Nancy Tichbon, vice president of customer care at Virgin Mobile Canada, a mobile virtual network operator (MVNO) piggy-backing on Bell Canada’s network, may be one of the few contact centre managers in the country wearing a smile this recession season – although how long before it turns into a grimace is anybody’s guess. Why is Tichbon smiling? Nobody, yet, has asked her to cut costs. In fact, her capital expenditures (capex) budget was hiked this year to help pay for, among other things, new customer self-service initiatives. And at the time of writing, she was actually recruiting new senior positions in her organization. Deeply ingrained Virgin-wide business philosophies have helped foster a culture of optimal cost efficiency. As a result, Tichbon says operation – a combination of in-house staff in Toronto and outsourced agents in eastern Canada – was already lean and mean, while still managing to score well on key metrics such as first contact resolution and customer satisfaction. “We haven’t had to change anything yet,” she says. That’s in marked contrast to many, possibly most contact centre operations. Consultant Roberta Fox, senior partner in Toronto-based Fox Group Technology, says “a lot” of her customers are being told to cut operational costs, typically in the 5% to 15% range. “And they’re being told, ‘Oh, by the way, do it by next quarter.’” It’s not just contact centres, Fox adds, it’s across IT-related operations. Companies in some industries, typically late adopters such as construction, continue to spend on new technology projects because they realize they need to catch up and finally embrace modern business methods and technology. “But the bleeding edge are not investing as much,” Fox notes. Louise Gougeon, director of contact centre consulting at systems vendor and hosted services provider Computer Talk Technology Inc., says her customers are being asked to cuts costs “across the board,” both in operational budgets – leading often to headcount reductions – and capex. “In the call centre world 60% to 70% of costs are for people and bricks and mortar,” notes Stan Tyo, vice president of contact centre solutions at Telus Corp. “The question is always, ‘Do I have the right number of agents? Do I have too many?’ Or, ‘Do we need all these buildings.’” The answers are in many cases changing. The quickest ways to cut costs are to shed people and real estate. But are they the best ways? Sometimes. But cutting in the wrong places or in the wrong way can come back to bite you. “There is definitely a risk of cutting too far,” Fox says. Tichbon points out that cancelling capital projects – an almost inevitable recessionary measure – can be counter-productive. One key to ensuring optimal cost efficiency, she says, is giving agents the right tools. “You see so many situations where some legacy system forces the agent to do 21 clicks just to put a simple transaction through. Recession or no recession, you can’t run a business that way.” Capital projects to upgrade agent tools can deliver return on investment in as little as six or even three months, Tichbon claims. Fox notes that IT support for contact centres in particular is being squeezed. One danger is burnout among remaining employees, with resulting defections and declining standards of system management. “Sure, you can say, ‘We’ll cut heads by 10%.’ But what if one person is the only one who knows how your IVR system works, and none of it is documented?” Fox says. “Because a lot of telecom technology is behind the scenes, senior executives often don’t understand that to make it work and keep it working takes a great deal of effort and expertise.” Gougeon is more concerned about the impact of chopping heads in the contact centre itself. “The number one risk is to customer service,” she says. “If you’re cutting too many heads, it’s going to suffer. That should be a key consideration.” Especially so since increased competition for reduced business makes keeping existing customers satisfied more important than ever. Many contact centre managers instinctively grasp this, Tyo says. “There’s a lot of attention being focused right now on how to maximize the customer experience when you do get someone on the line.” It’s tough to maximize the customer experience, though, if contact centres are understaffed and agents overworked. More than a cost centre One reason Tichbon’s operation remains unscathed, so far, is that she and her employers don’t see it as just a cost centre. Nor is customer service viewed as a finger in the dike holding back a flood of customer dissatisfaction. “Our call centre helps drive customer loyalty,” Tichbon claims. “We can turn a negative into a positive and leave them feeling more satisfied.” But again, if you’re faced with cutting costs, how can you hope to maintain the high morale, low agent churn and skilled, motivated management that this approach requires? There are ways to cut costs without cutting people or reducing quality. Some, such as implementing work-at-home programs, outsourcing and off-shoring, require a significant paradigm shift. But there are simpler ways. Fox’s firm offers clients quick audits of their spending on telecom services, including in the contact centre. “There definitely is money to be saved,” she says. Many companies saw their traditional telecom managers retire three to five years ago, Fox notes. “So they haven’t had experts in