John
Seddon, Vanguard Consulting, www.systemsthinking.co.uk
Copyright
Henry Stewart Publications. First published in the Journal of
Interactive Marketing, Volume 2, Number1. www.henrystewart.co.uk
The
call centre is heralded as a strategic weapon in the
competition for excellence in customer service; it is at the
heart of Customer Relationship Management (CRM). Yet rather than build
the relationship with customers, many call centres are
spoiling it.
Customers are frustrated at having to make choices from
IVR (interactive voice response) options that bear little or
no relation to their problem or need as they see it; they are
irritated at having to hang on, repeat their requests, get
passed around and so on.
In the worst cases politeness is becoming a substitute
for service; customers want their issue dealt with, they will
only put up with so much handling, however customer-friendly
the interaction.
The
result in such cases – and there are many – may not be
strategic advantage, but strategic fumbling; dropping the
ball, driving customers to seek services elsewhere. The espoused goal of
the call centre – improving customer service – is undermined
by the methods employed.
‘Push’ design and
management
The
causes of the problems are to be found in the design and
management of these organisations. In simple terms, call
centres are designed and managed on ‘push’ or ‘top-down’
principles. What
can be learned from what has occurred in call centres is a
lesson to managers throughout an organisation. The call centre is
central to CRM, but remedies have far wider implications.
How do
call centres typically get designed? Managers
plan; they either use industry data – speculation based on
previous experience – or actual data – calls in to existing
organisation structures – to estimate the volume of work to
expect. The work
is ‘sized’ using data about typical call length. These measures are
translated in to the service standards with which the call
centre is to operate (time to answer the call, average
handling time).
These measures set the budget and the budget becomes a
sword of doom.
How do
call centres typically get managed? Given
the above, the pre-occupation of managers is ‘how many people
do I need to meet the standards?’ and ‘how do I get them to do
it?’ This is to
see management’s role as resource planning and
management.
Managers understand their job as managing budgets,
standards and people.
In call centres we see a host of Human Resource
practices, all employed on the assumption that the people can
make the difference.
In fact, the people cannot make that much of a
difference, the capability of a call centre is governed by the
way work works – how it is designed and managed, and that is
the responsibility of management.
‘Pull’ as a better
way
Management
needs to learn a better job: to act on the organisation as a
system; this being the fundamental methodology for ‘pull’
thinking and practice.
When the call centre is understood as a system, the
potential for improving performance becomes vivid and
realisable.
Moreover, when managers learn to think and work this
way, the role they have played in causing sub-optimisation
also becomes apparent.
This, it has to be said, is often a major block to
making changes.
Managers are not comfortable when they are asked to
question their basic assumptions and, moreover, they are
reluctant to take the same issues up the hierarchy. The hierarchy speaks a
different language; after all, the hierarchy set the
budget.
To
understand a call centre as a system is to understand the way
the work works from a different, and more useful, point of
view. In
describing a systems perspective, it is helpful to compare it
to the norm, which is, essentially, a ‘mass production’ view
of work; it is the very thinking that resulted in industrial
strife in the last century. Systems thinking is
derived from the theory of quality (1). The two ways of
thinking about the design and management of work are
summarised in figure 1.
|
Mass
production thinking
|
|
Systems
thinking |
|
Top-down
|
Perspective |
Outside-in |
|
Functional
specialisation
|
Design |
Demand,
value and flow
|
|
Separated
from work
|
Decision-making |
Integrated
with work |
|
Related
to budget, showing activity, productivity,
standards
|
Measures |
Related
to purpose, demonstrating capability
|
|
Contractual
|
Attitude
to customers |
What
matters |
|
Extrinsic
(incentives) |
Motivation
of people |
Intrinsic
(pride) |
Figure
1: Mass production thinking versus systems
thinking
Customer-driven design –
understanding demand
The
purpose of any commercial organisation is to get and keep
customers. The
customers’ relationship with the organisation can only be made
up from the transactions they have with it. Thus it is important
for managers of call centres to understand the nature of
customers demands – why customers call in from their point of
view, and how the organisation (and bear in mind the work
often goes beyond the call centre)
responds.
Think
about it this way.
If an organisation understands why a customer calls in
(‘demand’) from the customer’s point of view, it should also
understand what matters to the customer (‘value’). If the organisation
then deals with that work (‘flow’) in the most efficient way,
by just doing the value work, service improves, the
relationship is built and costs fall.
