How to Start a Call Center - Call Center Guide eBook

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How to Start a Call Center - Call Center Guide eBook

Transcript Of How to Start a Call Center - Call Center Guide eBook

Contents

1 Industry Analysis

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1.1 Current Industry Landscape

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1.2 Analysis of Market Conditions

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1.3 Need for a Call Center

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1.4 Key Factors that Influence Call Center Success

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2 Business Model

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2.1 What Services to Offer

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2.2 How to Offer Services

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3 Planning for a Call Center Implementation

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3.1 Setting the Objective

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3.2 Sizing the Call Center

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3.3 Determining Call Technology and Equipment

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3.4 Additional Technology Investments

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3.5 Planning Data Availability and Technical Integration

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3.6 Involving Key Stakeholders in the Planning Stage

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3.7 Managing Operational Costs

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3.8 Making your Call Center Future Ready

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4 Call Center Operations Management

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4.1 Human Resources Management

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4.1.1

Minimizing Staff Costs

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4.1.2

Staff Rostering and Scheduling

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4.2 Business Continuity Planning

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5 Call Center Performance Metrics

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5.1 Agent Performance Measurement

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5.2 Other Performance Indicators

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5.3 Performance Reporting to Clients

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6 Project Financials

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6.1 Start-Up Expenses and Funding

