Advances in technology mean that call centres are no longer confined to cold-calling - companies are using them to cultivate high-value customers.
In an episode of the American comedy Seinfeld, Jerry is at home talking to a friend when his phone rings. Our hero picks it up. 'Hi ... Yes ... Oh, so you're offering me insurance ... hmm, well I'm a little busy right now. I'll tell you what, give me your home number and I'll call you back later ... Oh, so you don't want to me to phone you at home ... Oh well then, now you know how I feel. Bye.'
How we must all wish we could handle unwanted calls this well. Sometimes, of course, we initiate the call but then regret it. How many times have you phoned a customer service line, only to get the impression that the person you are talking to is merely processing (but not actually listening to) your answer?
Brief encounters like these can be irritating, but they are an unfortunate side effect of an otherwise hugely effective and successful industry. Employment in the call-centre industry is rising by around 22% a year and is forecast to have a 200,000-strong workforce by the end of 1998, according to the researchers and consultancy, Datamonitor. By the year 2002, Datamonitor predicts that 2.3% of the working population will be employed in call centres.
The call-centre industry is moving into a new stage of sophistication, using new technologies and techniques, most of which are specifically aimed at making those who work in call centres seem more of a help than a hindrance to the general public.
Experts differentiate between two types of call-centre activity - inbound and outbound. Both operations are growing rapidly. In the early days, inbound activity typically meant an internal help desk or a customer information service, often woefully under-resourced. Outbound calling, where the firm initiates contact, came a little later. Here, the impetus has shifted away from the stereotypical cold-calling of the Seinfeld variety towards companies making calls to cultivate their best customers.
With the shift in call-centre activity towards developing these profitable customers over the long term, the status of the call centre itself is being elevated. No longer regarded just as a low-cost route to market, call centres are assuming a strategic importance for organisations. Properly managed, they provide the conduit through which information is channelled back to the manufacturing line, to create market intelligence for future campaigns or even expose product defects at an early stage.
One impressive example of this latter capability is provided by Scottish Power's call centre in Glasgow. It uses an application known as Trouble Call. As the agents log details of the calls that they receive, the system checks for emerging patterns. After just five fault reports received by different agents the system can flag a potential problem. If the fault is confirmed, a recorded message is placed on the telephone network to advise other callers. The real power of the Trouble Call system, says Walter Russell, manager of the centre, is its precision. 'The message is only heard by customers who ring in from the affected area. If they happen to be calling for another reason or want more information, they have the option of talking to an agent. But most just want to know that the problem has been recognised and is being put right.' (See above.)
The marketing capabilities of advanced centres, like that for Scottish Power, differ so significantly from what went before that some analysts talk of an old and a new model. Vasa Babic, a vice-president of Mercer Management Consulting, contrasts new-model call centres that focus on profitability with the earlier model which lacked the intelligence to capitalise on valuable information. 'The traditional call-centre model treated all customers and calls as equal, by answering an undifferentiated stream of calls in strict succession. In the new-model call centre advanced technologies give the company the ability to anticipate the caller and even prioritise between customers, based upon their economic value to the business.'
So what are these enabling technologies? The backbone of the call centre is a large telephone switch which routes inbound calls to agents. In the more sophisticated centres, this basic technology is complemented by computer telephony integration (CTI), a technology that combines the company's telephone system with the resources of its database. When CTI is combined with caller-line identification, the system can retrieve information on the customer as soon as the telephone starts ringing. In some instances the system may detect that the call is being made by a customer who speaks a foreign language and route it to a bilingual agent. Alternatively, if agents find that they are getting out of their depth as a call progresses, CTI enables them to pass both the caller and a £ screen-based record of the transaction to a colleague or supervisor, reducing the need for the customer to repeat all that has been said previously.
Delivering a higher level of service is sometimes not the only objective. Indeed one of the biggest challenges is to ensure that the amount of time agents spend talking to an individual is proportionate to the customer's economic value to the business. 'Low-value customers can drain you dry, if they absorb too much of your time,' says Keith Mallinson, managing director of the telecoms consultancy, Yankee Group Europe. 'Sometimes you need to find ways of making it difficult for an unprofitable customer to tie up resources.' One technique that is available, says Mallinson, is to automate low-value transactions by installing an interactive voice response (IVR) system that invites customers to select a service, by responding to voice prompts.
