“Indiana Jones and the Temple of Doom,” wasn’t the best of the Indiana Jones movies. It was flagrantly racist, and featured the ever-annoying and helpless Kate Capshaw screaming her way through every scene. Despite that, was pretty entertaining.
In one famous scene, the bad guys pile onto a rope bridge, trapping Indy from both sides. To make matters worse, the villain pushes Willie (Capshaw) and Short Round (Jonathan Ke Quan) onto the bridge too. The bad guys inched towards Indy, swords drawn. This would surely be the end of our hero and his sidekicks, right?
When we last left our heroes of our story (mild-mannered executives in charge of customer care), they had just learned of the dangers of measuring the wrong things. Thankfully, they learned to shift their mindsets and the crisis was averted.
But there are many ways for businesses to self-sabotage, and business traps and pitfalls lay everywhere.
In the second installment of how companies self-sabotage, I will focus how companies pay for agent services in a way that disincentives productivity. It can also increase risk. I am by no means suggesting that providers of contact center services are villains, however, some of them do have some tricks that the good guys often fall for.
Contact center service providers often use pricing models that are based on agent time such as per-hour billing and per-month billing for full time employees. With the mindset that “cheaper is better,” many companies go with whichever rate they perceive as least expensive. In most cases, that’s the per-hour rate. What they don’t take into account, however, is agent productivity.
In the per-hour billing model, there is little or no incentive for the service provider to make productivity improvements and therefore no continuous improvement benefit for either the service provider or the customer. While a rate of $9 per hour may seem attractive, if only 3 transactions are completed in the hour, the cost per transaction is $3. Another service provider with a rate of $2.50 per transaction, could complete 4 or 5 transactions per hour through efficiency improvements. In that scenario, the service provider makes better margins, the client company has a lower cost per transaction, and the consumer is more satisfied because of shorter handle time and less effort.
In a real-world example, a major international hotel chain was looking to institute a live chat program to help consumers book rooms. While one chat service provider offered a per chat price of $3.50 per chat, the other provider offered services at an hourly rate of $8 per hour. The company’s leadership worked on the assumption that each agent would handle four chats in an hour, which would be less than the per-chat rate of $14 per hour (Four chats at $3.50 each).
There was just one problem. Since the competitor who offered the hourly rate was focused on maximizing billing, there was no incentive for agent productivity. As such, when the hotel chain went live on chat, the agents only ended up handling two chats an hour. There was no incentive for the agents to handle calls quickly, and at $8 per hour, the cost ended up being $4 per chat. The hourly model also leads to other behaviors that people don’t see. Agents would transfer the consumer to another queue, or worse -- an 800 number. These behaviors were hidden because the only thing the client company saw were the billing numbers.
Needless to say, once the company realized this, it dropped the hourly provider in favor of the company whose agents moved at a faster clip. Not only did it provide a much more cost effective service, but it was also more satisfying from a consumer perspective. More productive agents makes it easier for consumers to connect to companies to get things done.
Harkening back to “Raiders of the Lost Arc” for a minute, there is the scene where a bad stands across from Indy in a crowded plaza, flailing his large sword screaming. Okay, well that describes a lot of scenes, but in the scene I’m talking about, Indy simply pulls out a gun and shoots him.
In the fight between an hourly billing model and an outcome-based model, the outcome-based model wins. A cost-per-transaction model incentivizes a service provider to continuously make improvements to gain efficiencies and deliver superior outcomes. These outcomes can include improved customer experience (as determined by CSAT and NPS scores), issue resolution, improved margins for the service provider, better costs-per-transaction and greater derived value for the client. The outcome-based model or per-transaction model incentivizes greater ownership of outcomes and efficiencies on the part of the service provider by using technology and quality improvement initiatives.
I’m not suggesting you shoot your contact center vendor, but I am suggesting you change the rules of the game. Specifically, here’s what you can do:
When selecting a chat service provider, take a close look at the agents. Look for agents that are digitally savvy and empowered by technology. These “digital chat agents” are focused on simplifying the consumer’s journeys, especially when the consumer crosses channels or devices to complete a task. Look at which company’s agents have the right skill sets and an outcome-oriented focus. Visit the contact centers and look for the technology to make agents more productive. Specifically, you should look for agents who are:
What’s really exciting is what the future holds in terms of agent productivity. Agents are increasingly working hand in hand with enterprise chatbots, and the handoff between the two is becoming more seamless and arriving faster than expected.
In this new world, the sky is the limit for agent productivity.
PV Kannan is the Co-Founder and CEO of 7.ai. Since 2000, he has been leading the revolution to make customer service easy and enjoyable for consumers. In 1995, PV's first company, Business Evolution Inc., developed the first generation of email and chat solutions. The company was acquired by Kana in 1999 and PV became part of the management team. At 7.ai, PV was a pioneer in integrating customer service technology with business process operations to improve all aspects of the customer experience. PV has been at the forefront of customer experience from creating contact center agent services, developing a big data predictive analytics platform, creating omnichannel solutions for the web, mobile, chat, social, and speech IVR, to innovating mobile-centric applications. Over the years PV has been a thought leader in global customer service and has been featured in the books, The World is Flat and That Used to Be Us by Thomas L. Friedman, India Inside by Nirmalya Kumar and Phanish Puranam, and Reinventing Management: Smarter Choices for Getting Work Done by Julian Birkinshaw. PV is on the Board of Directors for Achievers. He has over 20 patents (issued and pending). PV has degrees in accounting and finance from the Institute of Chartered Accountants and The Institute of Cost and Works Accountants of India.