Background and Context
ACME Inc. is a retail company with a long tradition and footprint in the local market. The Holding was founded in 2006 but its story goes way back to 1950 when the company was founded in the south of the country to sell home appliances.
By 2017, the business was comprised of three different companies: a consumer electronics retailer with a footprint of almost 90 stores along the whole country, a fast fashion apparel retailer with 65 stores and Financial Services focused in making credit cards accessible for the lower income portion of the population. The service centres for the Financial Services business were located inside the stores.
In 2017 the company was undergoing major changes in its structure and also invested in a new and modern Distribution Center in the capital to improve operations and efficiency.
I was hired as LEAN & Operational Excellence Director reporting directly to the COO and my job was to instill a LEAN culture inside the company while doing some projects with the main goal of reducing costs.
The Problem
One of the first projects I was assigned to was to improve the processes and overall efficiency of the contact center. The contact center department was comprised of three big areas: (1) Front end Customer Services, (2) Stores Operations Technical support, and (3) Credit Collection. It also had 2 major areas inside Customer Services focused on After Sales Resolution and Technical Services and Repairs.
Some basic information for the operation in the Contact Center were:
- Has a Headcount of 260 FTEs
- It receives around 90,000 monthly incoming calls with a service level of 52% (Target was 85%)
- It takes around 500,000 outbound collection calls monthly
- Represents annual costs of around 2.5 Million USD annually
- Technology-wise it has an industry-standard IVR and a Ticketing system
I was asked to lead a team to diagnose the AS-IS situation and propose solutions with the aim to reduce costs while at least maintaining service levels. The scope of the project was only in areas (1) and (2) including also the After Sales and Technical Services Processes.
The diagnosis phase consisted of the following stages:
- Field observation with the different roles in the contact center
- Listening to customer calls to identify pain points
- Data analysis of the call volumes to identify patterns and establish KPI baseline
- Carried out interviews with the team and conducted some workshops
- Mapping out critical processes such as After Sales and Technical Services
During that discovery phase which lasted around 10 weeks, we discovered that:
- 75% of the customer calls were just about 4 topics: (1) Credit Card Information or Requirements - 47%, (2) Home Delivery Issues - 10%, (3) Incident Status Questions - 10%, and (4) E-commerce general questions -8%
- 71% of the tickets were closed within the defined SLA
- The call center reps had only between 18% to 28% of value-added time
- The ticketing system did not have any prioritization or business assignment rules leading to a manual process that lead to a wait time of 1 day to be assigned for resolution
- 276 different types of categories existed to classify customer incidents divided into 41 General Questions, 142 Requirements, 74 Claims & 19 Other types not classified making it difficult the selection for a service rep to select the correct type of incident to be created.
- Although the After-sales processes and technical services processes had similar resolution patterns and synergies they were led by two different team leaders with different ways of doing things
- There was a backlog of around 11,000 open tickets affecting 8,700 customers
- Lead Time for After Sales requirements were 26 days on average
- Lead Time for Technical Services & Repair processes was between 30 to 34 days on average
- 77% of the customers considered that the issue was resolved in the first contact for requirements related to Credit Card issues.
- We did not find any structured continuous improvement and feedback meetings inside the contact center team.
The Solution
I led a programme to redesign the contact center operating model that comprised 4 major initiatives:
Cost Efficiency in the contact center
- To implement self-service portals to reduce incoming calls for generic questions
- To redefine the operating shifts for the entire cells to accommodate to the actual demand curve
- To find synergies between other Departments that worked in the resolution processes for the customer, especially in the Financial Services area of the business
LEAN in after-sales and technical services & repair processes
- To reduce the backlog of open tickets with a SWAT team focused on stabilization and daily management
- To review processes and understand synergies between areas
- To implement daily management activities in the team and weekly performance meetings with operational areas to reinforce adherence to SLA agreements
Implement First Call Resolution initiatives for Financial Services as a pilot to evaluate results and decide the course of action
Implement a unique CRM and workflow system
- To standardize and structure all the processes and connect all internal back offices
- To review all the Service Level agreements and adjust them putting the customer in front
- To Implement visual management KPI dashboards for all the areas to monitor and improve SLAs and Lead Time
The Results
Cost Efficiency in the contact center
Initiatives started in Apr/2019 and lasted until March/2020 when I stepped back from the Customer Service Role due to the reorganization, during that period we were able to:
- Reduce total FTE headcount from 260 to a total of 138 while increasing service levels from the baseline of 52% to 81% over the last 3 months before the social unrest of Oct/2019.
