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Improving the Call Center with Six Sigma
BY LAURI GIESEN
Six Sigma is no longer just for manufacturers; it can work in call centers too.
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SYNOPSIS | The quality improvement discipline known as Six Sigma has been gravitating from manufacturing to service industries, such as banking. Some banks are finding it useful in their contact or call centers, where it provides a methodology for analyzing problems and then correcting them. The cost and effort required for implementation of Six Sigma is substantial, however, requiring strong support from upper management and throughout the organization.
When the phrase “Six Sigma” comes to mind, it’s typically linked with a manufacturing or pro-duction-type environment. And it is true that Six Sigma was originally applied to manufacturing (see sidebar “What is Six Sigma?”).
But nowadays, this quality control process may just as likely be applied to a service environment, such as banking, where it’s usually seen in a back-office processing operation. And that makes sense, since processing work somewhat resembles the standardized, production-style system used in manufacturing.
Now, some banks are taking Six Sigma a step further by applying it to their contact centers or call centers. At first glance, this may raise eyebrows, since the quality of customer service delivered over the phone or PC can be difficult to quantify. Call centers have traditionally monitored the speed with which their employees handle calls, but how do you assess the quality with which the call was handled? And is the time and effort involved in Six Sigma worthwhile in an environment where employees turn over so frequently?
“We’ve seen more applications of Six Sigma in the back office, but call centers are very data-rich, which makes them good candidates for Six Sigma,” says Ali Kiran, CEO of San Diego-based Kiran Consulting Group Inc.
Kiran and other experts say that many of the problems with delays or poor servicing of customer requests or complaints can be eliminated by a methodical study of existing operations. Banks that can study customer contact at each step can make changes in the types of questions call center employees ask, how they respond to requests and how they prioritize requests before passing them through. Additionally, banks can study what goes on in their call center operations to find the best hiring and training practices.
Six Sigma in the call center, it seems, is not so far-fetched after all.
Applying Six Sigma
How banks apply Six Sigma in their call centers can vary extensively, but typically the institution identifies a procedure within the center that is either costly or negatively affects customer satisfaction. The bank will then attempt to isolate the problem by looking at statistical data to find probable causes. Several different approaches to changing procedures to correct the problem will then be tested. The results are studied to determine what steps the bank needs to take to achieve the greatest improvement.
“If you believe certain types of calls are not being handled properly, you may want to study how the training of your agents can affect the quality of service. You try to isolate the problem and collect as much data as you can,” Kiran says.
For example, Kiran says, a bank could study how various service agents were trained and categorize them according to those methods. Then it could do a comparative analysis of the effectiveness of agents trained by the various methods. The study would look at such factors as the time spent in solving the problem and how many calls customers had to make to correct a problem or obtain needed information. Finally, the bank could use this information to create the ultimate training program.
“Six Sigma prevents you from repeating the same mistakes over and over again,” says Dina Vance, senior vice president of Charlotte, N.C.-based Ulysses Learning, a call center consulting firm. “The magic is not in Six Sigma per se, but in how you apply it.”
When Atlanta-based NetBank Inc. began using Six Sigma to improve its operations, the customer interfacing components of the bank, including call centers, e-mail response teams and chat lines, were among the key areas it looked at.
“Using Six Sigma to analyze your customer-interfacing data allows you to capture the voice of the customer,” says Adam Green, NetBank process manager and the former manager of the bank’s call center operations. As an Internet bank, the call center interaction was particularly important to NetBank because its customers do not interface with the bank at branches, but only through online communication and call centers.
A similar effort was undertaken at McLean, Va.-based Capital One Financial Corp.’s Direct Banking operation, which also handles customers through the Internet and telephone. In that situation, the bank was attempting to diversify beyond its certificate of deposits business into a wider variety of savings instruments, such as money market and standard savings accounts. “We used Six Sigma to analyze how we processed customer requests so that we could handle a greater variety of savings products,” says Arvind Immaneni, vice president of Capital One’s Direct Bank.
In the last two-and-a-half years that Capital One Direct Bank has applied Six Sigma, in both the contact center and back room processing, the bank has seen a 40% reduction in the per-unit cost of opening and servicing savings accounts, as well as a 55% reduction in turn-around times and a 66% reduction in customer complaints, according to Immaneni.
Still, Six Sigma requires a costly investment, both in hiring outside expertise and training internal staff, an investment not all banks are willing to make — especially considering that it can take months to see any payback on that investment. “Banks want a return on their investment sooner than later,” says NetBank’s Green. “A Six Sigma project typically takes six to eight months before you see much of a return. Many banks today are looking for 30-day returns on their investments, rather than six months.”
A key element to making Six Sigma work is defining the problem in the first place, according to Guillermo Kopp, executive director and global research fellow for Needham, Mass.-based TowerGroup Inc. “You need to have a clear idea of what your objective really is and a good definition of the problem is critical,” Kopp says. “For example, if your goal is to increase productivity, you have to clearly define what productivity is. Are you measuring it in terms of output, cost reduction or additional revenue generation?”
