Three Common Operating Mistakes in a Catalog Contact Center

Well-run catalog operations always have to balance service perform-ance with operating costs. That is, they must meet service objectives within a budgetary context of what is both doable and affordable.

To that end, catalog operations managers often are forced to make compromises when it comes to both setting and satisfying service standards, with the better managers able to deliver acceptable service levels at a reasonable cost.

Nowhere is this operating dialectic more evident than in the contact center. Although I might get an argument from a few warehouse managers, I believe the contact center is the most difficult fulfillment activity to manage in terms of both operating and service performance.

From an operations perspective, the workload is random and real-time. You have only 20 seconds to answer a call, while at least in the distribution center you typically have the luxury of 24 hours to get an order out the door.

From a service perspective, your phone reps literally are the voice of the company, with all the training and monitoring that responsibility entails.

Meanwhile in the warehouse, the customer contact is indirect at best, limited for the most part to the presentation and accuracy of the customer’s shipment.

After almost 30 years of working with catalogers of all types and sizes, I now believe the only true measure of operating excellence is directly related to the level of managerial focus and responsiveness.

Conversely, poorly run operations appear to suffer from common operating shortcomings that are more a function of management’s inability to focus on both sides of the operating equation (i.e., service and cost), rather than any technological inadequacies.

For example, many catalogers tout their customer-service levels, proudly noting their contact center’s ability to operate at a high level of service. When pressed, however, they admit that more often than not they fail to meet these standards. They say that to meet the standards on an ongoing basis simply would cost too much.

Obviously, such failures could be the result of many factors, but often it’s simply that managers don’t focus on the basics: accurately forecasting workload and staffing requirements and, most importantly, controlling the related labor costs. Given that labor runs at about 80 percent of a cataloger’s operating costs, it’s impossible to balance service and costs without closely managing the workforce.

To that end, here are three of the most common operating mistakes I find in poorly run catalog contact center operations, along with the techniques that well-run operations successfully employ to better handle the same processes.

Mistake No. 1: Ineffective Forecasting of Incoming Call Volume

Given the real-time nature of incoming call volumes, accurately projecting workloads is a critical activity for a catalog contact center. But in the case of weaker operations, the process often is ineffective and informal at best.

Typically, such companies must rely solely on an initial forecast provided by the marketing department at the beginning of a season, a forecast that’s never revised as the season progresses. Given this disconnect with marketing, the contact center manager is kept pretty much out of the loop with regard to any subsequent changes to the marketing plan.

As a result, such companies often must base their staffing levels solely on increases/decreases vis-à-vis last year’s sales volumes. Given the imprecision of this planning process, it’s no wonder their subsequent operating performance suffers.

How to avoid this: Better-run operations produce precise forecasts of call activity for every hour (in some cases, every half-hour) of every day of the year. They establish these based on the most current sales projections by involving marketing in the contact center’s forecasting process — in essence sharing with marketing the responsibility for the overall accuracy of the forecast.

This scheduling process typically centers around a weekly meeting involving contact center managers, the department scheduler, human resources and marketing personnel.

The meeting’s purpose is to establish the upcoming weeks’ forecasts, adjust the current forecast and identify outstanding issues (e.g., new hires, training, departmental meetings, holidays, illness) that can affect the center’s staffing.

Forecasting customer contacts is a dynamic process with weekly schedules being produced three to four weeks in advance and continually being refined during subsequent weeks. The weekly call volume then is allocated over days of the week by using historic call patterns such as percentage of calls by day of the week and hour of the day.

Without the direct involvement of marketing and an ongoing reappraisal of the forecast, an accurate and up-to-date workload projection is impossible; and without it, operations has no ability to plan or manage either a cost or service standard.

Mistake No. 2: Inappropriate Staffing Calculations

Unfortunately, even with accurate call forecasts, companies still fail to correctly determine their staffing requirements. Catalogers make two common mistakes in calculating headcount requirements:

• staffing to satisfy a specific call abandonment-rate objective; and

• relying on the number of calls per rep hour as a productivity measure.

First, while maintaining low call-abandonment rates is a worthy objective, staffing to meet this objective isn’t as easy as it seems. Contact center managers can control only how fast calls will be answered, not how long callers will wait on hold.

As a result, management has only indirect control over the abandonment rate, because a caller’s tolerance to a holding delay will vary by call type and service expectations.

Second, using a fixed number of calls per hour to determine staffing will result in uneven service performance throughout the day. As shown in the Contact Center Staffing chart (above left), the rep productivity necessary to achieve a specific service level will increase as the call volume increases.

During a 500-call hour a call center will be able to achieve significantly higher productivity than in a 100-call hour (i.e., 13 percent greater at a 50-percent service level, and 28 percent greater at an 80-percent service level). Basically, the larger the center, the more productive the reps.

The chart also highlights the cost of good service versus bad with an 80-percent service level costing about 8 percent to 22 percent more to staff (depending on the call volume) than a 50-percent service level.

How to avoid this: The right way to calculate staffing is to use a metric such as average speed of answer or service level, in conjunction with a statistical traffic model, such as Erlang C, which takes into account call volume fluctuations when calculating appropriate staffing levels.

Although this type of staffing calculation may appear complex at first, it can be accomplished fairly easily and inexpensively through the use of contact center workforce management software that is commonly available on today’s market.

Mistake No. 3: Maintaining a Permanent, Full-time Contact Center Workforce

Even given accurate call and staffing forecasts, some contact centers still are unable to operate cost effectively. The primary reason? Their workforces are comprised of permanent, full-time reps. As a result, catalogers have a tough time adjusting to the fluctuating call volumes throughout the day and week.

How to avoid this: Well-run companies often maintain a permanent flex-time contact center staff by hiring individuals willing to work four- to six-hour shifts, three to five days a week. The company guarantees this flex staff a minimum number of hours each week (e.g., 20 to 24 hours) and gives the staffers the flexibility to choose their hours from an inventory of available hours. In turn, they require the flex staff to expand their hours during periods of peak activity.

In sum, although the contact center certainly isn’t an easy operation to manage, the key ingredients for success need not be expensive. All that’s generally required: experienced managers focused on the basics and an organization with the flexibility to handle the fluctuating workload.

William J. Spaide is a partner in the management consulting firm of Spaide, Kuipers & Co. The firm has provided operations management and information technology consulting services to more than 300 direct marketers, retailers and distributors during the past 15 years. Contact him at (610) 668-8296 or via e-mail: spaide@spaidekuipers.com.