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6.2 Sales Plan

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6.3 Personnel Plan

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6.4 Financial Plan

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6.4.1

Break Even Analysis

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6.4.2

Projected Profit and Loss

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6.4.3

Projected Cash Flow

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6.4.4

Projected Balance Sheet

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6.4.5

Business Ratios

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7 References

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1 Industry Analysis
1.1 Current Industry Landscape
With more and more companies turning to superior customer service as a means to stand out from their competition, the call center industry is growing. As the economy becomes tough, companies are looking to outsource customer handling to third party vendors who specialize in the call center business. Call centers can be broadly classified into two types – captive call centers and third party call centers. In a captive call center, the agents handle only one organization’s customers. It is usually set up as a subsidiary of the parent company and functions as a cost center. The main objective of such a call center would be to optimize the operational cost while offering superior customer service. A captive call center’s business grows in direct proportion to that of the growth in the parent company.
In the case of third party call centers, the call center may serve multiple clients either in the same industry or varying industries. Here the growth can happen either when the client’s organization grows, or by acquiring new call center clients. The operations of a third party call center are run as a profit center and the focus is on improving the revenue billing as well as profits of the company.
1.2 Analysis of Market Conditions
The call center industry is fragmented in nature, and market players vary widely in terms of call volumes handled and services offered. While some players focus on a specific sector, others offer services across a wide variety of industries. Some players only offer ​call center services while others handle end-to-end customer service including reverse logistics. In the initial days, companies had their own call centers. However, today the trend in call centers is skewed towards outsourcing. Call center operations are outsourced typically to English speaking third world countries where the cost of operations would be only a fraction of the cost that you may incur in the United States.
An inbound call center is usually used for offering additional services to customers such as complaint handling, and information on products and services. An outbound call center typically focuses on lead generation for sales. They can also be used to conduct customer satisfaction surveys and for campaign management activities.
1.3 Need for a Call Center
A call center can provide several benefits to an organization. That is why a well-planned call center has a high chance of being profitable. In this section, we will look at some of the reasons why organizations opt for call centers. Industries such as financial services where there is a high volume of transactions with the end customers would benefit from a call center by helping to reduce transaction costs. The majority of simple transactions can be carried out by the caller himself with the help of a simple IVR system.
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In addition to lowering the transaction costs, call centers also offer convenience to callers who may not have the time for, or access to, the branch network or client organization for a face-to-face transaction.
1.4 Key Factors that Influence Call Center Success
The call center industry has a high entry barrier, as clients do not wish to change the call center to which they have outsourced their operations due to the significant switching costs associated with changing partners. The learning curve of agents is also quite steep, as they need to learn the business processes and products of the clients being serviced. Intense competition among call centers makes it difficult to increase billing to clients. Therefore, the operational costs have to be kept as low as possible. Given below are some of the key success factors for a call center:
1. A robust technology framework that can accommodate year on year business growth 2. A well-trained and motivated staff who would strive to achieve quality and productivity
goals 3. A diverse clientele which would reduce dependence on a single client for revenue and
margin
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2 Business Model
A key step in starting a call center is preparing a business plan. This must cover aspects such as what services you would offer and which customer group you would like to target. Both of these decisions depend on two key factors – the competition and your skill set. You can be successful if you can identify a profitable niche without a great deal of competition, that can be well-served with your skill set.
2.1 What Services to Offer
Call centers face competition from players all across the globe. The industry is fragmented in nature with several small firms catering to small organizations, while some of the bigger players cater to large clients such as GM, Citi and Amex. Since the competition is intense, it is difficult to get good rates by offering plain vanilla solutions. If you can offer services catering to high-end niches such as legal services or ​healthcare practices​, then you will have better margins.
Market penetration is difficult unless you are a captive call center with assured business volumes. This is because contracts are usually awarded to firms with a reputation for high quality services. One way to break through the barrier is to have industry veterans with good professional networks in your top management. The other step to take is to opt for quality certifications for your operations, which can act as an assurance of your professionalism to potential clients. As a new player, you would also need to participate actively in industry forums that will act as a means to introduce your services to potential buyers. By keeping operational costs as low as possible, you would be able to give better rates to clients that will go a long way in winning new business in this price sensitive industry. In the initial stages, you must also be willing to offer customized solution packages for your clients in order to capture market share. It is best to have at least a couple of contracts under your belt before you start setting up your call center. This will help to assure revenues from day-one of operations.
2.2 How to Offer Services
Before an organization decides to set up a call center, careful thought should be spent on deciding which service strategy is best. Some of the options for a call center include hotlines, shared infrastructure arrangements, establishing an in-house call center or outsourcing the call center to a third party vendor. Each option has its advantages and disadvantages and you must evaluate each of these options carefully before determining the most suitable approach for your needs.
Hotlines
Hotlines are not exactly call centers. But if you are an organization considering establishing a call center to ​address a temporary spike in customer queries or complaints​, then this is a better option to consider. This can also be used for new product launches and campaign management activities.
