while providing a welcome day out from the pressures of a Call Center, results in little value gained, as most competitors are very adept at hiding from prying eyes the real value in their own operations. Benchmarking involves the structured collection of data. The accuracy of a Benchmarking project therefore depends on the willingness of a target company to release information and data about their own operations. This will of course be difficult when comparing direct competitors, and therefore a number of different approaches can be used:

i. High Level Benchmarking The simplest but most crude comparison of organizations can be achieved by considering high level performance indicators such as call volumes, the number of agents, total Call Center costs etc. Results from this approach can rapidly identify gaps in performance, but usually wont provide a reason as to why the gap exists. Despite being superficial, especially when applied across industry sectors, this analysis can provide effective pointers to areas of the business which require more detailed analysis.

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The choice of measures to use will depend on the objective for the original Benchmarking. As an example, the relationship between the number of customers and the number of customer service agents can give an initial indication of the overall efficiency of a Call Center function, whereas the loaded cost per second of a call is a useful measure for quantifying the effect of process and technology improvements. Additionally, the average number of calls handled by an agent in any hour can provide a useful means of comparison of agent productivity and the processs efficiency. Other measures which can be compared include unit transaction costs and the average number of calls required to service a particular enquiry.

ii. Technical Benchmarking Any evaluation that precedes an investment in new systems should include an assessment of the performance of the short listed hardware and/or software being considered, working in a live environment. This is a form of Benchmarking, as the exercise involves the comparison of an existing system against the potential benefits a new one, based on the performance gained in another organization. In order to do this effectively it is important to extract the most appropriate data from the targeted Benchmark site(s), so that the benefits of any investment can be calculated properly. In this case the system suppliers will normally nominate a reference site which they feel will demonstrate their product in the field most effectively. Be aware though that this site will not necessarily match your business drivers and processes. When it comes to reference sites however, while there may not be any choice as to which ones that are visited, it is important that the optimum reference be found and the most appropriate data be collected for the Benchmarking to produce realistic calculations for the business case. For example, if a company is evaluating an investment in a new ACD system to provide the handling of calls between multiple sites it is important that the reference organization has not only multiple sites working, but also has the best match in terms of the number of sites, the call volumes, and talk times, so that a realistic comparison can be made.

iii. Performance Benchmarking Clearly, extracting process and management data from competing organizations is very difficult. It is however possible to compare the performance of organizations by emulating customers or prospects, and simply calling the organizations and comparing the experiences against those with calling patterns similar to ones own organization. In these cases, both quantitative data such as talk time and response time is normally collected, along with qualitative measures such as usefulness of the information, warmth, helpfulness and professionalism of the agent. Thus both the efficiency of the operations and the perceived level of quality can be compared between the organizations.

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iv. Process Benchmarking The methods described above compare the results of the elements within a Call Center rather than the elements themselves. Therefore the most thorough type of Benchmarking involves systematic comparisons of the processes which drive the different operations. This is time consuming and requires a high degree of co-operation between the organizations involved. Essentially, every process within the organization must be mapped and the results compared against similar processes in similar organizations. The objective is to redesign the processes to achieve best practice throughout. The result of this exercise is a fundamental evaluation of the way a Call Center functions, and therefore such Benchmarking is normally undertaken as part of a process re-engineering project.

v. Best Of Breed Or World Class Customer expectations of service over the telephone are rarely driven by one industry sector alone. If a customer can call to book a ticket on an airline, their perception of the service they received will be used as a comparative judging factor against other carriers, if they are calling around to compare prices and availability. On the other hand customers of a telebanking service may never have called any of the banks competitors numbers because they have always held their account with the same bank. Therefore, their perception of quality from the service received from the bank will be judged against that from non competing organizations, such as their telephone company or an airline. The result is that all of these organizations standard of service are used by the customer to judge quality. Similarly, any company doing Benchmarking in this area needs to judge their own operation against both their direct competitors, as well as other industries. Managers cannot ignore the service offerings from non competing organizations. While their products may sell in different markets, they are competing to exceed customers expectation of service across all of a customers market life experiences. Customers, especially in Asia and Europe, are also increasingly being exposed to organizations from overseas markets such as the U.S. Therefore if an organization is to compete to provide service excellence, it is competing on a global stage across all sectors. To achieve this, it must deliver World Class Customer Service. Global Benchmarking of Call Centers across all sectors requires a formal framework to ensure that like can be compared with like. The Aspen/Coba World Class Benchmarking Methodology is one such method. In this system a Call Center is evaluated in four different contexts: the culture of the organization, the quality of the service provided, the technology used, and the efficiency of delivery. Under these headings a Call Center is considered under 28 different categories. The resulting scores are totaled and then mapped to a grid.

