ACCE/Special Preview: The State of the Call Center Industry

Our annual overview of key trends the contact center professional needs to follow.

As the industry gathers in Seattle this month for the Annual Call Center Exhibition, it's a good time to ask ourselves: what is the scale and scope of this sector? Where is it going? In what direction are conditions changing, and how does that affect us as professionals, as individuals, as companies?

Often, discussions about the health of the call center industry focus on the negative. Turnover, for example, has been a structural problem for decades. Progress in combating turnover has been incremental, at best. Another negative has been the tendency of centers to look at their goals and processes with an isolated tunnel vision, rather than relating what they do to the overall health of the businesses they are part of.

Leaving all that aside, it's clear that in 2006, call centers are a profoundly important and vibrant part of the American business culture. They -- we -- are at the core of the company/customer relationship. As much as any other corporate organization, the call center is vital to the success or failure of every company, of every business transaction. All the metaphors we've used in the past -- being the "front door" to a business, or the "front lines" -- they are all amplified by today's faster and more global economy. The call center really is central.

In this short essay, I'm going to describe what I think are four trends that call center professionals have to be aware of in order to take advantage of the new visibility and importance their status holds. Two are emerging technology trends; the other two are social and cultural. I believe that you can't understand the modern call center without thinking about how these four ideas are feeding into each other.

We have new tools to measure activity and turn those measurements into changes in how we manage performance. Different names are used to describe related aspects of this trend (performance management, analytics, among others) but they reflect the same phenomenon: better tools that capture more subtle variations in behavior and help us plot solutions to difficult problems.
The call center doesn't have to rely on big proprietary technologies like old-style phone switches, ACDs, CTI installations and gigantic CRM software suites. On-demand software and services are finally playing a significant role in letting centers target precision technology at reasonable prices to exact customer handling needs.
Customer services have been woven into the fabric of the world economy in the same way that manufacturing was in earlier decades.
And finally, we are seeing the emergence of the customer as an influential counterweight to the corporation. It is possible now for a single unhappy customer to wreak havoc with a company's goals and even its profits. When this happens, the call center is the place where the corporation lays blame, and where it looks for a solution.

You Are What You Measure

Call centers typically generate mountains of data. The problem has always been how to interpret it and what to do with it. Ideally, you'd take all the information that comes from your activity reports and marry it with other company data. Neither source of data tells you very much by itself. Activity data, for example, is largely about calls: how long they last, how many an agent can take, how many transfers, which customers you talked to and for what issue.

The rest of the company generates different kinds of information. Companies track products: made, shipped, delivered, planned, abandoned. They track money spent on all aspects of the business, including marketing, sales, HR, and on and on. They track higher level data like profits and revenue, and they derive metrics like customer value.

When the call center reports to its C-level managers about its activity, unless it speaks in concepts that are relevant to the enterprise, it will either not be heard or it will be ignored.

Performance management is, essentially, a way to take the vast mountain of data that's generated by the call center's operations, marry it to other relevant business information from other parts of the company, and apply it to the specific problem of making the call center run more effectively. Performance management, and its close cousins, analytics and business intelligence, are very fully developed disciplines. Outside the center, companies are very skilled at collecting and then mining disparate sources of information. Adding the call center's data to that mountainous pile, while not a trivial exercise, is a natural outgrowth of current trends.

What's new in the call center is that these measurement tools are not just descriptive; they are prescriptive. They can tell a manager exactly what steps they need to take within the center to show better results. In just the last two years a wide series of vendors has turned to the task of crafting very sophisticated -- but easy to use -- tools that determine what you need to measure within your center and how you can turn those measurements into actionable plans for improving the performance of the center as a whole (or of specific agents). It's a remarkable revolution, and it's unfolded in relative obscurity. For more details on how these tools work and who makes them, I recommend our recent roundups in the August 2006 and February 2006 issues of Call Center Magazine.

Some other insights on this came from a recent survey conducted by Ventana Research, whose analysts argue that few centers have recognized that the best way to reduce cost is to identify why customers are calling and eliminate (or reduce) the need. "Only 23% have deployed any type of root-cause analysis that would enable the center to identify process changes, manufacturing improvements, marketing and sales messaging or better ways for the center to work in conjunction with other business units," the researchers assert.

"Despite much industry rhetoric to the contrary, our research shows little appetite for making sales in the contact center, with only 48% measuring revenue generated...Our results show a nearly universal inability to produce business-related measures that are granular enough to point to specific improvements needed."

