From cost-cutting program to centre for profit generation, contact centre operations need a clear benchmarking plan. By Darren Baguley.

Pan-American Airlines invented the call centre in the 1970s, and benchmarking performance using key performance indicators (KPIs) has been around almost as long. But after decades of using the same old benchmarks the Australian contact centre industry is in the midst of a major shift in how it measures an agent's performance.

For several years organisations have had one goal: to drive costs out of the contact centre. Correspondingly, KPIs have reflected this. Average time to answer (ATA), average handle time (AHT) and raw sales were, and still are, commonly used metrics in contact centres. In the past few years there has been a gradual shift in senior management's attitude as contact centres have transitioned from being cost centres to profit centres.

As contact centres begin to generate more revenue than they cost to run, managers are focusing on qualitative metrics aimed at improving customer service. Some organisations are doing this within the framework of a recognisable management philosophy such as Six Sigma, while other centres use a similar technique but in a less formalised way.

Metrics such as average time in queue are still important, but they're taking a back seat to KPIs that are designed to measure the customer's interaction: first-call resolution, conversion ratios and customer satisfaction.

According to Company Director Chris Severn, of Customer Service Experience, with the hundreds of different metrics contact centre managers could potentially look at, deciding which KPIs to benchmark against is such a complex process that it's all too easy to get bogged down and lose sight of the main game.

"The challenge for these managers is to know what's important," says Severn. "Trying to filter through the hundreds of measures to the handful they can really measure a business on. It's easy to focus on the wrong things and become statistic junkies who know everything about their business except where they want to take it.

"Those are the risks of benchmarking contact centres, yet you can't do without them; if you do something wrong in a call centre it's going to cost and affect customers, before someone works out what's happening."

For managers looking to make the transition from cost-reduction-based metrics to qualitative measures, thinking about outcomes rather than inputs is a good start. Simply said, while inputs such as AHT, call volumes and sales volumes are outcomes, they are not necessarily an outcome in the minds of the customer at the other end of the line.

Instead, metrics that are oriented towards what shareholders, customers or staff care about are often a better place to begin. A customer who has experienced a hard sell and rejected that offer is likely to be dissatisfied at the end of that call. By the same token, one who has experienced a more needs-based conversation with an agent who has taken their time over it, even if they've ended up saying no, may well be quite satisfied because it has been a meaningful conversation.

That person is then more likely to take another call in the future.

One contact centre that follows such a philosophy is outsourcer ICT Australia. According to Managing Director, Michelle Tomkins: "Our centre is a profit centre for ourselves and our clients, so our focus is not on how quickly we service someone. With standard benchmarking you look at things like AHT. We look at whether we can resolve whatever the discussion is about in that first call.

"We use that as a benchmark, first-call resolution (FCR). The other area we look at from a benchmarking point of view is being able to support our customers with a communications medium they prefer. So if someone wants to communicate by email, phone or fax or whatever, we ensure that we can use the appropriate method."

Tomkins says a percentage of the industry is making the transition to an outcome-centred model, but large numbers are not. "They're in the sectors where they are traditionally pressed on margin, but if they don't start seeing every communication they have with a client as a sales opportunity, they're just going to churn and burn. There have been many examples where a particular call centre has brought on 1000 new clients one month but lost 1500 because they weren't happy with what they were doing.

"Sometimes it's harder to retain a customer than to get new ones through advertising and marketing campaigns. That view has to change, otherwise they're just going to churn, and someone satisfying the client's requirements by effectively communicating and servicing them will get them to move."

While FCR is definitely a more customer-satisfaction-centric metric than the KPIs that contact centres have traditionally been using, People Matrix Group's Solutions Director, Mark Schneider warns that it needs to be carefully applied.

"Before you try to interpret anyone's FCR rate, you'd better ask, 'what do you mean by that?'. Too often, FCR includes calls that have been handballed to another department to follow.

"The operator often takes the view they did what they could on the first instance, but it really comes down to how the customer feels at the end of the call. The best way to assess that is by asking, 'have I resolved your problem to your satisfaction?'."

There is a trend to do this now, particularly in competitive industries such as banking and finance, because it brings it home to the operator. Schneider adds, "If that question is on their call assessment criteria and they're not asking it because they're afraid of what the answer might be, it's going to hurt their performance. You've got to link the call-quality criteria to performance and customer satisfaction."

Australian Teleservices Association Chairman and Team Red Solutions partner, Steve Michinson has identified a trend towards measuring the overall cost to manage the customer as well as FCR. "Many contact centres focus purely on the call answering stats as opposed to the cost of administering a customer. If an agent takes a little longer on the phone [to solve a customer's problem], but manages to encourage the customer to use the internet in the future, that will reduce an organisation's costs.

"On the sales side, the number of sales an agent makes or the number of calls they take a day is of less interest than the conversion rate or the value. For example, take an organisation that has a $9 product and a $100 product. The $9 product is easy to sell, but is the agent who sells 20 of those more valuable than the agent who sells 10 of the $100 products? If you have the wrong KPIs, you drive the wrong behaviour. By the same token, it's not productive to measure AHT religiously; instead, apply a standard deviation and look at the top or bottom 10 per cent."

Some enlightened companies have even taken the fairly radical step of abandoning traditional metrics like average time to answer to just measure abandonment rate.

"It is the customer voting with their fingers about exactly the same thing," says Chris Severn. "At what point do customers decide 'I'm out of here. I'm not waiting'. If you measure to an abandonment rate, you're measuring your customer outcome; if you measure to a service-level agreement, you're measuring to an internal process that you don't really know is right or not."