200803 LOMA Conference - Creating a Call Center

Creating a Call Center:
A Straightforward Approach
Presented by:

Steve Callahan Kirsten Kaczor
Practice Development Director Services Team Manager
The Robert E. Nolan Company American Family Life Insurance Company

LOMA Customer Service Conference
March 2008

Session Overview

§ Why Call Centers as a Focus
– Critical customer touchpoint, the face of the company
– Issues with service impacting competitive differentiation

§ Developing a Call Center Strategy
– Basic mechanics of Call Centers
– A proposed solution for addressing mixed service centers

§ American Family Insurance Case Study
– Designed and implemented a call center operation using
existing skills, technologies and resources in under 12 weeks

– Real example of how companies can consolidate, organize, and
develop efficient and effective call center service functions.

LOMA Customer Service Conference © Robert E. Nolan Company, Inc.
March 2008 www.renolan.com | Page 2

Why Call Centers as a Focus

Steve Callahan
Practice Development Director
The Robert E. Nolan Company


Why Call Centers?

§ Competition creating increased pressure on margins
§ Distribution channel competitiveness and instability
§ Product commoditization drives service differentiation

Call centers are the “front line”
the customer facing contact point

A crowded insurance marketplace means that consumers who are not
satisfied with a carrier's quality of service can find viable options
elsewhere. As a result, more and more insurers are making concerted
efforts to improve their customer service. "At the end of the day, if you
don't satisfy your clients, they're not going to stay your clients,“

says Jeffrey Stoll,
SVP and CIO of the Individual Business and Customer Response Center
MetLife.

And Satisfaction With Call Centers is Sub-par

Of 6 industries measured by ACSI Call Center Customer
Satisfaction Index, the insurance industry is on the low end

Compared to Banking (77) and Retail (80),
Insurance call centers (68) need improvement!

Yet Attention and Investment Makes a Difference

Call Resolution is the Key to Satisfaction (J.D. Powers Survey)
§ 73% with issues resolved awarded satisfaction score of 80
§ 22% with unresolved issues awarded satisfaction score of 29

MetLife recently invested in its call centers, and…
customer satisfaction score jumped by nearly 10 percent

The technology involves agile, Web-based services that
§ Allows tracking calls and keeping case history
§ Accesses various systems through a single desktop.
§ Reduces the time on the phone
§ Improves customer experience


Challenge: Balancing Efficiency and Effectiveness
(Costs)

(Customer Value)


While Contact Complexity and Diversity Grows


And Outsourcing Falls From Favor…
Making Insourcing a Need

57% Opposed to Voice Offshore
19% Okay with Voice Offshore
24% Uncertain

Complicated by High Multi-lingual Demand

Significant growth trends in Hispanic and Asian Markets require
attention to multi-lingual services to meet customer needs

Making Demands for Call Center Improvement High

Ranking of Importance of Call Center Goals

From 7.7 (Improving First Call Resolution) to
9.6 (Decreasing Costs), with a midpoint of
8.5 (Improving Customer Satisfaction)

Profiling People and Process as Priorities

48%

10%


While Attrition Remains a Huge Issue

82% rank a priority
the 42% attrition

Given 15% end
up at competitors

Developing A Call Center Strategy

Steve Callahan
Practice Development Director
The Robert E. Nolan Company


Call Volumes Fluctuate Throughout the Day

80

70

60

50

40

30

20
0 Widely fluctuating volumes and staff needs
10
0 Must be handled in real-time – no backlogs
0
8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00 13:30 14:00 14:30 15:00 15:30 16:00 16:30 17:00 17:30

Mon Tues Wed Thurs Fri


Calls Even Fluctuate Intrahour
(The impact is that breaks, lunches, time away from desk critical)

12

10

8

6

4

2

0
0

6

8

2

4

0

6
2

4

0

6

8

2

4

8

0
:0

:0

:0

:1

:1

:2

:2
:0

:0

:1

:1

:1

:2

:2

:2

:3
10

10

10

10

10

10

10

10

10

10

10

10

10

10

10

10

Customer and Agent Experience Also Widely Varies

0 Poor service delivered by highly stressed agents
70
Understaffed
60
Level Staffing
50

40

30

Overstaffed
20
0 Expensive service delivered by bored agents
10
0 Believe it or not, quality is lower
0
8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00 13:30 14:00 14:30 15:00 15:30 16:00 16:30 17:00 17:30


