Failure Demand is Not an Option
- April 29th, 2010
- Posted in Systems Thinking and Contact Centers . Systems Thinking and Government
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Contact centers notoriously take a manufacturing approach to how they are managed. The contact center formula has long been set and looks like this:
# Calls x AHT (Average Handle Time) x Service Level
Contact center management and cost accountants use this number so they can determine how many people they need to staff phones. The service level piece is constantly being benchmarked to see what an acceptable amount of phone calls would be not to get answered.
I’m OK with the first two factors to determine staffing levels, but the whole acceptable level of service piece is to plan to upset customers. From a customer perspective having all phone calls answered when they call is what is desired. The customer expectation is in direct conflict with the the formula above.
Some will say, “Everyone uses this formula .” Yes, they do . . . and at great expense.
Starting with the customer, they call in when it is convenient for them to call. With service levels your company calls back when it is convenient for you. Customers have a choice either find someone else to call (competitor) or have to call back or wait for a call back – both are arrogant approaches to customer service.
On the cost side we may be able to staff at lower levels with less than 100% service level. But try putting a figure on how many don’t call back and do business elsewhere or swear never to do business with you again. These figures are unknown and unknowable (W. Edwards Deming).
On the AHT factor, I have had many conversations (some heated) about if they just drop AHT by 15 seconds they save (in some cases) 100s of thousands of dollars. I can only say this may be true, but they are looking at the wrong part of the formula. They completely ignore their biggest opportunity to improve.
What is this opportunity? Reducing failure demand. First discovered by John Seddon, this is a failure to do something or do something right for a customer. This number ranges from 25 – 75% of all calls a contact center receives. Eliminate or reduce failure demand, you reduce phone calls. This represents a far larger savings than reducing AHT because you never have to take the call in the first place.
The added benefit is greater customer satisfaction when you reduce or eliminate calls that customers don’t want to make and you don’t want to get. This also frees up resources to answer 100% of calls. Customers love good service and rarely get it, so this becomes a differentiator from the masses and your competition.
Failure demand is only the beginning. We have learned many other counter-intuitive truths about contact centers through interventions with the public and private sector. But taking this first step to different thinking can help your organization dramatically.
Leave me a comment. . . share your opinion! Click on comments below.
Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). His organization helps executives find a better way to make the work work. Read his articles at Quality Digest and his column for CustomermanagementIQ.com Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at [email protected]. Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.
Trip,
Excellent blog.after working 14 years as an entrepreneur, I started working in a call center. The first day on the job i thought i had stumbled on the set of a remake of “modern times”. You are right – it has all the connotations of an manufacturer’s assembly line.
The failure demand is another way of describing FCR, am i correct or have i misunderstood?
Best
Michael
Michael-
Thanks for your comment.
I started to say that FCR (First Call Resolution) and Failure demand is different, but some may be defining FCR the same. However, I have not seen this at contact centers.
FCR usually says that the call is resolved meaning all demands. Failure demand means eliminating the call altogether so we don’t have to have a resolution.
I hope this helps.
Tripp
Tripp,
Before having worked through John Seddon’s “Check” process, during an intervention at my employer, I couldn’t quite get my head around the high percentage of failure demand that was estimated to be “in the system”. I just could not accept our system was that bad.
After “Check” I couldn’t quite believe how much hard work our department had been putting in to service demands that didn’t created any value and were caused by that failure to do something or do something right.
Once we found ways to eliminate the Failure Demand our capacity shot up.
Part of the problem was with us hiring a call centre to deal with our customers. Seemed like a good idea at the time but even re-reading that sentence now “hiring a call centre to deal with our customers” makes me shiver.
Great blog,
Regards
Ian