- FTE reduction represented an annual reduction of 0,7 Million USD annually → From 2.5 to 1.8 Million.
- TMO reduced from 10 mins avg to 3,5 min
- Call volume reduced from 90,000 to 60,000 in average by:
- Implementing self-service portal which migrated around 3,000 calls monthly to create tickets and around 9,000 calls monthly to ask for the status of the ticket
- Implementing IVR self-service options which accounted for 15,000 calls per month
- Absenteeism reduced from 20% to 10% with a better shift scheme and incentives
- Presented business case to reduce the Customer services structure as part of the reorganization effort which aimed to reduce costs by 0.4 Million USD annually. The final resolution included in the final proposal was 0.3 Million USD annually after a couple of adjustments. The process was led by another team.
LEAN in after-sales and technical services & repair processes
Reduced the backlog from 11,000 open tickets to 3,500 within the first 3 months of operation
- Better ticket assignment system with a small Excel spreadsheet automation while waiting for the Workflow implementation
- Daily management and KPI monitoring
- More attributions for the resolution team to expedite customer solutions.
- Data sources cross reference and cleaning to finding actual issues solved but not closed in the system (i.e: customers with their articles already delivered but still pending to close the resolution ticket, around 5,000 tickets and 3,500 customers in that scenario)
Reduced total lead time for the after-sales process
- During the first 6 months and with the daily management initiatives and data cleaning Lead Time was reduced from 26 days to 8 days
- In a second initiative of 2 months, SLAs were revisited and agreed upon the areas and a new improved process was put in place that allow me to reduce the lead time from 8 days to 2 days.
- SLA compliance changed from 71% to 96% in the after-sales process
Reduced total FTE headcount from 14 to 7 in a 6 months periods
- Robotic Process Automation to free up 1 resource from manual tasks
- New workflow assignment and automation rules free up 1 resource from manually assigning the tickets to the team
- 5 resources were freed up when the backlog was stabilized at the takt time of the process, around 200 tickets daily with a backlog between 350 to 450 tickets.
Made a diagnosis and presented a business case, within 2 weeks, for the Technical services processes which aimed to reduce costs for the company with a potential of 0.6 Million USD annually
As a side project the customer satisfaction and NPS survey was reviewed within a 3 month period:
- Merged 2 separated surveys with disconnected results into 1 that accounts for the customer journeys inside the company instead of reviewing the businesses as separate units
- Redefined the data sources in accordance with the new defined journeys increasing the potential customers on the database from 0.3 to 1.2 Million.
- Automated the survey collection process from calls to an automatic mailing survey reducing costs from 0.2 Million USD annually to 0 while increasing response rate from 3.5% to 7.3%
- Implemented automatic daily mailings for the stores with one-day delay results of their NPS and customer satisfaction readings
- Implemented an online dashboard for customer satisfaction and NPS results for the whole organization
Implement First Call Resolution initiatives for Financial Services as a pilot
- First-call resolution initiatives moved the rate from 77% to 83% (83% of the respondents considered the issue solved at the first contact) within a 2-month period of diagnosis and testing
Implemented a unique CRM and workflow system between Feb/2018 and Apr/2019 → 14 months duration of the total project involving the whole organization while maintaining the costs of the previous system
- Implemented a workflow and CRM system connected with the IVR system to create tickets and generate flows for the resolution areas
- Reduced the number of categories from 276 to 40 by redefining the actual needs of the customer and grouping by processes instead of individually
- Implemented Business Analytics dashboards for the whole organization to help in the visual management and performance management processes
Lessons Learned
- Significant cost reductions were achieved during the whole project while also improving lead times and service levels
- New data was acquired from the CRM/Workflow system which allowed the organization to take more informed decisions and start improving
- Involvement of the organization was good and everyone found value in the new systems and processes implemented
What went wrong? How did you resolve the issue?
- The technical Services processes team was not able to be merged with the Customer Service team due to political discussions inside the company not advancing. A better and stronger business case should be presented for the benefit of a unified team in consequence, the improvements observed in the after-sales department were not replicated in this department and lead time for this process remained constant.
- The social crisis in Chile changed the focus of the organization to one more focused on cost efficiency which stopped some promising customer satisfaction initiatives to remain as pilots and not being deployed or rolled out
- The unified structure project was not led by me, making it difficult to track if the proposed costs savings were achieved and the achieved lead times and SLA compliance numbers were maintained
