Call-Center Consolidation

Everybody knows you have to spend money to make money, but when the marketing and sales department is yelling for more, while the finance department is screaming for less, companies are forced to come up with innovative ways to economize. As competition heats up the industry, wireless carriers are especially under pressure to offer added services and sign up new customers while keeping operating costs low, said Bud Jordan, Price-waterhouse Coopers principal consultant.

"That means fewer sites, fewer (customer-service representatives) and fewer administrators," he said. "The only thing that 'fewer' doesn't apply to is customers."

But more customers require more customer service representatives (CSRs) to handle the call volume, which means more customer-service centers, right? Well, not always. Some carriers have found that instead of having many small customer-service centers, it is more efficient to have larger centers, and fewer of them. AT&T Wireless has reduced its number of call centers from seven to five, Ameritech Cellular has gone from seven to four, ALLTEL from nine to seven, and United States Cellular from 16 small centers to four regional centers, with plans to add more as business needs are evaluated. Not only have they cut real estate, infrastructure and salary costs, but they have gained efficiencies by placing employees and business processes in fewer places.

Linda Baker, United States Cellular vice president of customer service, said real estate cost is one determining factor for wireless carriers considering consolidation. Her company's efforts to consolidate stemmed from its desire to invest in a multitude of technologies for the centers. In order to turn cost savings around to customers, it decided to invest in a limited number of sites.

"It's more cost-effective to limit your capital investment and installations when you are in a year of technology changes," she said.

Bob Fletcher, Bob Fletcher & Associates president, agreed that consolidation is a trend among wireless carriers. Besides saving money in real estate and infrastructure, Fletcher said you can save 15% of total costs in salaries alone by combining CSRs into large teams instead of independent small teams. For example, he said, if three centers each take 100 calls that last five minutes and answer 90% of them in 20 seconds or less, it takes 22 reps in each center (66 total) to handle the volume. But if you put them under one roof or connect them electronically, it takes only 58.

"Larger teams raise the occupancy rate," he said. "You can handle the same call volume, offer the same average handling time and give the same level of service to the customer, but do it with fewer people."

Consolidating the Rest Jordan said that when you consolidate your centers, you also consolidate your business processes, people, technology and resources. His clients that have consolidated gained more control over end-to-end processes because their employees could communicate better with one another. The move also optimizes business processes, he said. When companies merge, there often are many people with the same job description, but no one is responsible for overseeing the whole process, he explained. Consolidation also offers opportunities to create synergy with the work force.

"When you consolidate on your business side, you can focus on a learning environment and continuous improvement within your call centers, which turn out to be self-supported training environments for the call centers," he said.

Baker agreed that for United States Cellular, having the management team in one location rather than in several locations reduced redundancy and increased communications. Productivity went up as a result. The company created other efficiencies when it moved from 30-seat customer-service centers to 250-seat centers. More people in one place means more employees to cover for sick time, personal days and vacation. United States Cellular is able to offer flexible work schedules and schedule switches. That flexibility, combined with better career-path opportunities, has led to higher employee retention.

Consolidation helped AT&T centralize its resources, said Ken Woo, AT&T corporate spokesperson. In the past, CSRs might have used varied, and sometimes outdated, reference materials, and subject matter experts were scattered across all locations. Today, the materials are not only in one place, but also they are consistent. The company's subject matter experts are on hand to handle questions or special requests.

"Someone who specializes in one area can reference the facts about that region's coverage and talk to the customer from an even more educated standpoint," he said.

Local Expertise at a National Level As wireless coverage and competition expand, local call centers aren't as effective, said Linda Wokoun, Ameritech Cellular vice president of call-center operations. The need to have localized pricing plans for each market has diminished over the past few years as many of the competitive issues are now national or super regional.

Similarly, when AT&T first launched wireless, it made sense to have CSRs as localized as possible. Woo said it was difficult to have someone in New York, for example, answer all calls from other markets when he might not be familiar with those areas. CSRs had to transfer calls to the local centers to get answers.

