A POINT OF VIEW PAPER

Service levels
one size does
not fit all
Using Science to Set
service levels
“A center can achieve its [service level] objectives yet still be wasting resources,
creating extra work and providing poor quality.” ~CallCenterMagazine.com
The majority of contact centers manage
their operations by adhering to strict
parameters around key performance
metrics, like speed of answer, commonly
referred to as service level. In fact, some
argue that service level is the most widely
accepted metric in the industry.
Debates on the definition of service level
and whether there is an industry standard
have been raging for years. While some
argue for a ‘gold standard’ in setting service
level targets, others state that service levels
must be established based on specific
business needs and customer requirements.
So what is the best practice for establishing
a service level?
Typically, service level targets are
determined by contact center management.
Despite cautions to the contrary,
management teams often apply the old
adage “one size fits all.” It is not uncommon
for service levels to arbitrarily be set at
80/20 (80% or more of the calls answered in
20 seconds or less). Clearly, the gravitation
of contact center management to this
“industry standard” illustrates the need for
guidance on exactly how to set a relevant—
and achievable— service level target.
“Most centers operate as if service level is a goal identical to corporate profit—
more is better and less is not,” writes Bill Durr.
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The solution requires a complex ability to
answer myriad questions:
• How does time in queue impact the
overall customer experience?
• Would changing staffing levels
substantially impact customer
perceptions of their experience?
• How can service levels be optimized to
better balance labor costs, customer
satisfaction and abandon rates?
While the relations among labor costs
and service levels can easily be modeled,
many centers still overlook a critical
clue in unlocking answers to the above
questions. Only by incorporating “voice
of the customer” measurement will center
managers understand how, and when,
service level affects the experience in their
centers. Without that, we can only guess
what customers truly think about their time
in queue.
At Convergys, we have solved this problem
through the development of a scientific,
data-driven approach to statistically
calibrate voice of the customer feedback
with service level data. This technique
can be used to set any service level, from
telephone speed of answer to e-mail speed
of response to ideal handle time.
Sensitivity Analysis: How We Do It
Within the call center environment, speed
of answer data are potentially available at
two levels. The most readily available source
is aggregated reporting from the call switch
for specific time intervals; for example,
Center A’s average speed of answer for the
day, or for a half-hour interval within a day.
When Center A also has a robust customer
survey program, we statistically match
service level data with survey data for the
same time period.
Historically, patterns most often emerge
when service levels vary significantly
between time intervals within a center.
Setting appropriate rules for matching and
controlling length of time, our approach
reveals variations in how service level
impacts the customer experience results.
In other words, we statistically isolate the
point at which customer satisfaction with
the experience drops off.
The second level of service level data is
at the call center level. Our recommended
method for service level sensitivity analysis
is to collect speed of answer information
for each call as part of an ongoing voice of
the customer measurement program. This
call-level detail then can be matched to
satisfaction data collected from the same
customer. While this may not be possible
Sensitivity analysis highlights where all centers might be over-investing.
with all switch configurations, the approach
yields much stronger insights. We not only
collect customer perceptions of the call,
but also tie actual process data to that
experience in a way that facilitates analysis.
Regardless of matching approach, our
analyses isolate the effects of varying
answer times on levels of customer
satisfaction. Through multivariate statistics,
we are able to point to whether wait
times (and more generally, call handling
practices) affect satisfaction levels and if
so, to what degree. This quantification
of the impact of speed of answer on
satisfaction is what most call centers lack.
Once we know which levers have the
greatest impact on satisfaction, we use
sensitivity analysis to understand how
customer satisfaction might be affected at
a range of wait times. This layer of analysis
helps us understand how service levels
should be set to drive the maximum blend
of satisfaction and cost efficiency. Such
analyses have provided significant savings
for our clients, by showing that tighter
service levels do not necessarily lead to an
increase in satisfaction performance.
Service Levels: Rules to Live By
While every business is different, we have
encountered several common themes with
regard to service levels in recent years:
1. What happened on the call is more
important than wait time to reach
an agent;
2. An 80/20 service level is not a “gold
standard” for delivering higher
satisfaction; and
3. Over-investment in staffing to meet
service levels is more common than
you might think.
Rule 1: Call Handling Is More Important.
At Convergys, our statistical analyses
consistently reveal that agent skills and
call resolution have much stronger impacts
on satisfaction performance than does
time spent in queue. This holds true
even with self-reported perceptions of
wait time. Across the board, customers
whose issues were resolved have higher
satisfaction scores—regardless of how long
they waited. So when you are challenged
to allocate budget to satisfaction
improvements, consider placing wait time
lower on the list than the above factors.
Rule 2: The 80/20 Rule Is No Guarantee.
Setting service level to 80/20 does not
guarantee a positive customer experience.