Many
traditional, ‘mass production’ managers struggle with this
idea; they are used to equating improved service with greater
cost. Many will read the last sentence of the preceding
paragraph and assume that the implication will be higher cost
because this means using more expensive people, those they
tend to keep in specialist functions ‘behind’ the front
line. However,
instead of thinking ‘cost’, managers should work on the
‘causes of costs’, (and one is managing with traditional,
hierarchical and functional budgets – to which I shall return
below).
When
demand into call centres is understood from the customers’
point of view, an alarming volume of what I call ‘failure
demand’ (2) – demand caused by the failure to do something
right for the customer - becomes apparent. This work represents a
major cost as well as significant damage to the
relationship. In
some call centres failure demand runs as high as 75% of the
total volume. I
have never seen it lower than 25%. Mass production
thinking treats all demand as units of work. The systems thinker
does the obvious thing – understand demand from the customers’
point of view and work on the causes of failure to remove
them. However,
the traditional organisation design obviates working this way.
The
problems caused by other functions are not represented as
costs on their own budgets; these other functions can make
their numbers despite the costs caused. Managers of call
centres who do appreciate these issues are forced to ‘work
through the hierarchy’ to solve the problems. They are expected to
attend meetings and make presentations, but often nothing gets
done, for the hierarchy represents an inefficient means for
solving such problems – the preoccupation of the various
managers is to meet their own objectives – the inability to
solve problems is designed in. It is not an answer to
allocate such costs to the relevant functions or divisions;
the costs should be eradicated. To do that, and thus
to improve performance, requires a different way of designing
and managing the work; it begins with understanding demand
from the customers’ point of view.
Customer-driven design –
understanding value and flow
Consistent
with the desire to manage work standards, managers of call
centres typically specify procedures for how the work is to be
done. Where
procedures do not match with customer demands, which is all
too often the case, waste occurs – re-work, duplication, lost
time and so on.
By contrast, the object of a systems design is to
design flow against ‘value’ – what matters to customers for
each type of customer demand. An example will
illustrate:
A
telecommunications company’s call centre had the following
procedure for dealing with calls: Every call necessitated
bringing up the customer record on the IT system; note had to
be made of the customer’s request and actions taken. If the customer’s need
could be dealt with within three minutes, it should be
done. If it
seemed likely to take longer than three minutes, call centre
agents had to raise a ‘task’ on a separate part of the IT
system. The
entries that needed to be made on this ‘task’ system
duplicated much of the work already done on the customer
record. The task
then had to be sent to the relevant department for
action. Such
tasks would wait in electronic
queues.
When
this call centre’s work was studied ‘outside-in’, looking at
demand and flow, it became clear that enormous resources were
being spent on ‘non-value’ work. Moreover, the
batching, sorting, queuing and counting (‘managing’) of work
was causing errors and failures to meet commitments made to
customers. In
turn, this was causing ‘failure’ demand from customers – calls
to progress chase, complain, raise a query and so on. The management’s
preoccupation with cost, which was behind the ‘three minute’
edict was actually causing costs. Some of the costs
associated with waste were measurable, the costs of the impact
on customers were much greater and
incalculable.
The
‘procedures’ were thrown away and instead call centre agents
worked to the principle of ‘handling everything that came in
through to completion’.
Those (in other departments) who had the ‘answers’ were
brought on to the call centre floor. Thus training became
‘pull’ – what was needed, because of customer demand(s), was
learned immediately.
In two weeks the call centre came under control, it
reached a steady state.
Then the volume of calls began to drop, because of less
failure demand, and customers (these were business-to-business
customers who had frequent contact) immediately commented on
the change. Of
greatest surprise was the impact on average handling time – it
remained unchanged.
Managers discovered for themselves that learning to do
the value work, and only that, reduced overall resource
utilisation and did not increase it in the call centre. None would have
predicted such a result, for it goes against the grain of a
productivity mind-set.
Customer-driven design – the role
of IT
In
call centres, IT systems usually control the way the work is
done. In the
example above, the IT system was not only used to govern work
procedures, it also counted work, giving managers data about
volumes and activity.
These measures became the tools of management and
managers used them in the ways they were obliged to – data
about volume led to moving resources around to deal with the
work; data about activity led the managers to ‘manage people’
in inappropriate ways (see later). It is a paradox that
‘managing with the budget’ causes sub-optimisation – managing
costs causes costs.