Some banks, for example, have used programs such as Six Sigma to reduce the amount of time call center reps are spending with customers. But in looking to reduce the amount of time spent on each call, a bank needs to consider how the time reduction affects customer satisfaction and the opportunity for cross-sell.
“You can set up prompts and screens that help agents make shortcuts in making decisions and you’ll have a fantastic improvement in your average handling time. But are you foregoing opportunities for cross-sell?” Kopp asks. Correctly defining the bank’s goals from the beginning should prevent such occurrences, he says.
Analysis and Solutions
Once goals have been defined, there are a number of opportunities to apply Six Sigma to detect processing problems and find solutions. One of the Six Sigma projects at NetBank involved examining how long it took to handle requests from consumers to complete transactions such as transferring funds, setting up new accounts and closing accounts.
“We were interested in reducing cycles of customer fulfillment to streamline our operations and create a better experience for our customers,” Green says.
NetBank found some requests were taking several days to complete even though the bank wanted to complete as many of those as possible on a same-day basis. The bank sorted those customer requests by type. “We then put these requests and our responses under a microscope,” Green says. “We wanted to learn why it was taking so long to complete the requests.”
Step one, the bank found, was identifying which types of requests were most negatively impacted by delays. “We found in some cases it was okay with customers if the request wasn’t handled right away. But with other types of requests, immediate action was required,” he says.
By focusing on the most urgent requests, NetBank was able to look at its procedures and redesign the request handling process to reduce the amount of time required. Ultimately, the bank was able to substantially reduce resolution time, which enabled the bank to handle more requests with fewer employees, Green says.
A similar effort was undertaken at Capital One, where the Direct Bank looked closely at customer experiences to analyze what could be done to improve the speed and lower the cost of handling new account openings and completing transactions. “A lot of banks survey customers to get their input into how they can improve their operations, but we believe surveys are costly and not the best way to study what really happened,” says Immaneni.
For example, customers being surveyed sometimes forget whether they had made a specific type of request during the last year, Immaneni says. And if they are asked if they were satisfied with the results, they might answer, “yes,” because ultimately they got what they wanted. But a Six Sigma analysis would show that while the customer’s request was completed, the customer had to call multiple times or that the request took a long time to complete. Both are unacceptable.
Banks have also used Six Sigma to examine factors outside the call center that affect the center’s performance. Kiran cited an example of a bank that wanted to reduce the number of calls coming into its call centers from customers who were confused by the application for a particular type of mortgage loan.
The bank, whom Kiran did not identify, analyzed the calls coming into the center over a period of several months and determined that many of them related to missing information on the loan application or confusion relating to particular questions. The bank tried rephrasing the questions several different ways and added additional questions. It then studied the nature of calls to see how the various changes in language affected the number of calls received in the center and the ease of answering questions when calls did come in.
The bank found that a change in language in the document that customers had in front of them when they called in helped reduce the number of calls and improve the communication with customers who did call in, according to Kiran.
Hiring and Training
Another way Six Sigma is often applied in call centers involves the hiring process. Banks can analyze the background and character attributes of all its call center agents. It can then compare how those agents performed in terms of efficiency, customer satisfaction, cross-sell success and attrition. Then, when the bank needs to hire new agents, it can identify the background and characteristics that have been most successful in the past and look for new candidates who match those standards, Vance says.
“You can build your recruiting processes around what you know to be successful,” he says.
Immaneni says Capital One Direct Bank used Six Sigma to find things that were lacking in its call center employee-training program. The program was modified and existing employees were required to take “refresher courses.” As for recruiting, Immaneni says Capital One found through Six Sigma that different talents were required of sales agents located in the call centers and it modified its candidate requirements, he said.
But most banks, including NetBank, have used Six Sigma to correct existing problems rather than to design new processes from the beginning. The savings from identifying these problems and correcting them can be substantial. “The rule generally is for every Six Sigma Blackbelt you have, you should expect to save about a half million dollars,” Kiran says.
Savings of more than $5 million are not unrealistic for a large bank, Kiran says, and he has seen savings of up to $25 million from Six Sigma programs that included call centers as well as back-office and branch analysis.
While Six Sigma improvements were a continuous process at Capital One, the bank was able to start to see some improvements as early as three months after starting the process, Immaneni says. “We implemented changes in stages, beginning at three months. We focused first on those areas where we saw the potential for the greatest returns. But two-and-a-half years later, we’re still analyzing our operations and continuing to make changes that result in gains.”
These types of savings can be a real incentive for a bank to try the program, but it must be willing to make the investment in time and support. “Banks may benefit considerably from Six Sigma, but it requires a lot of commitment from throughout the organization in order to get the big paybacks promised,” says TowerGroup’s Kopp.
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