While IVR can be used to provide an efficient way of handling low-value customers, favoured clients are given a special number to ring so that they can be routed directly to an agent. In the longer term, developments in voice recognition technology may enable systems to recognise callers by a few spoken phrases, allowing important customers to be automatically fast-tracked to a personal account manager.
Technology is also playing an increasingly important role in enabling agents to extract greater value from contact with customers, and to improve take-up rates on optional loyalty schemes. The UK telephone operator, British Telecom, has invested heavily in equipping its telesales teams with state-of-the-art CTI systems. When a customer calls a BT centre with a sales enquiry, the screen presents the agent with a summary of other products and services, such as international calling plans, which fit the customer's call profile. It also presents a script to help the agent promote the product.
Only about a third of UK call centres have invested in CTI. In some quarters attention is already shifting to the next technological challenge - offering an integrated internet capability. Although some analysts have predicted that the internet will usurp the role of the call centre, most see it as complementary. 'The internet is currently a bit like interactive voice response, it is a self-service option, suited to routine tasks that can free your agents for more valuable work,' says Justin Fletcher, a principal consultant at Price Waterhouse.
Managing the web site and call centre as complementary channels is only the first step. The real challenge is to combine the two technologies, so that customers can talk to a call-centre agent at the same time as viewing an interactive catalogue. As a halfway house to fulfilling this objective, some firms offer a call-back service which customers activate by clicking a button on the firm's web site. The disadvantage is that you have to go offline to receive the return call, unless you have separate voice and data connections for your telephone and modem.
A more elegant solution to achieving internet integration is to route the customer's initial call over the internet itself, instead of the normal telephone network. This enables the customer and agent to talk, browse a web page together and exchange graphical data simultaneously. The downside here is that the customer needs to have a multimedia PC equipped with a microphone, or a special device for connecting the telephone to the computer. There are also concerns, for the moment at least, over call quality. 'Companies are reluctant to use voice over the internet because it is perceived to be less reliable than conventional telephony,' says Fletcher.
Despite the caveats, internet-enabled call centres are clearly a promising technology and one that is attracting investment from major players, such as Sitel, the international teleservicing company, which is installing the capability at its site in Brussels. Less innovative firms are likely to hold off from investing for a couple more years, not least because so few consumers have access to the internet - just 7% of UK households, according to the market research company, INTECO Corporation. But once the base of potential users expands, analysts predict that the number of internet-enabled call centres will increase rapidly. 'Most call centres have the technology to hand - it is only a matter of incorporating it into the system and training agents to cope with it,' says Cynthia Ngwe, a business analyst at Datamonitor.
Besides improving the quality of customer contacts, new call-centre applications have the potential to make the cold-calling process less intrusive. One important development in this context is predictive dialling, which automatically dials numbers from a list of targets and only presents the call and screen-based details to an agent when voice contact has been made. In this way, no one agent is allowed to harrass a particular customer into buying a product or service, as sometimes happened in the early days of call centres.
Debt recovery businesses have used this kind of predictive dialling for almost a decade, bringing productivity improvements of around 300% in some instances. Nevertheless, consumer marketers have been less willing to experiment. This partly reflects concerns over so-called 'nuisance calls'. The latter are calls which diallers initiate but abandon once the telephone has been picked up, because all the agents are busy. The suppliers of predictive diallers say that the problem has been largely overcome by safeguards included in later versions of their technology. Some consumer businesses have been persuaded already. BT, for example, uses predictive dialling to contact customers who would benefit from its call discount plan for high users.
Another trend which addresses organisational productivity, is the creation of distributed call centres that are geographically dispersed but have the capability to act as a single operation. Equifax, the international credit risk management company, provides a 24-hour cheque guarantee service to clients in the UK, Australia and New Zealand. Between 8am and 10pm, UK-based customers calling into the service on an 0800 number are routed through to an agent in the company's Cumbernauld centre in Scotland. After 10pm, traffic originating in the UK is answered by agents based in Adelaide, although the customer dials the same 0800 number as before. Traffic originating in Australia and New Zealand is similarly routed to Cumbernauld during UK working hours.