Managing
resources – moving people around according to the work – may
seem to be a logical thing to do. But managers overlook
the fact that they themselves have caused many of the work
‘backlogs’. To
‘hose’ resource at backlogs causes ‘lumps’ in the work
flow. In simple
terms, it makes the whole of the work more unpredictable and
it can also cause more errors and waste, for the purpose of
the work often becomes ‘bust the backlog’ which is not the
same as thinking ‘do the value work’.
Managing
people – ‘motivating’ them with prizes and the like,
essentially treating their performance as different (when it
appears to be so but is not – see below) also appears to be a
logical thing to do.
However, psychology has taught us that extrinsic forms
of ‘motivation’, when linked specifically to a task – ‘do this
to get that’ – cause the worker to focus on ‘getting that’ and
as a consequence the quality of work suffers. Even worse, such
‘incentives’ cause the task to become de-valued; the intrinsic
value of doing the work is lost.
The
above problems have their routes in traditional managerial
assumptions, but the data for their expression are provided by
the IT system. In
my experience the majority of the data provided by IT systems
in call centres has to be turned off when changing to a
systems approach.
The IT systems represent an enormous amount of waste in
creation and, furthermore, are a primary cause of waste in the
way the work works.
The small amount of data provided by IT systems that
have value need to be used in a different way. Two examples will
illustrate:
Measuring capability of the
system
In an
insurance claims call centre, the first system measure to be
established was time to settle claims – the purpose of the
system from the customer’s point of view. This was not available
on the IT system (lack of measures relating to purpose is a
common problem) and took some time to establish. Once the measure was
known, people – managers and staff – could focus on the
reasons, how time was wasted or lost and how time was used to
do the ‘value work’ – what mattered to the
customers.
The
measures in use – work volumes and activity – were scrapped,
for they were part of the problem. Only total volume in was
kept as a measure from the traditional set, and to make it
more useful it was plotted in a control chart. The control chart
helped managers judge the stability and predictability of the
system.
Measuring the capability of
agents
Similarly,
the first system measure to be established amongst the work
teams was agent capability. It was found (as is
most often the case) that agents’ performance was entirely
governed by the system – the way the work worked. Mangers who assumed
the agents to be responsible for differences in activity were
actually making things worse.
This is
always a difficult idea for managers to grasp, so an example
may help:
Figure
2 shows a Call Centre service agent’s work activity every day
for twenty days.
Figure
2: Call centre service agent’s calls taken by
day
What
this chart shows is that we can expect the agent to take as
few as twenty and as many as ninety calls on any one day. The variation is
caused by the service agent’s system – the nature of calls,
availability of information, utility of procedures and so
on.
Most
managers look at such a chart and express either disbelief or
panic. Their
attention is always drawn to the lower limit - they are
terrified at the prospect of all service agents taking as few
as twenty calls.
However, one wouldn’t expect a series of observations
at the lower or, for that matter, the higher limit of the
chart. The chart
simply illustrates that the variation existing within the
observations (numbers of calls per day) would lead one to
expect values as high or as low as the limits. Most, however, would
occur around the mean.
Ignoring
this fundamental truth, managers set work standards, spend
resources on ‘motivational’ programmes and police peoples’
performance. The
agents, who are victims of the system, do whatever they have
to do to succeed or survive, regardless of the impact on
customers.
Systems
thinkers are aware that there is always variation, in anything
that we do. In a
call centre, the job of management should be to manage flow
and reduce or remove sources of variation, in that way
performance will improve. When working this way,
managers become leaders, they harnesses service agents’
ingenuity towards contributing, learning and improving, rather
than driving agents to use their ingenuity against the
system.
IT and supplier
relations
The
measures provided by the IT systems are also used for
contractual purposes when outsourcing work to suppliers. Here is a typical
example:
An
IT manufacturer of home computers had out-sourced customer
service to a supplier.
The supplier was judged on achievement of a service
level – time to answer the phone. When service levels
were poor, the manufacturer would lean on the supplier. In turn, the managing
director of the supplying organisation would lean on his
managers who would, in turn, shout at their engineers to pick
up the phones or be faster in dealing with customer
problems. Two
consequences arose:
1.
The
‘simple fix’: The
fastest way to resolve customer problems was to ask the
customer to go through a routine that re-configured their hard
drive – the consequence was the hard drive would be in the
same state as it was when it was originally shipped. Any customer who had
not backed up his or her computer would lose all of the
software that had loaded and all of their personal
files.