house to manage telecom. Sometimes, we’ll go in and it’s, ‘Omigosh, you’re still paying 15 cents or 20 cents a minute for long distance?’” There is also serious money to be saved by renegotiating contracts with suppliers. The trick, she says, is to offer not just one piece of business but the entire spend to get maximum leverage. “That’s where we have lots of fun working on behalf of clients – ‘What’s your deal for us to stay with you rather than going to your competitor?’” In one case, she was able to save a client 15% to 25%. “Those are permanent, every-month savings.” But it really only works well for large and mid-size companies. Organizations with under 50 seats – the majority of call centres – will likely not see enough savings to justify her fees, she admits. There are other fairly simple things you can do. One of the secrets of Virgin’s success is the extent to which customers service themselves. Over 90% activate new phones either on the Web or on the handset – a far higher percentage than other mobile carriers, Tichbon says. It’s partly that Virgin’s target market and customer base are predominantly young. “The great thing with my brand is that customers want to self service,” she says. “They really don’t want to call a contact centre.” But Virgin has also encouraged self service by making it easy. “Self-service is a key whether there’s an economic downturn or not,” Gougeon says. “Anything that lets you avoid agent interaction means you’re ultimately saving money.” It could mean implementing an IVR system – although that will require a capital investment. Fox suggests starting by putting more information at the company Web site. Some firms fail to publish the most basic data – the extension number for the Sales department, for example – forcing customers to call in to get it. “Put the simple stuff up there. That’s a no brainer. That’s a quick win,” she says. Smart contact centre managers like Tichbon also analyze call details on a regular basis to understand why customers are calling. “Then you look for ways to make those calls unnecessary,” she says. A shift to home-based agents Sending agents home to work can pay huge dividends. It has for Telus, both in its internal contact centre operations and its Agent Anywhere outsourcing service. “When you’ve got agents in a bricks-and-mortar contact centre, the cost of infrastructure is $1,500 to $2,500 per agent per month,” Tyo says. “When you move to home-based agents – and we pay for everything – it’s closer to $500.” The savings don’t stop there. “It may sound awful, but you don’t have to pay people as much if they work from home,” Tyo says. “The agent doesn’t have to incur the costs of insurance, commuting and so on, so the wage doesn’t have to be quite as high.” The best part is, employees will thank you. Indeed, giving them the option to work from home can help attract and retain top agents. Many want to work from home, and some – such as mothers of young children – must. Home-based agents are also more able and willing to accommodate employers’ need for split shifts to cover peak calling periods. More and more of Tyo’s customers are now questioning decisions of a few years ago to build multiple large contact centre facilities across the country to “follow the sun,” ensuring agents are available all hours. They’re now considering closing them down and sending agents home. But can it be a short-term cost cutting measure if you have a long-term lease? “Sure, you can close down an office overnight,” Fox says. One of her clients did just that, paying penalties to get out of leases and still coming out ahead financially. Many companies do it initially for the cost savings, and only then realize the other benefits related to agent retention and scheduling, Fox says. “There’s a longer-term spin that a lot of people are not thinking about. As the economy circles around again, why go back to old ways of doing things? You can use this to transform your business.” The other paradigm shift involves outsourcing some aspect of contact centre operations – using hosted infrastructure that companies such as Computer Talk offer, which eliminates new capital investments in on-site equipment, or going all the way and outsourcing to a company like Telus that provides and manages agents as well, including agents overseas. Many companies are now considering the off-shore option, Tyo says. “They know they’re going to get cheaper cost per agent, but they’re torn with how to keep jobs in Canada.” Telus maintains contact centres in Canada and the Philippines, using off-shore agents for about 20% of transactions, mostly “simple” ones such as password resets. Outsourcing and off-shoring should not be undertaken lightly, though, Tyo says. “The caution we give customers is, ‘It can be the right thing, but it doesn’t mean you can abdicate responsibility. You still own the customer relationship.’” Telus has seen accumulated savings of about $10 million over three years from sending agents home and off-shoring. It has helped big customers realize savings almost as impressive. One thing becomes clear talking to contact centre folks about how to weather the recession. All the measures advocated have merit on their own. All are long-term solutions to the ongoing problem – boom or bust – of how to make contact centres optimally cost efficient, and optimally effective at the same time. That’s the silver lining.