David Bradford, a senior consultant with the UK IT consultancy, Ovum, thinks that distributed technology has considerable potential to raise organisational effectiveness and to promote more varied working practices. Call centres in sectors such as telephone banking have, he says, traditionally meant co-locating large numbers of people in a greenfield site. 'Technology that allows multiple call centres to act as a single unit, could enable high-street branches to handle some inbound calls, during peak periods, or allow branch staff to assume responsibility for some outbound calling,' he observes. Looking further into the future, it is possible to envisage a day when calls to a single, toll-free telephone number could be routed to home-based agents linked into a common network.
And when that happens anyone will have the power to operate a virtual call centre from the comfort of his or her own home.
Scottish Power - Call handling is key to the multi-utility power battle
The creation of a centralised call centre, serving both gas and electricity customers across the UK, is an integral part of Scottish Power's plans to establish itself as a leader in the emerging multi-utility business.
Employing over 470 agents at the Cathcart Business Park in Glasgow, the new centre was established in May 1996, and replaced nine customer service centres spread across Scotland. Since its opening, the company has built on to the centre's basic technology platform. It has added computer telephony integration, caller-line identification, automatic screen transfers, screen pops and interactive voice response applications.
Investing in advanced call-handling technology supports Scottish Power's market strategy. 'The power business offers very limited scope for price competition,' explains Walter Russell, who manages the Glasgow centre, 'so you have to look to customer service if you want to create a source of differentiation.' As an illustration of the customer-centred approach, Russell cites the way in which the call centre's performance indicators are weighted towards customer satisfaction, rather than average call-handling times. Another example is call-tagging, where the name of the agent who initially dealt with a customer is tagged to the query until it is settled.
Outbound calling is assuming a larger role through the loyalty programmes that the company is developing in preparation for competition in the household electricity market from September. Similarly, call-centre technology is supporting the company's assault on the gas market by encouraging agents, aided by scripted screen prompts, to cross sell. When a customer calls into the centre, the system uses caller line identification to display a record of their billing status, services, payment schemes and recent fault history.
Scottish Power's system is smart but it is not fail-safe. When I called the Glasgow centre, the system identified that I was ringing from elsewhere and promptly routed the call to an agent covering the South East of England. 'Do you supply gas in Eastbourne,'
I asked (they do). Then things started to go downhill. 'I'm very sorry,' said the agent. 'Our computer systems are down, could you call back this afternoon?'
easyJet - The no - frills philosophy can apply to call-centre technology
If you only have one product you may find the sophisticated features of the new-model call centre irrelevant to your needs. The trend is to offer services that are differentiated by market segment, but some companies still excel by focusing exclusively on the most price-sensitive buyers, as easyJet, the cost-cutting challenger to BA, has demonstrated.
EasyJet's Luton-based call centre is central to the company's operations - it even emblazons the telephone number on the side of its planes. But by the standards of more advanced call centres, the systems that easyJet employs are basic, even crude. 'We don't want a high overhead, so we keep our processes very simple,' says Clive Just, easyJet's IT manager.
'We don't use automatic screen pops, caller line identification or interactive voice response, because we are not convinced that they would add value to the business.'
He has a point. As a no-frills operator with just one class of service and no frequent flier programme, easyJet's competitive advantage derives from how it cut costs. The call centre plays an important role in delivering this objective by cutting out the middleman and enabling the company to sell nearly all of its seats direct to the public.
'Not paying commission to travel agents has cut 10% off our operating costs,' says Just.
The company deliberately makes the booking system as simple as possible.
This is, says Just, because it fits in with the company's goal of turning air travel into something to be enjoyed by as many people as possible and which is as easy as journeying by road or rail.
When a call-centre technology demonstrates a clear business benefit, the company will make use of it, so long as it adds value.
Solutions that deliver flexibility are generally preferred over systems that incur fixed costs. If the business is running a promotion, it reserves individual numbers for each media channel on BT's advanced services platform.
The calls are directed to different agents' extensions depending on their origin. This enables the effectiveness of each channel to be monitored.
Similarly, the company can route calls received from France, Holland and Spain to agents who speak the relevant language.
EasyJet uses technology opportunistically and has few sacred cows. It is constantly looking for ways to minimise overheads and recognises that employing hundreds of agents in a centralised location could one day be a cost burden.
The airline's next big project is to launch an internet booking system which enables customers to act as their own booking agents. It is also testing the practicality of diverting incoming calls to home-based telephone agents, in the hope that home-working will offer a lower cost alternative to investing in more bricks and mortar as the business expands.