What this suggests to me is that there is a gaping void between what centers are measuring, and what they can now measure with available technology. Professionals in these areas who are swift at seeing the gap will be able to turn their centers into corporate strategic assets by restructuring what they measure, and by putting new those metrics into action.

Hosting Emerges as an Alternative

According to a recent research report from Dimension Data, the Call Center Benchmarking Report, 5% of centers have chosen to rent technology (compared to 4% last year), and 15% have chosen to buy hosted technology (up from 5% last year).

That's more than just an incremental increase -- it's a recognition on the part of call center purchasing committees that they are not as willing to invest in technology for a long time horizon. They are looking for targeted technologies that address specific problems, that can be costed out over a measurable period of time. The trick now, it appears, is to implement tools that don't force you into the business of managing them. If your call competency is managing the customer, then you are in a people business, not a technology business. Call center managers are increasingly willing to offload the ownership and management of their technology to professional technologists -- i.e., vendors and service providers of technology platforms.

This is not to say that hosting has replaced owning premises-based equipment. It's more of a minor groundswell than a great wave. But by introducing a realistic and cost effective alternative out into the marketplace, hosted tools make the ownership and use of complex technology a little easier.

Mariann McDonagh of Verint Systems says that "in today's climate of mergers and acquisitions, re-orgs, spinoffs, outsourcing and offshoring, hosting can be just the ticket. The great thing about hosting is that it's flexible, and can grow and shrink and change as an organization changes. If you're running a hosted solution, and you acquire another company, getting that company up and running on the hosted solution is much more straightforward, less costly and less time consuming than deploying more premise equipment at the newly acquired company.

"In the outsourcing and offshore outsourcing area, here's a specific example," she says. "A North American company had a contact center operation that included their own agents, a local outsourcer and an offshore outsourcer. The company had no visibility into the outsourcer's contact center operations. The company deployed a hosted solution which they not only used for their own agents, but insisted that the outsourcers use them, too. This gave them instant insight into the operations of the outsourcers, including both the local and the offshore outsourcer. From this they were able to optimize all of their contact center operations. In addition, they are now in a position to switch outsourcers much more easily than before, since the task of equipping a new outsourcer, either local or offshore, is as simple as setting them up on the hosted system. Needless to say, this easy ability to switch serves as an incentive to the existing outsourcers, and they haven't had to do so yet."

It's a World Economy of Call Centers

Let's stipulate for a minute that the Friedmanesque world has taken hold and that conditions are (relatively speaking) flat. What does that mean for call centers? And for American companies looking to do business globally? I recently visited several centers in Egypt, and was delighted to see with my own eyes that a) the power stays on, b) the workstations glisten with the cool light of modern software, and c) the Internet is widely, deeply, fibrously available. Inside the gates of the call center operations you would never be able to tell -- by looking at the infrastructure -- that you are not in Phoenix, London or Bangalore. Note that I added India to that sentence there at the last minute. Don't we all take it for granted that the physical underpinnings of call center life -- of modern, mechanized and digitized business life in general -- are freely available in India? In Manila? In Johannesburg and Dubai? Yeah, we do. Which is my way of acknowledging that the infrastructure is good; it's acceptable; it's not something you need to worry about or even think about beyond the first stage of location assessment. It's flat. You can build a call-center-class industrial park and plop it down just about anywhere on the face of the earth these days. That's what you need to get to the starting line in the race to attact call center business. It's not the finish line.

When I first started covering the call center industry in the early 1990s, site selection was a very different animal. In those days, the core of the industry was focused on the American midwest. The college towns were filled with young transient workers with flat, nonregional accents. The outsourcing companies had set up shop years before in the regions around Nebraska, Iowa and South Dakota, to name just a few places. One of the key reasons for the clustering was the availability of good technical infrastructure in those places. Military bases and AT&T points of presence provided the engines for large scale telecom operations to hop onto the network and do outbound telemarketing and inbound service. It was a golden age.

And then other areas of the U.S. started to take notice. Economic development officials began to wonder why they couldn't plop several hundred jobs down in their towns by offering the right incentives, the right tax breaks, the right pieces of real estate with a cushy deal from the local telco. And so the competition to be the low cost provider within the US began in earnest in places like Oklahoma, Kansas, Wyoming and North Carolina. Lots of locations in the southwest and south put together packages to attract call center investment. And the industry began its inexorable crawl across American to inhabit towns and cities large and small by the end of the last decade. Why is it important or even noteworthy? Because the lesson that I learned watching it happen was this: once you get to a certain baseline level of infrastructure, it stops being a topic for consideration in terms of site selection. In 1992, America learned what the world is now learning -- you can locate anywhere, because infrastructure is everywhere.