"That has changed with our true national network and national coverage," he said.

On the other hand, said Faerie Kizzire, Sprint senior vice president of customer care, as carriers build national networks, customers have more opportunities to use your service wherever they go. Therefore, it is even more important to be able to speak intelligently about their destinations as well as their home areas. Sprint is building a second call center in Rio Rancho, TX, that seats 504 people.

"The challenge for all of us is to create the kind of tools for people that they still can give personalized service to a customer as call centers are becoming larger and more centralized," she said.

To help, Sprint offers CSRs an on-line comprehensive map of every market in which it does business.

Ameritech also has been able to offer local expertise despite the fact that calls may be answered in another city, Wokoun said. The company uses a geographic information system that allows its technical assistance group to put maps of every location in which it operates on its computer screens. The maps show cell sites and help CSRs answer questions about other markets. The system also is connected to engineering so when trouble tickets come up, engineers know exactly where the customer was reporting difficulty.

Terri Wright, ALLTEL staff manager of call-center support, said an on-line reference system has been ALLTEL's solution to answering questions about unfamiliar markets. A well-designed search engine brings up information about critical items that are unique to each market, such as coverage areas, pricing plans and store locations with detailed directions to the stores from major thoroughfares. In some cases, CSRs can pull up maps of the areas or pictures of the stores.

"It is imperative to us that we strive to make it transparent to our customers where the call is being handled," Wright said.

There are arguments for keeping a local touch, however. United States Cellular's Baker believes it is important to keep regional centers for the retention of regional information. She takes cultural and demographic needs for each area into consideration.

Meeting the Challenge Before you decide to consolidate your employees and your resources, prepare to meet the challenges that will arise. From a management perspective, you will have to deal with a fear of change. You also will face operational issues, such as multiple technologies, different legacy systems and inconsistent practices.

"The biggest issue is a fear of the unknown," Jordan said. "What can keep that at a minimum is very open and honest communication between the staff that's planning the change and the rest of the employees."

Once you analyze the consolidation process, he said, you need to let everyone in your company know what you have discovered, what you are thinking about changing and where the company is headed. Let them know that you don't have all of the answers right now but that you will keep everyone posted.

Baker said open communication, change-management courses and cross-functional transition teams were vital to United States Cellular's success in assuaging its employees' fears. The change- management courses let employees voice their fears and concerns to management, and they received tools and skills training to help them handle the transition.

Ameritech handled the employee situation by letting attrition happen naturally in the centers that it wanted to close. It took about a year to shut them down, Wokoun said. Although the company typically only gives relocation packages to executive- or management-level employees, it recognized the value of its CSRs and offered them incentives to move to other locations. A good number of them took the company up on its offer. The rest were absorbed into other jobs in the industry or at Ameritech.

"While you don't want to run seven centers when you can operate on three or four, you never want to close a center while you still have a lot of trained people there," she said. "Well-trained CSRs are so valuable, and it's much more expensive to hire new people and retrain."

ALLTEL's Wright said her company avoided any forced displacements of employees by changing call-center functions in particular locations. For instance in Springfield, MO, it had a facility with a call-center operation responsible for Springfield and its outside areas. The location also handled its own financial services. ALLTEL migrated collections to its Little Rock, AR, financial services organization, and the Springfield call center became inbound customer service only.

"The message we gave was positive: 'The good news is you will all have jobs. The other news is it might be doing something different from what you do today," Wright said. "We maximized the use of trained reps and allowed them to transition into these other call-center opportunities."

Challenges also lie ahead from a technical perspective. Jordan said if you are in a merger or acquisition situation, you may end up with multiple types of customer care and billing technologies. He cautioned against making business decisions based on technology. Instead, you should figure out the processes that will best serve you and your customers, then decide which technology best serves those processes.

Fletcher said when choosing one legacy system over the others, you should consider how old each system is and how much implementation work needs to be done. It's a good idea to have dedicated teams to analyze each system and to train employees how to use the one that you pick.

