Outsourcing and Call Center Blog

5 May, 2007

Improve quality, retention and profits – create a “staff of one”

Filed under: BPO,Call Center,HR & Staffing,Outsourcing — shamrin @ 19:24

The idea of a “market of one” has been around for a long time. In the 80’s and 90’s it was applied in B2B marketing in a fairly broad way with the idea that products and messages would be customised individually for individual customers. Dell and Toyota are examples of bringing this notion to the consumer market with their approach to building computers and cars on an assembly line but to the specification of an individual consumer. I remember meeting Michael Dell in 1990 at his then modest-sized factory in Austin and seeing them assemble and test each machine to the buyer’s specifications. The combination of just-in-time inventory control and personalisation was brilliant and represented a new and important revenue model. Today personalisation of internet and mobile experiences are taking the idea even further. But how about applying this concept to personnel management in the call centre?

It’s normal to look at things like quality, retention, revenue and profitability on a project or company-wide basis and of course it should be viewed this way. But really any of these measures are simply aggregates of the individual results of individual agents. In the case of quality, we are quite accustomed to measuring and tracking agents on an individual basis. Why do we do this? Because it impacts the things that we are really interested in which are revenue and profitability. I propose that on an agent-by-agent basis (the micro level) there is a relationship like this:

Retention 1


Retention 2

On the ground this means that the longer any agent stays with us, the more effective and efficient s/he gets at his job, bringing in more revenue at an increasing rate (up to some limit). Moreover, the longer any agent stays with us, the more time we have to amortise the expenses of hiring and training him. So, what happens if we look at an individual’s profitability graph? I think it would look something like this:

Profitability Graph

In this graph, the area under the curve is the cumulative profitability of an agent. Initially it is negative and gets more negative as we train, pay, feed and transport him (the curve might be shaped more flatly if we were being reimbursed by the client at a 100% rate during this time). It further shows the agent beginning to return revenues (where the graph crosses the dashed line) as he leaves training, hits the floor and begins to answer calls. He eventually “pays for himself” as the graph crosses zero and he breaks into profitability. Overall profitability continues to rise over time but at a flatter and flatter rate (but still rising) as he maxes-out his efficiency and pays-off his training & hiring expenses.In creating this graph it is important to consider the broadest possible definitions of cost and revenue return, for example management & QA expense and the value of customer satisfaction (quantitative measures for this may be hard to come by at this micro level).

How can we use this chart for fun and profit? I will cover that in my next entry on this topic shortly.

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