In the call centre service industry, the time agents spend serving a customer is an important component of the cost of that service. Call centre managers measure this as average handling time, and most try to manage the call time down.
As an unintended consequence of this policy, when an agent's average handling time exceeds the target, they are motivated - not by their managers, but by these incorrect incentives - to start disconnecting calls as soon as the customer is put through or rushing through the call without ensuring resolution. These short calls then bring the agent's average down to target, and all is well in the management report.
Of course, all is not well. A customer has just waited in a queue, only to have an agent hang up on them before they could even speak or not having their problem solved. There are expensive consequences for the company, the least of which is having that customer call again and give the next poor agent to answer the call an earful, which of course takes more time.
This extreme, but surprisingly common, example illustrates the risk of poor understanding of the value - and costs - of poor customer service. Focusing on one element of cost - in this case the time it takes to handle a transaction - leads to poor decisions and ultimately to poor performance.
Instead of managing the wrong thing and incentivising the wrong behaviour, a holistic approach considers not just the cost of handling a transaction, but also the cost of multiple transactions incurred by causing a customer to contact the company more than once, and the cost of customer dissatisfaction incurred first by causing a customer to make contact, and then by not meeting the customer's need quickly and efficiently.
First call resolution
According to Service Quality Measurement Group, in the United States, first call resolution (FCR) matters most for impacting a call centre's performance. In its benchmarking studies going back 11 years, the 68% of calls that are settled the first time around means that the other 32% of call volume are from customers who have to call back because their issue wasn't settled the first time. The industry average is 1.5 calls to settle an issue, which represents an enormous opportunity to reduce operating cost.
Some other statistics from SQM should motivate executives and call centre managers alike to focus on first call resolution as their key measurement of a call centre's performance. A 1% increase in FCR leads to a 1% increase in customer satisfaction. Countless studies from around the world including the American Customer Satisfaction Index show that customer satisfaction is both a leading indicator and highly correlated to the share price.
Importantly, when a problem is solved the first time, just 3% of those customers are at risk of going to a competitor. Conversely, if a problem is not solved, the at-risk portion of customers booms to a whopping 34%, according to SQM. Most companies cannot handle that.
A misconception
As a consumer, if I'm buying a product or getting assistance, my definition of good service is quick, efficient meeting of my needs. A polite, even friendly encounter is nice, but not really of primary importance. I want my sale processed or my problem solved the first time, every time. Second, I'd like it to be quick and painless.
There is a very common misconception that offering a good service to customers - the quick, effective, efficient meeting of a customer's need - involves additional cost. In other words, people believe there has to be a trade-off between quality of service and cost.
This misconception arises from an unclear or incomplete picture of the cost of service, often resulting in a focus on the wrong thing. In our view, all contact centres should strive to exceed 80% first call resolution, and if this is properly managed, costs should go down, not up.
Paddy Coleman is Group CEO of Customer Service Engineering, CSE, a call centre productivity firm.
Share