Those dedicated teams also can help you standardize your processes. Whether you are consolidating because of a merger or simply for the cost savings, chances are each of your centers has a different way of doing things.

Even something as simple as using the same abbreviation when your CSRs take notes and input billing-system data becomes vital. In other cases, your centers may handle administrative work in different ways. One CSR may be used to taking customer requests for marketing materials and then mailing the brochures himself, while another takes calls and then offloads the other work to another department. It is important that you re-engineer your processes so that everyone knows where his duties fall.

With so many different people, procedures and technology to worry about, rarely do call-center consolidations come off without a hitch. The key is to be, like these carriers, willing to accept change and ready to deal with whatever surprises come up along the way.

What do you do when you want the efficiency of a larger team, but you can't physically move your call centers? BellSouth Cellular faced that situation when it considered consolidating 21 locations, said Helen Prieto, director ofcustomer operations.

"When we did the financial analysis, there wasn't any cost savings by consolidating because our centers are in places that house other departments, so we couldn't shut down an office to save the cost of rent," she said. "Concern for employees who did not want to relocate was another consideration."

BellSouth turned to virtual consolidation, or electronically connecting its centers. Instead of 21 different call centers, it now has eight virtual call centers, one in every state in which it offers service. Most of the time, the first available CSR in the state takes the call. In the evening, BellSouth further consolidates into four virtual call centers that take overflow calls all night. BellSouth's markets run from small southeastern cities to larger markets such as New Orleans and Atlanta. Therefore, the company prefers to have calls answered by a CSR in the same state as the caller because the CSR is more familiar with the area and can focus on the customer's needs, Prieto said.

Linda Wokoun, Ameritech Cellular vice president of call-center operations, said prior to going virtual, each one of her company's MSAs had its own customer-service center to answer any questions from local customers. Ameritech began consolidation in 1996 through manual allocations. Over time it implemented technology at the network level that routes calls automatically instead of at the local automatic-call-distributor level.

"Our ability to deliver efficient service to our customers in a cost-effective way is enhanced by a virtual team," Wokoun said. "People who use cellular service don't have a lot of time on their hands to wait for people to answer the phone. The larger your team is, the better you are able to help them."

Bob Fletcher, Bob Fletcher & Associates president, said the best way for carriers to electronically consolidate is through a network router. The device can route calls by priority queuing, automatic number identification, skill-based routing, least idle agent or however the carrier chooses. Customers call only one number, he said.

Customer-service centers can range from the single to quadruple digits. How big is too big? Carriers share their thoughts on how many people should ideally be in one call center.

"We benchmarked a lot of call- center and carrier operations, and we felt the 250- to 300-person call center created the family environment that we are looking for, that we also want to pass onto our customers. We have found that the majority of the top 10 carriers are going from two to six call centers, typically with a regional flavor." -- Linda Baker, United States Cellular

"Two or three years ago, the big thing was mega teams, 600 to 800 people in a building. My theory is once you get past 350 agents in one place, you are probably too big. If you need 400 agents, there is no reason to put them in one building; you can take the same concept but do it electronically with four centers of 100, or eight centers of 50." -- Bob Fletcher, Bob Fletcher & Associates

"You should not consolidate to a single site. You need more for fall back, fail safe, backup, disaster recovery and logistics in case you have an outage or bad weather." -- Bud Jordan, Pricewaterhouse Coopers

"The size is driven by balancing the financial investment with how large a center you can realistically manage and still have good relationships with employees. We landed on two centers with 504 agent seats that will employ 1,200 people each. The compelling factor for us is how fast we are growing. We can't bring 25 people on every two weeks and hope to keep up with the growth in our customer base." -- Faerie Kizzire, Sprint

"A 400- to 600-seat center is about as big as you want to get, but there are other people with different opinions. With the way you can route calls, you don't need to have huge call centers with thousands of people. You run up against issues of providing a sense of esprit de corps. You wouldn't want to build a call center with less than 100 to 150 people, unless you had a call center as part of another operation where you already have your real estate costs covered." Linda Wokoun, Ameritech Cellular