The
‘dumb front end’: To get the phones picked up, the supplier
hired cheap labour – people who could do nothing of value for
the customer.
When call volumes were higher than even this resource
could cope with, managers told ‘experts’ – those who could
solve problems – to pretend to be a ‘dummy’, that way they
would meet their service level.
Service
levels were met, the customers experienced dreadful service
and costs rose.
This organisation had a lot to
learn.
This
example illustrates a more general problem in outsourcing
customer service to call centres; neither party is interested
in the nature of demand. The contracts deal with volume, not
nature.
Effectively organisations outsource their waste – the
costs of dealing with failure demand become hidden. Often the costs are
incredible. It is
not in the supplier’s interest to declare the fact (assuming
they think this way) because the work represents
revenue.
IT has
been central to the development of both call centres and
CRM. The nature
and use of IT is a reflection of our current management
thinking. In
simple terms, if the IT solutions didn’t appeal to managers
they would not be bought. They do appeal because
they fit the current management
paradigm.
IT offers features, not
necessarily benefits
Customer Relationship
Management might be more properly called Customer Record
Management, for this is a feature of the IT systems that
people can find useful.
And in my experience I would say no more than
‘useful’.
Managers need to be reminded that the many features of
IT systems (Record Management, Caller Line Identification,
Customer-Telephony Integration, Interactive Voice Response and
so on) are just that, features. To the extent that the
are benefits will depend on how they help or hinder the way
work flows and they can often make flow worse. In applications of CRM
I have yet to see managers working with data on the
relationship between the features IT systems and the flow of
work. It is
always (and wrongly) assumed to be a positive relationship.
Holder
and Fairlie (3) comment: “Relationship marketing is an attempt
to recover some of the traditional values of the neighbourhood
shop… It seems ironic that we are today struggling to harness
sophisticated data-mining software to vast consumer
databases.” Irony
is a good choice of word. We are asking
computers to do the very thing they are least able to do and
we are asking people to not use the very thing people are best
able to do, form relationships with others
(customers).
From ‘push’ to ‘pull’ – changing
the paradigm for CRM
Mass
production thinking leads to ‘push’ design and
management.
Managers have to ‘make budgets’, workers have to ‘work
to procedures’; the consequences for customers are evidenced
in the bad fit between what matters to customers and the way
the call centre responds. To design call centres
from a systems perspective is to think ‘pull’ rather than
‘push’. The
object is to understand the nature of customer demand, its
predictability and variation and design optimal responses. Not
only is this cheaper for the organisation, it improves
customer satisfaction; it builds the customer relationship
rather than destroying it.
The
call centre can be the eyes and ears of a business; it can be
central to relationship management. However, the call
centre is not an island; it is subject to the design and
management of the wider organisation. In traditional mass
production organisations, the design of the relationship with
customers can be characterised as ‘make and sell’. Ford was famous for
the slogan ‘you
can have any colour you like, as long as its black’. Today, we see many
organisations’ marketing plans being driven by production
capabilities (‘we make it, you sell it’). By contrast, Toyota’s
Lexus line represents a model of ‘make to order’, production
being ‘pulled’ by demand (4).
In
Japan people say the only way to lose your Toyota salesman is
to leave the country.
It is a long-term relationship based on one-to-one
behaviour and not limited to the showroom. Incredibly, Toyota has
brought marketing into an entirely different relationship with
production management.
The basic condition of ‘pull’ thinking is managing
flow; marketing creates flow. By contrast, in mass
production organisations you find marketing and service
managed as different functions with differing objectives and
measures. As a consequence, you often find a problematic
relationship between call centres and marketing. The way marketing
behaves has a major influence on the nature of customer demand
on a call centre.
For example, marketing may offer a price which, because
of the IT system, will mean call centre agents completing
information fields in such a way that the customer gets an
invoice that is not easily understood. A simpler and
astonishingly common example is marketing offering the
customer something no one in the call centre has knowledge
of.
