The Lifetime Value of an Agent

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Let's start from the proposition that customer service in America is at best unremarkable and, at worst, really awful.


Whether you're talking about service delivered by phone, fax, e-mail, live text chat or Web site, it doesn't matter. The typical consumer has a story to tell - often many stories - about the dysfunctional customer service systems he has to deal with daily.


Before discussing what can be done about it, let's have a moment of self-examination. The call center industry has a collective blind spot. It tends to screen out information about the interaction of the "typical customer." Instead, the industry as a whole often idealizes customer interactions or sees things as if they were plotted on a graph or a spreadsheet. Let me strip the veil of willful ignorance away from this picture for a moment. People hate this. You already know that people hate being called by telemarketers. That goes without saying.


But they hate having to call a toll-free number and waiting on hold. They hate having to punch in an account number and then the agent asks for the account number again. This is what computer telephony integration and its tech ilk have wrought - unreasonable expectations. We too often view the industry, and the call centers that are its core, as a finished product. It's as if - having conceived of the best possible service situation and enumerated the technologies that will get us to that point - we can sit back and rest on our laurels and marvel at what a wonderful technological age we live in.


It's not enough simply to say that customers have choices about what channel to use, or to feel good because you can measure the value of customers and supposedly treat them according to how important they are. You must remember what is a permanent, essential variation on the 80/20 rule. Twenty percent of call centers (or contact centers, or whatever you want to call them) make good use of advanced technology while 80 percent do not. Another, more chilling variant is that 20 percent of customers understand how the call center industry helps them, how the technology they wade through makes their interactions better while 80 percent don't care and hate the whole experience. These percentages are for illustration purposes. You won't find this in any study or research report.


Let's also presuppose some basics:


o Most call centers do nothing but answer voice calls. No e-mails, no Web, no e-commerce. Nothing but plain old voice.


o Most first-line agents are looking at a screen that tells them little more than the name of the person calling and the current balance on an open account.


o Most of those agents are getting that information by manually entering a name or account number.


o Most of those agents are getting paid less than $12 an hour.


o Most of those agents will be gone in three years.


o Most of those agents, therefore, don't have more than a cursory familiarity with the company they work for or the products they sell or service.


It's clear that the industry, which for 10 years has been infatuated with technology, needs to address the main barriers to continued success: that advanced technology is not so widely distributed as the industry press and vendors would have you believe; and the weakest link has been and remains the way representatives are managed.


Treating the rep like crap is functionally equivalent to treating the customer like crap. To knowingly do so for very long is corporate insanity.


Fixing This Problem


One reason customer relationship management became so popular in the call center mind was that it contained the germ of a very good idea at its core. That is, you can measure the value of a customer, estimating the amount of revenue a customer will generate over his lifetime. Then, when you balance that figure against either the ongoing cost of retaining the customer or the cost of replacing him should he leave, you know exactly how much you can spend on customer service. If you have good knowledge of your costs and control over your operation, you can arrange to deliver service with pinpoint accuracy to the customer, always spending enough to keep him, but never more than you need. This is one aspect of what has been called the mass customization of service and is a component of the popular idea of one-to-one marketing.


It's all well and good to think this way. These are admirable goals and we are at the beginning of the era in which this type of marketing will become standard. We are not there yet, not by a long shot.


Technology promises more than it delivers. I'm not talking about the specific features and benefits that are detailed in requests for proposals and planning documents. I have confidence that most vendors' products actually do what they say they do, in controlled or highly maintained environments.


But I don't think that layering tech on top of a customer base will do anything but sow confusion most of the time. The call center blind spot tends to look at customers as aggregates, which is like looking at them as a herd. I don't think they tend to act as herds. They tend to act as accumulations of a lot of highly eccentric individual actions. Each action is created by a counteraction, which is the conversation with the agent.


So, before you invest dollars and man-hours in a customer service system based on the value of customers, you should attempt to measure, and understand, the lifetime value of an agent.


It should be possible, from the moment of hire, to estimate going forward the number of calls, minutes, interactions or customers that a given agent will deal with. Any call center that knows its turnover rates knows how long an agent will stay on average. Correlate that with the automatic call distributor statistics for average call handling. Put a number to the agent's interactions.


Say you hire someone and you can predict that, based on turnover, the average rep stays three years. Then say that the person will handle five calls per hour, or 40 calls in an eight-hour shift. That's 200 per week, times 50 weeks is 10,000 in a year, or 30,000 in a typical "lifetime." Now ponder that for a minute. How scared are you that the person you barely know is going to talk with 30,000 of your customers?


Forget CRM


CRM isn't going to do anything for you if you put someone in front of those 30,000 who thinks you couldn't care less what happens in his career.


Now put dollars to those 30,000 interactions. Depending on what you sell, that's either a lot of money saved, or a lot of opportunity squandered.


Can the rep on the phone make the most of that opportunity by soothing someone who might bolt to a competitor?


Or sell them something that they might not have thought of?


Do you even know what they are capable of?


If not, then you're looking at the question of value through the wrong end of the telescope.


Consumers demand more and companies pay lip service to that demand by adding more technology that purports to decrease cost and increase the amount of contact a customer has. But this endless fascination with multiple channels of contact is a fool's errand. Make the calculation of the value of an agent - and I encourage people to create a metric for this, if there's none already - and you will think differently about the dollars invested in recruiting and training.


This is almost heresy, but start to think about agents in the same way you think about technology - as a system of customer contact. When you know what the agent's lifetime value is, you can think about the costs involved and then ROI them!


More training?


Better benefits?


Strategies to reduce turnover and increase productivity?


It all looks different when you think of the agent as the key component in the service equation.


The agent is not really the weak link in the process. The best technology you can add to your center is not related to call handling, or Internet-enabling or CRM. It's tech that enhances training, that adds coaching, that measures skills and schedules reps fairly.


Call center operations are increasingly accountable to higher management for their performance, from both cost and revenue standpoints. Creating and using a metric for agent lifetime value is a great way to justify the headcount you need to perform. And it's a lot easier to realize the benefits of agent relationship management than CRM.


Keith Dawson is a technology writer and editor at Call Center News Service, New York.
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