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The grid depicts the relative scoring of a companys ability to deliver World Class Customer Service. The higher up a company's position on the vertical axis, the greater the quality of service provided. This is of course driven by both cultural and soft issues within the Call Center. The further a company is to the right of the grid, the more efficient it is in providing cost effective service. This requires suitable implementation of processes and technology. Only when a company delivers both quality and efficiency can it be considered as being World Class. Organizations which fulfill this criteria end up in the top right hand quadrant of the grid.

G. Making Benchmarking Work Benchmarking, as a term, may be just another piece of management jargon, but the practice of comparing and learning from allies and competitors is neither new nor likely to be become obsolete in the future. As competition to provide better service to customers intensifies the winners will be those who are aware of what is changing around them, and how they can adapt quickly to innovation, whether it comes from within or outside their Call Center. But is Benchmarking really needed to improve a Call Centers operation? And if one uses it, is there much to be gained from it? If ones Call Center is only marginally automated and integrated, the chances are there will be little to gain from a Benchmarking exercise, except to reinforce what one already knows: without good technology that allows management to accurately measure the staffs performance it is nearly impossible to improve on it. If that is the case, then perhaps the best thing to do is to learn to walk before one starts to run. First, put in place the technology needed to deliver the metrics that are required to manage the Call Center. Then learn how to use the available metrics to manage it. After one has been managing the Call Center for a while with good metrics, one can begin to Benchmark oneself against others. How does one Benchmark against others? Sometimes the best way to achieve quality and efficiency improvements is to simply start by looking more carefully at the KPIs used to measure a Call Centers operation. Start by redefining each KPI so that it matches your customers business needs. Then put in place the technology needed to accurately measure the KPIs, hopefully on a real time basis. Finally, teach first level managers how to use these measured results to manage their staff. When this is complete, and when one has been operating at this level for at least six months, then management can begin to Benchmark themselves against others.

H. KPIs KPIs for Call Centers are often misleading, rarely understood, and usually being measured wrongly.

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What should management be measuring? The following are the key KPIs management should follow: ASA (Average Speed to Answer). The World Class Standard (WCS) is 15 seconds. ABD (Abandonment). The WCS < 1%.

CHPA (Calls Handled Per Agent) or Average Calls/Day/Staff is not a useful KPI. Instead it should be ETHPAPD (Efficiency in the number of Transactions Handled Per Agent Per Day). However, for this KPI to have any value it must be tracked on the basis of: 1) CKW (Closed Key Walkaway) codes, where for each CKW there is an average length of call, and where 2) Each agents ETHPAPD is calculated on a weighted average of the individual CKW Transactions Handled Per Day (THPD), with this then being converted into an efficiency factor based on the total amount of time the agent worked. ETHPAPD is useful when it comes to determining which agents are most productive, but it tells management little about the quality of the work being done. For quality of work, management needs to look at AHTSCC. AHT (Average Handling Time) or Average Talktime is not a useful KPI unless it also takes into account SCC (Single Call Completion). What is required then is to combine AHT and SCC (Single Call Completion) into a weighted average based on CKWs. This will give management a useful measure of how effective an agent is in meeting customer needs. In this case what is being done is to give a higher rating to an agent who addresses a customers issue in one call, even if it takes longer to talk to the customer, than is normally given if the agent consistently has short call lengths but fails to solve the customer issues being raised. For this to be measurable then management must look again at CKWs, and the average length of time for each CKW type of call. Remember, it is important to recognize that a lengthy call that completes the transaction in one call is better than a short call that does not complete the transaction. CPC (Cost Per Call) is a useful KPI, but only for the Call Center manager, and even then only for budget preparation purposes. It is of little relevance or value to agents, team leaders, or first line managers. OCPA (Occupancy Cost Per Agent), like CPC is a useful KPI for the Call Center manager. Its best value comes about when it is used to establish a budgetary goal for the Call Centers GM. QB (Queue Behavior) is of little value when it comes to efficiency and quality as it applies to agents. It is useful however in terms of overall traffic management, and should be a standard part of the daily routine of tracking how calls are coming into the Call Center, and managing the distribution of them.

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