What You Don't Know About Call Volume Forecasting Strategy
In the last article I discussed the assumption with respect to satisfaction at the call center. The assumption was that improvement in queuing performance at the call center could have a positive impact on customer retention. If you are convinced that call center queuing performance really does impact customer retention, then the issue is whether or not the impact is consistent with corporate strategy. The obvious answer is that any improvement in customer retention is usually consistent with corporate strategy. The less obvious answer is that any improvement in customer retention may appear positive; however, the wrong customers may be retained. Consider the other side of the strategy discussion; namely, to what extent is the call center considered as a component of the corporate strategy. In this article, corporate strategy will be examined particularly as it may impact the call center operation and how the call center operation can be a major strategy component.
Critical Call Center Components In Customer Management Strategy
Many people confuse strategy with tactics and think that the actions taken in the call center represent strategy. While the concept is true, the actions themselves represent tactics. Tactics are the actions put in place to translate a strategy from concept into action. Many companies will have conflicting tactics in an attempt to implement a customer management strategy. For example, a company wants to grow market share so the sales and marketing department sell delivery performance as a way of translating improved performance over the competition to gain the share. The manufacturing department knows that margins are important and hence focuses its attention on reducing the unit manufacturing cost. While both tactics are good for the company, they are not complementary. Another conflict of tactics can arise when manufacturing constrains the rate of growth of the production capacity while the sales and marketing department are focused on volumes that may exceed the capacity.
Strategies are generally derived from the mission statement for the organization. Companies spend a great deal of time developing a mission statement that is concise yet clear and lasting beyond specific market and economic vagaries. From this very general mission statement, strategies such as increased market share or return on-¬equity for the investors of X percent or greater can be defined. For the purpose of simplicity, this article will focus on growth of market share as the strategy of choice. (There is no constraint that limits the number of corporate strategies being implemented at any one time—except the hours available by the executives to manage them).
Once a strategy has been defined, it is translated into specific financial parameters that can be measured by the finance organization. If a company wants to increase its market share by 1 percent (not an unreasonable strategy), it must know the size of it’s market so that the 1 percent improvement can be translated into incremental revenue and margin. These financial parameters provide the guidelines for spending for the tactics that will lead to the growth. If the cost of implementation of the tactics exceeds the anticipated margin, the strategy and/or tactic needs to be re evaluated.
Call Center Strategies
Any strategy used by the call center, unless the call center is a business unto itself, should complement the corporate strategy(s) identified in the long range plan. A few possible call center strategies will provide some insight regarding the complementary nature of strategies between corporate and call center.
Strategy A: the Minimum Cost strategy
This call center strategy has a focus to maximize the productivity of call center personnel and hence minimize cost. The call center is provided with the minimum number of personnel and uses part time personnel wherever possible to minimize cost. This strategy has the benefit of minimum cost but ignores the issues of quality and retention. Make no mistake, if the call center manager is measured on cost performance, the other parameters will be compromised as necessary to meet the cost objective.
Strategy B: the Quality Strategy
This call center strategy focuses on the quality of the interaction with the customers. Often, companies who focus on quality will use the message that some calls may be audited for quality purposes. For this strategy the call center is provided sufficient personnel and training to meet specified call center performance parameters deemed appropriate for establishing a quality image. While this strategy appears to be only positive, there is the opportunity for the call center manager to fall into the Measurement Trap (a trap that keeps asking for more information and is never satisfied).
Strategy C: Maximum Retention Strategy
This call center strategy focuses on the retention of customers. Often, companies who focus on retention will intentionally over staff the call center so that sufficient time is available to deal with each customer without concern for meeting either quality or performance parameters so long as the customer situation is resolved in a positive manner. This strategy has very positive benefits for call center personnel and customers but definitely increases costs (and lowers margins). It also generally meets most corporate strategies but with increased costs.
Strategy D: Minimum Quality Strategy
This call center strategy follows closely the minimum cost strategy. Whereas quality may play a part in the minimum cost strategy (such as getting the most quality for the investment), the minimum quality strategy is used by companies that see their products and service (call center) as a commodity and see no need to provide anything other than minimum quality as a way of maintaining a market position. This strategy may actually cost less than the minimum cost strategy since the minimum cost strategy may have an implied quality level that raises the costs above the minimum quality strategy.
Strategy E: Middle of the Road Strategy
This call center strategy requires very little thinking and could be described as the "me too" strategy. A strategy like this arises when management does not see the call center as a strategy component and thus assigns it to be "just be like everyone else." When this happens, the call center follows the "pack" and thus provides no positive impact to the company since it is only doing the same thing that all the other competitors are doing.
Each of the five preceding strategies is probably derived from a corporate strategy. In any case, each strategy is either the result of planning and focusing the call center strategy to be consistent with the corporate strategy or the result of omission from any consideration in strategy development.
An Example of Complementary Strategies: Growing Market Share
Consider the case where the company wants to increase market share by differentiating itself from the competition. In this case, the company has decided that the market for its products and services tends to be inelastic (not just price driven) so that differentiation will have an impact. The company may translate the general strategy into product features that are unique. The company may also wish its call center to look different than the call centers of competitors. The quality strategy would be a complementary strategy since it will provide noticeable differences in call center performance (such as time to answer, time to return calls, etc.).
Another Example: Grow Market Share
Consider the case similar to the one above except this company believes its products and services are commodities and hence price elastic (market share increases will probably come from reducing prices). The company may translate the general strategy into the lowest possible quality and cost in order to reduce prices and still make a profit. For this case the minimum quality strategy or the minimum cost strategy would be complementary. In either case, there is no need to differentiate the call center performance from everyone else. Thus, the call center should be staffed for minimum performance and minimum costs. The company expects customers to be more concerned with price than slow performance at the call center.
The difference between these two seemingly identical strategies is the market they are in. Elastic markets act very differently than inelastic markets and general strategies must be tailored to meet the needs of the specific market. However, it is clear that not every one of the five strategies would be appropriate for either of the two strategies to increase market share. When strategies are in conflict, it has the same effect as members of a tug of rope team not all pulling in the same direction. Is your call center strategy supporting your corporate strategy? Does the performance of your call center help meet corporate goals or is your call center there just to "keep the company out of trouble?" How do think your call center should evolve to meet corporate strategies?
If you are having trouble answering the preceding questions, your call center is probably an organization waiting for direction. Call Centers will continue to grow in strategic importance. Now is the time to address the issue of call center strategy!