Typical Service Center Organization Design 1:
Consolidated Calls and Transactions
Customer / Policyholder Service
(Line of Business / Channel / Region)

Calls & Transactions
0 Policy Owner Service
0 New Business
0 Claims
0 Policy Owners
0 Agents and Brokers
0 Providers


Typical Service Center Organization Design 2:
Separate Call Centers from Transactions
Multiple Call Centers
(Line of Business / Channel / Region) Processing Center(s)
Billing
Phone Calls
Claims Transactions
0 Policy Owners
Phone Calls 0 New Business
0 Agents/Brokers
0Policy Owner Service
00 Policy Owners
Providers Agency
0 Agents/Brokers
Phone Calls 0 Claims
0 Providers Owners
0 Policy
0 Agents/Brokers
0 Providers


Service Center Staffing Dynamics
Phone Calls
§ Widely fluctuating volumes and staff needs
§ Handle peaks in real time
§ Overtime not an option
§ Requires sophisticated staffing/modeling tools
§ Need is immediate and unscheduled

Transaction Processing
§ Mildly fluctuating volumes and staff needs
§ Handle peaks with overtime
§ OK to build small backlogs
§ Traditional staffing models work well
§ Need can be scheduled and is not immediate


Improvement Opportunity

100% Transactions 100% Calls
+
Maximize Resource Utilization

§ Blended work basket § Widely fluctuating
§ Mildly fluctuating
§ Shared resources
– Volumes – Volumes
§ Sophisticated
– Staffing – Staffing needs
– Management practices
§ Peaks in overtime – Modeling tools § Peaks in real time
§ Backlogs okay – Staffing tools § No Backlogs
§ Staffing models § WFM 101

Requires a new strategy

The Service Center Improvement Opportunity

Consolidated Processing
Call Center POOLED Center(s)
RESOURCES –
SHARED
TASKS

Shared
Resources
Goal:
Maximize Resource Utilization and Effectiveness

The Service Center Objective

Short cycle transactions fill downtime for center staff
Staffing at level that builds in peak time excess
80

70

60
Transaction Capacity 50 phone / 20
20 phone / 50
50 processing processing
40

30

20
Call Staffing Need
10

0
8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00 13:30 14:00 14:30 15:00 15:30 16:00 16:30 17:00 17:30

Total Staff Call Staff Needed


Match Schedules to Call Arrival Patterns

1. Forecast incoming calls 80

§ By day 70
§ In 30 minute increments
60

2. Convert to staff need
§ Call handle time, service levels 50

§ Schedule adherence 40

3. Develop work schedule 30

§ Start, stop times 20
§ Breaks, lunch, PTO
§ Backup coverage 10

4. Allocate filler work 0
8:00 8:30 9:00 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00 13:30 14:00 14:30 15:00 15:30 16:00 16:30 17:00 17:30
§ Short duration transactions Staff Available Calls Staff Need
§ Simple, once and done

Goal is consistent customer and agent experience

Optimizing Service Center Performance

Optimal performance from integration of non-phone tasks
§ Letters, emails, faxes, other transactions, and calls requiring research
§ Work is difficult to handle between calls effectively, yet must be handled

Three techniques to create balance, better utilize capacity
1. Give phone staff quiet time off the phone every day
§ Use slow times to reallocate staff to other work, be sure to track productivity
§ Transaction productivity greatly increased by uninterrupted blocks of time
2. Treat transaction timeliness the same as call service levels
§ Slow handling drives up phone calls creating spiral of lost productivity
§ Use task goals similar to calls, e.g. 80% in 2 days; keep all in balance
3. Monitor percent pended phone calls (first call resolutions)
§ Identify who has most callbacks and what the most common reasons are
§ Training needs? Performance issue? Forms issue? Unclear policies?
§ Track call back / pending return call inventories by person


Impact of Service Center Approach

Net Productivity Increase

Dept 1 24%

Dept 2 17%

Dept 3 21%

Dept 4 18%

Dept 5 37%

Overall 22%


American Family’s Challenge of Growth

Kirsten Kaczor
Services Team Manager
American Family Life Insurance Company


Outline
§ American Family Insurance Company
– Staffing/ Structure
– Challenges
§ “Old World” – Previous State
– Metrics
– Inefficiencies
§ Contact Center
– Identify the Gaps
– Implementation
– Staffing
§ “New World” - Current State
– Results/ Efficiencies
– Measurement Tools
§ Future Enhancements