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The advantage of opting for a hotline is that it does not require a heavy upfront investment on telephony and IT infrastructure, and it can be made operational quickly. The main focus will be on training agents to handle the calls. However, hotlines cannot be a permanent strategy, as the operations will not be able to handle heavy call volumes for an extended period of time. Shared Infrastructure This option can be considered if you do not have sufficient call volumes to necessitate setting up an independent call center. You can piggyback on the existing infrastructure of another organization that already has an established call center by creating SLAs for quality and productivity. You would only incur contractual costs and all set-up costs can be completely avoided in this case. Organizations looking to start a call center must also carefully evaluate the benefits of outsourcing the call center operations before opting for an in-house call center. In the next section, we will look at how to plan a call center implementation.
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3 Planning for a Call Center Implementation
Proper planning is an essential step in determining the success of call center implementation and operation. A well laid out business plan is a key factor in ensuring that the call center is aligned to the objectives of the parent organization and has a profitable and cost effective operation. The business plan should also include key service level requirements for operations, key considerations that shall be kept in mind while sizing the call center, selecting the right site for operations as well as the extent of change management and process re-engineering needed for the implementation. A period for key activities shall also be drawn out so that the call center is operational without undue delays. The business plan should also provide the organizational and financial reasons for choosing to set up the call center.
3.1 Setting the Objective
Before deciding on the infrastructure, enablers, technology, and staff needed for the call center, it is essential to lay down the business objectives of the call center. The choice of infrastructure, technology, and number of staff and their skill levels all depend on the objective of the call center. This should be set forth before any procurement or hiring activity is commenced. The objectives should be as narrow as possible as this will help to procure the ideal technology and staff mix to serve the needs of the call center.
Some of the key objectives of why organizations opt for setting up a call center are given below:
1. Improve customer service levels and offer 24*7 support for customers
2. Reduce the number of customer complaints received
3. Cost reduction of transactions without affecting service quality
You need to identify the main objectives behind setting up your call center so that you have clearly defined measures of success.
3.2 Sizing the Call Center
If you are thinking of establishing a call center to handle the customer calls for your organization, then arriving at the right size for the call center is extremely important. You can start this process by collecting data pertaining to the calls that you currently receive. The following data points need to be collected and analyzed to determine the call center’s size:
1. The number of calls currently received
2. Call duration metrics – average duration of call, minimum and maximum duration of calls, bucketing of calls into various buckets in terms of duration
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3. Metrics related to nature of call – bucketing of calls into inquiry calls, service calls, complaints/escalation calls.
Once this data is collected, it should be corrected to account for the likely increase in calls when a dedicated call center is introduced and customer awareness about the option increases. You must also collect data related to competitor’s call center size, if it is publicly available.
Other factors that can influence the size of the call center include:
1. Time spent on data processing activity – pre and post call.
2. Likely availability of staff (leave policy and absenteeism)
3. Potential gains to be achieved if the right expert is made available to answer the call, so that multiple calls can be avoided. This needs to be measured both in quantitative terms of agent time saved as well as qualitatively in terms of improvement in customer satisfaction and brand perception
4. Variations in peak traffic at different times of the day as well as between weekend and weekdays
The growth plans of the parent organization should also be considered. Thus, if the parent organization plans to expand geographically, then you would need staff capable of handling language and cultural requirements of the new geography. Similarly, if the organization is planning to enter into a new product line, then the call center staff should be technically capable of handling queries related to the new product.
In general, sizing an inbound call center is more challenging than sizing an outbound call center. In the former case, the organization cannot control the call volumes or the variation in peak traffic. While a huge organization may hire external consultants to arrive at the size of the call center, a simple process of sizing the call center is shown below:
1. Arrive at the inbound and outbound call volume
2. Arrive at the average time for each call and related processing time for each call
3. Arrive at the actual work hours of an agent
The average time of each call should take into account only the actual time that is spent talking on the telephone. The processing time includes all paperwork and data analytics work associated with a call. Typically, if you consider an eight-hour shift, the productive time or actual work hours for an agent is likely to be six hours or 360 minutes.
Once these numbers are estimated, the average customer time can be calculated as follows:
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● Average customer time (in minutes ) = Average call time + Average processing time
● Average number of calls per agent per day = 360/average customer time
● Staff required = Total call volume expected/average number of calls per agent per day
If the sizing of the call center is correct, then it goes a long way in ensuring that the human resource management of the call center is a success. Sizing should also consider the levels at which agents need to be hired as well as the recruitment and promotion policies of the call center. Once call center sizing is complete, the output should be a staffing plan, which includes the following elements:
1. Number of agents initially required as well as year on year growth plan for the next 3 years
2. Identify the organizational structure and determine skill levels needed for each role
3. Develop the recruitment process and the timelines
4. Design the induction training for initial hires
3.3 Determining Call Technology and Equipment
Based on the level of sophistication needed for the call center as well as call volumes and the budget available for setting up the call center, the choice of technology can vary widely. The various options available for telephony technology are summarized below:
1. A single contact number:​ This is the most rudimentary approach towards establishing a call center where you have a toll free number that customers can call without having to pay for it.
2. Basic Telephone System​: Here the agents will have separate lines, which can directly receive and make calls.
3. PABX system​: A Private Automatic Branch Exchange is a set of specialized equipment that can allow calls to be transferred internally while retaining individual numbers for different telephones. Callers can dial a specific extension to reach a specific agent or department.
4. Automatic Call Distribution (ACD):​ This is an advanced system, used in almost all call centers today. This system provides the flexibility of offering improved customer service by allowing the calls to be placed on hold until an agent becomes free to answer the call. This can drastically reduce call drop rates and achieve load balancing by effectively distributing incoming calls based on a defined set of rules. Most ACD systems today have the ability to generate comprehensive MIS reports on a near real time basis to help in analyzing call patterns and changing rules to prioritize calls based on real time variations in call traffic.
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