The same phenomenon is at work worldwide now. So, it was very enlightening to sit down with Egypt's Minister of Communications and IT and have him tell me that he's not really interested in having the government invest in infrastructure. Paradoxically, that makes a lot of sense for where the emerging-nation call center market is headed. If you are linked to the global fiber network, you can run a world-class call center from anywhere. With the barrier to entry so low, and governments everywhere awakening to the economic delight that is a 500-seat job site, Egypt's Smart Village, though beautiful, can be replicated anywhere. If I were the information minister of any mid-sized country aspiring to join the developed world, building a string of high-end connected industrial parks would be high on my to-do list.

No country will make a splash on the international market by touting its technical underpinnings -- we take that for granted now. You can't play in the flat world unless you've already proved willing to build the necessary technical substrate.

The decision to use call center services should be made based on labor quality, and availability, rather than on cost. This change in world dynamics is already starting to affect centers in the U.S. The baseline of that argument (or let's call it a business case, rather than an argument) rests on local qualities of education, language, service culture and continuous supply. U.S. call centers are being forced to use technologies and better business practices to fight the turnover battle because there are so many other available locations that compete with them on the basis of good labor, rather than just cheaper labor.

The Super-Empowered Angry Customer

Companies and their call centers are used to thinking about customers from an asymetrical point of view.

What I mean is that they tend to view customers as "powerful" only when they are aggregated into huge groups. Any individual unhappy customer is a case to be resolved, but an army of unhappy customers is a force to be reckoned with.

We generally take a pretty condescending view of the individual customer, creating strategies for "managing the relationship," scripts and scores that tell us how valuable a customer is and what psychological buttons to push to achieve a desired purchasing result.

But what happens when the power shifts and it's the individual customer who is a force to be reckoned with? Take the case of AOL.

This company is famous for how difficult it is for customers to cancel their service. Without getting into the pros and cons of their customer retention strategy, let's just stipulate that it's a pretty advanced set of techniques for preventing cancellations by turning them into "save" opportunities by CSRs.

One customer who tried to cancel his account recorded the entire call to customer service. He posted the recording to a blog. It became a viral incident blasting AOL's service attitudes. For mere pennies, one angry customer had the power to broadcast AOL's inner workings -- and his dissatisfaction with them -- to an audience of millions. Millions. That prompted more outcry; one Web site posted a purloined copy of the internal AOL training documents dealing with retention strategies. More embarrassment ensued. One customer asymmetrically impacts the operations of an entire company.

Or take the case of Dell. A man named Jeff Jarvis bought a laptop that he found unsatisfactory. Unfortunately for Dell, he received very poor service, and he described it in excruciating detail on his popular blog over the course of months. It galvanized an entire community of like-minded unhappy Dell customers. According to some observers, the long-term incident known popularly as Jarvis' "Dell Hell" has actually impacted Dell's stock price. One man, an Internet-enabled megaphone, and a major corporate problem focused on the call center.

What can you do in the face of such a "super-empowered angry customer"? Not a lot -- at that point it's really too late to do anything but apologize, promise changes, and slink off into PR damage control.

But all call centers -- and all companies -- have to recognize that every customer is a potential super-empowered angry customer. There are no opportunities to sweep unhappy interactions into aggregates and point at our average success rates. Call centers must preemptively act to negate the outlying bad interactions because every single interaction has become a flashpoint for public humiliation and failure. This is a phenomenon that's going to change the way companies strategize about customer relationships. It's going to change the way you think about spending on things like self-service, CRM, customer support software and the like. And it's going to force you, the call center professional, into collaborating with marketing and upper management.

Taken together, these four basic trends make for an exciting but turbulent time to be a call center practitioner. You are likely to be blamed for things that are not your fault -- angry customers, bad press, unhelpful statistics. It's on you to understand the forces that are changing the way call centers operate, and to take advantage of the new opportunities that arise. New tools, more flexible technologies and a wide-open global playing field are all at your disposal. Now go out and enjoy ACCE.

Over a course of more than three decades, Keith Dawson has developed software, managed teams of architects, and worked extensively in the software development and IT industries as a writer, editor, and pundit. He has written for Media Grok, Media Unspun, Slashdot, The CMO ... View Full Bio