‘Pull’
thinking goes beyond the creation of product or service, it
helps us look at every transaction between the organisation
and the customer and from the customers’ point of
view. This is
a fundamental shift in our thinking about the way we work with
customers. The
traditional ‘make and sell’ paradigm uses above-the-line
‘push’ marketing tactics. They have led to the
ubiquitous statement:
‘half of my marketing budget isn’t working, the only
trouble is I don’t know which half’. It always occurs to me
to ask ‘how do you know its half?’. In the last ten years
we have seen growth in direct marketing. It is attractive
because it is more measurable, but what are not and cannot be
easily measured are the costs of intrusion. The shift of interest
from ‘below-the-line’ marketing to CRM masks the fact that
there has been no real change in philosophy. CRM is often no more
than more sophisticated ‘push’. Managers invest
enormous resources on what is an appealing idea – they have no
idea of the potential consequences. An example will
illustrate:
The
central marketing function in a bank was making a major
investment in customer databases. The whole plan was
based on the proposition that knowing more about customers
would lead to more ‘tailored’ offers of products and
services. I
suggested that rather than invest such a large amount of
resources in something that was, in effect, no more than a
‘bet’, it might be more profitable to understand the nature of
current transactions between the bank and its customers. Further, it would help
to know the value created at these points of transaction and
then model changes to what went on at a ‘local level’ (from
the customers’ point of view), to understand what might
predictably occur if such changes were applied
universally. I
was met with incredulous looks. In essence the
marketing executives were uncomfortable with the idea of
working in a local branch and a call centre; after all, they
were ‘from head office’.
Similarly,
I was working with a telecommunications organisation that had
invested in consulting help to create a new ‘customer-facing’
structure. The
new structure separated the ‘consumer’ channel - retail outlets -
from the ‘corporate’ channel – corporate sales staff. I found many small
business users being ‘turned away’ from the retail channel as
their procedures instructed such ‘demand’ to be sent to
corporate sales.
Corporate sales found such accounts to be unattractive
to pursue, as the volumes were small and would not thus help
in achieving sales targets. Taking the customers’
point of view led to a design based on demand; it led to an
immediate rise in revenue.
The
central issue is how do we design and manage work to create
‘relationships’ with customers? If CRM remains no more
than a sophisticated ‘push’ method, it will pass on and be
remembered as the late Nineties customer fad, and perhaps
thought of as something exploited by the IT industry. If organisations grasp
the nettle of ‘pull’ design and management, the paradigm will
have truly changed; and this will be a change from which there
is no going back.
Anyone who doubts that proposition should study the
evidence. The
Toyota system – the exemplar of ‘pull’ methods – is now forty
years old and continuing. The methods are a
quantum leap beyond economies of scale, they represent another
economic level – economies of flow
s Service organisations in the UK that are learning to adopt
this thinking are building confidence fast, reinforced by the
fast benefits of removing waste. Managers who have
learned to work this way, never go back to what they did
before.
The call centre is the place to
start
Spoiling
the relationship with customers is not the fault of the call
centre alone.
Call centre managers may install IT, define procedures,
manage activity and do other things that hinder the flow of
work, but the relationship goes across all boundaries. However, the call
centre is a powerful place to start a change to a systems
perspective.
For
the call centre to be the eyes and ears of a business you have
to look ‘outside-in’, to understand demand, value and flow
from the customers’ point of view. This always creates a
compelling case for change and, moreover, provides the means
to make an immediate start on improvement. The substantial early
gains – productivity gains occur in weeks – builds managers’
confidence in taking a systems approach to the design and
management of the work.
Managers discover for themselves the limitations caused
by the way they have traditionally managed and thus attack the
‘causes of costs’ with confidence. Management’s role
changes to managing the system – understanding and improving
how well the work flows, end to end, to fulfil the customers’
expressed value.
The consequence is always improved service, improved
efficiency and improved morale. It is also a first
step on the journey to genuine Customer Relationship
Management; customers love to deal with organisations from
which they can ‘pull value’ – what else would they
want?
John
Seddon is the managing director of Vanguard Consulting. He is an occupational
psychologist, author and consultant. John describes his
work as a combination of systems thinking – how the work
works, with intervention theory – how to change it. The Vanguard web site
is www.systemsthinking.co.uk
1
“In Pursuit of Quality:
The Case Against ISO 9000”, Seddon, J. 1997, Oak Tree
Press.“The Vanguard Guide to Transforming Call Centre
Operations”, Seddon, J. et al, 1999, Vanguard
Publications.
2
Editorial,
Holder and Fairlie, Interactive Marketing Vol. 1 No. 3,
2000
3
“The
Toyota Production System”, Ohno T., 1988, Productivity
Press.