American Family Overview

§ Large, multi-state, mutual insurance company

§ Top-twenty multi-line insurer based in Madison, WI
§ Serves personal, commercial, and specialty markets
§ Products distributed through dedicated career agents
§ Long history of customer focus and service quality
§ Concentrated on serving America’s Middle Market

§ Major property-casualty distributor
§ Good mix of life, health, and annuity lines


Organizational Staffing and Structure

§ Inforce staff supported all service needs including phone
calls, customer requests, and agent requests by blended
teams doing the same work

§ Phone calls were answered by all staff in both teams
based on a rotating schedule, and included doing the
transaction work at the same time

§ Stress levels were high and quality mediocre due to the
breadth of knowledge required


American Family’s Challenge
§ Rapid growth in sales created inforce service backlogs

§ Agents striving for year end goals in time of growth

§ Service times need to improve 20% to be competitive

§ Pending inventory had to be reduced “significantly”

§ Wide swings – over 250% - in service time variances


“Old World”

Cloudy, Not Well Defined

Starting Transaction Service Levels
2005 Loan/Surrender Tasks
Production Turnaround Time
See Definition Tab for explanation of time measurement for each Task
Wide fluctuations in service times
20 19

17
No consistency in service
15 Building backlog of transactions
Dividend Request
Number of Days to Process

11
Loan Request
9
10
10 10 Surrenders
10 9
9
9 8 8
Partial Surrenders
7
7 7
7
6 6 7
2005 Billing Tasks
5 Production Turnaround Time
5
4 See Definition Tab for explanation of time measurement for each Task
4 4
4 4 4
3 3
3 3 25
3 3
3 3 3 24

2 2 2
1 1 1 1
1 1
1 1 1 1
0
20 19
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

AFT/Bank Change
16
Num ber of Days to Process
15 15
15 14 15 14
14 14 Bouncers
14 13
M ode Chng to
Amplan
11
10 11 11 11
Premium Processing
10
10 10
11
9
9 9 Reinstatements
9 8 9

Randomly arriving calls 7
7
8
7
7
8
7

6 6 6
5 5 5

Calls impact transaction servicing 4

2
5 4 4
5 4
4

2

Transactions impact call services 0
Feb
0 0

Mar
0

Apr
0

May Jun
0

Jul
0

Aug
0

Sep
0

Oct
0 0

Nov Dec
0 0

Jan


American Family Service Center Organization:
Consolidated Calls and Transactions

Customer / Policyholder Service
(Two Teams Doing Blend of Calls and Transactions)

Calls & Transactions Calls & Transactions
0 Policy Owner Service 0 Policy Owner Service
0 New Business 0 New Business
0Policy Owners 0Policy Owners
0 Agents and Brokers 0 Agents and Brokers


Current Operating Inefficiencies

§ Two teams duplicating efforts
– Managers
– Staff

§ Phone calls causing interruptions

§ Lack of time to find efficiencies
– Processing work
– Handling calls

§ Lack of “Experts”


Establishing a Service Center

§ Separated work from phone calls to improve efficiencies
§ Identified best qualified staff for each area
– Took strongest processors, assigned to the work areas

§ Tasks staffed appropriately and phones got the rest
– Staff were not asked for their preference

§ Needed to create a different culture
– More accountability, adherence to schedules
– Needed metrics to measure success and areas for improvement


The Contact Center Improvement Opportunity

Consolidated Loans Processing
Call Center Illustrations Center
Agent Calls Complex Changes
Agent Chgs
Client Calls Cancellations
Problem Research Address Chgs
Premium Billing
Agent Emails Beneficiary Conversions
Voicemails Dividends Surrenders
Callbacks

Shared
Shared
Tasks
Resources


Implementation of a Contact Center
§ Coverage is 7 to 7
– Team members choose their schedule
– Late shifts signed up for as staffing needs are determined
§ To improve coverage we allow a 4 day work week
§ Call audits are used to determine call quality
– All incoming calls are recorded and are randomly audited
– Goal is 3% of the calls or 300 a month whichever is less
– Our follow-up time is 60 seconds
§ Piloted for 10 months then formal restructuring
– Pilot allowed fine tuning staff levels, workflows, reporting
§ Blended simple tasks with phone unit to optimize staff
– Added 33% to call center staff level to allow for blended tasks
– Loans, dividends, agent changes, illustrations
– Fewer steps, require involvement in fewer systems, no research
– Also included email boxes and voicemailboxes

