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Call Centre Industry Hit by Skills Shortage

by Alan Cane, Financial Times, 25 May 1998

The FT reports on the recent Henley Centre report into Call Centres. The report is based on a study that was sponsored by Cable and Wireless Communications. The study shows that more than 1 in 10 calls leave customers feeling irritated, annoyed or furious. The damage to reputations is so great that the report advises many companies to abandon their centres. Growth of Call Centres within the UK has been rapid, with annual growth rates of 50%. Unfortunately, customer expectations are rising rapidly, but due to a chronic shortage of staff with appropriate skills, the study shows that few customers are delighted, with most being merely satisfied.

Comment

My own views are that call centres are too often implemented as me-to operations. It's almost a form of poker, with the typical stake (investment in a Call Centre) being £10-20m ($15-30m). To this must be added massive promotion spend. There seems to be a belief that volume will bring very low cost, significant market share, and the demise of the competition - a winner takes all scenario. Even companies that normally sell via agents are building direct operations with the attendant risk that IFAs may desert the company quicker that they can attract direct customers. Similarly, those companies with retail outlets may find them under utilised.

Then, if customers subsequently find the service to be less that satisfactory (and customer expectations are growing fast), the insurers will collectively have made it extremely easy to switch. Just spend an hour one evening and you can have 6 quotes. It's happening - churn is at a seriously high level.

This is not to say companies should not have Call Centres - they provide customers with lots of convenience. But they will only be efficient and profitable if the conversion rates are high and the churn rates low. That means offering superior value added services (to attract), taking every opportunity for building trusting relationships, and developing flexible, responsive and efficient customer processes that delight the customer.

The Booz Allen & Hamilton report has shown that telephone based transactions can cost as little as 35p compared to teller based transactions of 60p (see here). The key issue is how to utilise the difference. You can give it to your shareholders, to your staff, to your customers (as lower prices or promotional gifts), or you can re-invest it in the business. Re-investment allows you to create new value added services, deliver superior customer processes, to build customer knowledge, and to develop high customer trust and strong relationships - all leading to high customer lifetime value, long term profitability, and high embedded value in the company.

The choice is yours.

External References

1. Alan Cane, 1998, Call Centre Industry Hit by Skills Shortage in Financial Times, 25 May 1998
2. Through the Loop - BrandLoop, 1998, Are Premium Prices Justified?, Through the Loop Consulting Ltd, June 1998

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