For example, in the shipping industry we
saw that queue times of up to a minute
do not detrimentally affect customer
satisfaction scores. In the insurance
industry, our analyses showed no strong
effect on customer satisfaction at wait
times of up to two minutes. In financial
services, we noted some cases where
queue time did not affect customer
satisfaction at all.
As a general statement, queue times of
less than 30 seconds do not strongly
impact the customer experience. What are
the exceptions? Trends vary by customer
segment and by wide variations in daily
service level performance. In one group
of centers where queue time varied
substantially day by day, customers were
highly sensitive to wait time; perhaps these
daily changes resulted in widely varying
customer expectations. Similarly, different
call types or segments of customers have
different sensitivity to speed of answer;
customers calling with a technical problem
are much more willing to wait in queue
than are customers who need to verify
their mailing address.
Rule 3: Over-Investment in Staffing Is
Common. With increased pressures to meet
satisfaction metrics, many centers over-
invest in staffing to achieve high service
levels when the quantified return is difficult
to pin down. Staffing a center to reach an
80/20 service level inevitably involves labor
costs beyond what is needed at non-peak
call times. But if it is not important to the
customer to answer the call in 10 or 20
seconds, why spend the money to staff to a
peak call volume that may only occur a few
times a day?
It may be perfectly feasible to drop service
level to a 70/30 or a 60/40 average speed
of answer, without negatively impacting
satisfaction scores. We know cost savings
in these decisions can be substantial.
Return on Investment
The first step in setting service level
targets should be to conduct calibration
analyses for each major call type or
customer segment. This is particularly true
if the goal is to implement a prioritized
queuing strategy. When you understand
how different wait times affect customer
satisfaction scores, you are in a position
to make objective, educated changes to
service levels.
How do you incorporate this knowledge
into running the business? We believe
that, as with other business decisions, the
ROI of various service level combinations
must be taken into consideration. It is
important to not only avoid the tipping
point where the customer experience
degrades, but to maximize cost reductions
as well. What do we mean? The results of
sensitivity calibration uncover where slower
speeds of answer cause drops in customer
satisfaction; clearly, you should steer clear
of that threshold.
Just as importantly, calibration analysis
highlights where call centers might be over-
investing. If there is no difference between
customer satisfaction scores in a 70/20 or
80/20 environment, why pay to staff the
incrementally higher service level?
We approach this cost reduction /
satisfaction benefit evaluation through
simulation and business case analysis.
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Across a range of alternative scenarios,
we evaluate the likely achievement in cost
reduction or cost increment balanced
against the likely impact in customer
satisfaction scores. Once our clients have
this information in hand, they can make the
right decisions about where their service
level should be set.
The payoff to this type of disciplined
approach to service level analysis can be
significant to the bottom line. For example,
a major shipping provider was concerned
about preventing slippage in satisfaction
during an upcoming holiday season.
To prevent this deterioration, the client
decided to tighten service level from 80/20
to 90/20 resulting in significantly increased
labor costs. Convergys’ sensitivity analysis
predicted changes in satisfaction scores
at various service levels and showed there
would be no gain in customer satisfaction
by moving to the 90/20 model. In fact, the
client could loosen service level without
adversely impacting satisfaction. Dollars
saved from this avoided investment
exceeded $1.2 million.
Conclusion
Contact center managers can only
understand how sensitive customers
are to queue time by incorporating
their “voice” into operational analyses.
Through our experiences, we have
drawn the following conclusions
about service levels:
• Service level targets should be based,
in part, on analysis of customer
expectations;
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Cincinnati, Ohio USA
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www.convergys.com
©2008 Convergys Corporation. All rights reserved. Convergys and the Convergys logo are registered trademarks of Convergys.
Convergys refers to Convergys Corporation and its wholly owned subsidiaries.
• Queue time generally has a small
relationship on the experience except at
higher than ‘normal’ queue lengths;
• Satisfaction with the agent and first
contact resolution (FCR) are both
stronger drivers than queue time;
• Sensitivity to queue time differs by
industry and customer type; About Convergys
• Where queue times are less controlled, Convergys Corporation (NYSE: CVG)
they may have stronger effects on is a global leader in relationship
satisfaction; and management. We provide solutions that
drive more value from the relationships
• In many cases, loosening service level
our clients have with their customers and
targets can significantly reduce labor
employees. Convergys turns these everyday
costs without negatively impacting
interactions into a source of profit and
satisfaction or abandonment rates.
strategic advantage for our clients. For more
Driving the Change information, visit www.convergys.com.
While many ‘rules-of-thumb’ exist as to
how to set service levels, there still is no
strong set of unified findings into how
various service levels drive the top line.
It’s always been easy to calculate the
cost of increased staffing levels at more
stringent service levels, but it’s more
difficult to show how high service level
targets improve the business. Convergys’
approach to service level sensitivity
analysis is one way to understand both
sides of the speed of answer question so
that call center management can strike the
right balance between loyal customers and
optimized costs.
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PV5-048 One Size Does Not Fit 7.11.08