Implementation of a Contact Center

§ Created productivity measures to emphasize phones
– Initially based on average timings, calculated time at work, less
project time, less time off, plus overtime to get productivity
– How much time at work, less projects, less time off, of remaining
time how much logged in to take calls for adherence
– Opted for monitoring what percentage of time team members
were available for phone calls to get adherence

§ For productivity, run reports to get actual talk time
– Subtract talk time from productive work time, then use remaining
time to determine how much task work was done using the
timings, from that calculate productivity based on non-call time

§ Service goal is 80% in 30 seconds, under 5% abandons


“New World”

Clear, Well Defined

Comparison of Total Transaction Inventory
Total Servicing Queues Inventory Dropped 60%
Oct 4th to Dec 4th Comparison

2500

2000
Total Inventory

1500

1000

500

0
Advanced AFT & Block Conversion & General Loans & Premium Reinstatements Surrenders
Changes Billing Repl Changes Dividends Processing

Transaction Types

10/4/2005 12/4/2005

Comparison of Transaction Cycle Times
Total Cycle Times Reduced by 25% to 72%

Cycle Time Improvements

15.00

10.00
D ays

5.00

0.00
AFT/ Bank Change Premium Processing Reinst ates Loan Request s Surrenders

Oct-05 Dec-05


Common Call Center Service Goals

The three most common measures in use today are:
§ ASA – Average Speed of Answer
§ Abandon Rate – Percentage of callers who hang up before being served
§ Service Level – x% of Calls Answered in Y seconds

ASA ignores abandons, can mislead over longer periods
§ Focus on ASA alternates between poor service by overstressed agents
and great service by unproductive agents
§ Measuring ASA results in wide swings of service that average out at an
acceptable level but have periods of totally unacceptable service

Abandon rate tells you nothing about vast majority of calls
§ Abandon rate fairly uncontrollable, typically a symptom of other issues
§ Tracking should eliminate “short abandons” – those in the first 10 seconds


Call Volumes and Abandon Rates
Over 28,850 calls received from Nov 9th through Dec 30th
§ Average talk time per call just under 3 minutes
§ Average Abandon Rate 5.6%
Phone Performance

1200 30.00%
1 2 3
1000 25.00%

% Abandoned
800 20.00%
Volume

600 15.00%
400 10.00%
200 5.00%
0 0.00%

Date

Call Volume Abandon Rate


Contact Center Performance Over Time
Contact Center Performance
Percent
Answered & Call Volume
Abandoned
100% 20,000

88.45%
90% 87.48% 85.37% 19,000

18,155 79.00% 18,190
79.20% 78.44% 78.67% 78.43%
80% 17,783 77.14% 18,000
74.01%
71.33% 71.85%

70% 16,834 17,000
16,362 64.44%
16,087 16,014
15,948
60% 16,000
15,431
15,028 15,128
14,868
50% 15,000

13,996
40% 14,000

30% 13,000

20% 12,000

10% 11,000
4.35% 5.34%
2.95% 3.40% 3.23% 3.48% 3.13% 3.30% 3.90% 3.81%
2.10% 1.81% 2.49%

0% 10,000
Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07

Calls Answered Abandoned Rate Percent Calls Answered in 30 seconds


Optimizing Individual Performance
Four key metrics to identify agent development needs:
1. After Call Work (ACW) – high times can mean extra breaks
or handling issues

2. Short Calls – intentional or unintentional disconnects that
drive up ratios

3. Average Hold Time per Call – ties up extra staff, not good
service, may be training need (excessive documentation)

4. Percent Schedule Adherence – low value means wasted
resources, anything under 80% is a performance problem

Talk Time is not recommended as a metric, it may lead to
the wrong result by focusing on getting off the phone
instead of handling the call

Productivity Reporting


Adherence Reporting


Future Enhancements

§ Currently piloting a new business contact center
– Pooled phone resources able to handle either type of call

GOAL: Better leverage resources, focus, increase scope
of staff’s responsibility, improve service

§ Testing 2 to 3 people off the phones for two weeks
– Keeping an eye on phone queue and logging in when necessary
– Process work from the phones, handle queues and mailboxes
– Others are logged into the phones 100% of their productive time
– Improved abandon rate and service levels
GOAL: Improve task efficiency, provide breaks for staff,
create time for projects and longer work


Thank you for your attention

Questions?
Presented by:

Steve Callahan Kirsten Kaczor
Practice Development Director Services Team Manager
The Robert E. Nolan Company American Family Life Insurance Company


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