The Tyranny of Service Level
Untested and unquestioned as the sole determinant measure for years, service level today is only one
among several metrics directing strategic decisions, affecting design, implementation and the success of
optimized contact centers.
H
ow do you run a call center efficiently and
effectively to maximize caller satisfaction
given the resource and budget constraints
that most businesses face? What are the critical
variables in providing efficient and effective call center
management? Service level is used in virtually every
call center (for a solid discussion of what a service
level is, see [1]).
Service level is defined as the percentage of calls
answered within a specific time, and appears also
to be the focus of how industry experts believe call
centers can be run well.[2] Eighty percent of calls
answered within 20 seconds is probably the most
common form of service-level goal.[3,4]
There is no empirical work on how important
service level really is for call center efficiency and
effectiveness. It is used as a common metric because:
1. It is very easy to measure since it is automatically
reported in every major technology.
2. It has been around a very long time. It was built
into the first automatic call center switches and has
remained there since.
3. There is a certain face validity to thinking that if
you answer a greater percentage of calls within a
certain period of time, this indicates good service.
If service level is important, there should be a
relationship between service level and caller
satisfaction and other variables of call center
efficiency and effectiveness. If service level is
virtually a meaningless measure, then the industry
has generally been wasting time, effort, and – more
importantly – money that could have been used to
build up call center operations that have an impact
on important outcomes like caller satisfaction.
Research has been done to understand the
relationship between call center service level and
caller satisfaction.
While there is no real agreement about what
metric(s) are important in running a call center (aside
from service level), the following metrics appear to
be the most widely cited (e.g., [5]): abandonment
rate, adherence to schedule, average speed of answer,
www.CRMproject.com/15758
talk time, work time after call, inbound calls per
eight-hour shift per customer service representative
(CSR) – the average number of calls per CSR
handled per shift – calls closed on the first contact,
calls blocked, queue time, percentage of calls closed
on the first contact, percentage of calls blocked,
abandonment time, total calls offered, CSR turnover
and caller satisfaction.
Wenti Xu, Richard A. Feinberg,
JungKun Park
Hypotheses
The focus of customer contact today is on the
relationship of service level to a call center’s
efficiency and effectiveness. If it is, indeed, an
important measure, service level should closely
relate to call center efficiency and effectiveness:
H1 – There should be a positive relationship
between service level and caller satisfaction.
H2 – There should be a negative relationship
(opposite to predictions) between service level and
abandonment rate. If service level increases, we
would expect that consumers would have no reason to
abandon a call.
H3 – There should be a positive relationship between
service level and adherence. Service level means that
more agents are in seats ready to answer calls.
H4 – There should be a negative relationship between
service level and average speed of answer (ASA).
As service level improves, the total number of calls
answered can be increased and customers will not wait
for as long a time for a customer service representative.
H5 – There should be a negative relationship
between service level and average talk time. Better
service level represents a call center’s ability to handle
a greater number of calls and reach a higher degree of
productivity. The average total time for one customer
connected with the CSR should decrease.
H6 – There should be a positive relationship
between service level and average work time after call.
The more calls answered, the more likely more will
need after-call work.
H7 – There should be a positive relationship
between service level and inbound calls per eight-hour
shift per CSR. Higher service level means more calls
Purdue University. She is a research
Purdue University
Ik-Suk Kim
California State University
Los Angeles
Wenti Xu holds an M.S. in consumer
behavior and is a Ph.D. candidate at
associate at the Center for CustomerDriven Quality. Ms. Xu holds a B.E. in
industrial foreign trade and aeronautics
technology.
Richard A. Feinberg, Ph.D., is
a professor and the director of the
Center for Customer-Driven Quality
at Purdue University. He is the author
of two books and over 200 research
and trade articles, and hundreds of
presentations and seminars.
JungKun Park, Ph.D., is an assistant
professor of retailing management
at Purdue University. He received
his Ph.D. in retailing and consumer
behavior from the University of
Tennessee. Dr. Park’s research area is
technology and consumer behavior.
Ik-suk Kim, Ph.D., hails from
Purdue University. He is an assistant
professor of marketing, California State
University, Los Angeles. Dr. Kim has
published many papers and articles in
journals and conferences on marketing
and consumer behavior.
CRM Transformation
167
The Tyranny of Service Level
answered in a specific time frame, and therefore
more calls answered during shifts.
H8 – There should be a positive relationship
between service level and percentage of calls
closed on the first contact. As service level
improves, the call center can handle more calls
and if the call center regularly closes calls on
first contact, the number closed on first contact
should increase.
H9 – There should be a negative relationship
between service level and percentage of calls
blocked. If service level increases, customers
can get through to CSRs more easily and more
calls can get connected to the call center without
being blocked.
H10 – There should be a negative relationship
between service level and average queue time.
Better service level means more calls can be
answered quickly so that the amount of time
customers wait in a queue to be connected to a
CSR should decrease.
H11 – There should be a positive relationship
between service level and average abandonment
time. In this way, better service level equates
to more calls answered and fewer consumers
hanging up.
H12 – There should be a negative relationship
between service level and total calls offered. As
service level improves, the number of total calls
offered will go down.
H13 – There should be a negative relationship
between service level and CSR turnover. Poor
service level leads to more complaints since
callers cannot get through, increasing stress
which leads to more turnover.
Methodology
Data in this study is taken from the Purdue
University Benchmark database of call centers
(www.benchmarkportal.com) for the year 2004.
This database contains 2,974 call centers related to
30 industries. Variables are measured according to
the operational definitions provided by Anton.
Results
There are wide differences in service-level
performance across industry groups, as shown in
Figure 1:
168
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Industry Categories
Service Level[3]
Advertising
10.00
Hotel
20.00
Real Estate
20.37
Airline
22.00
Telecom Provider
24.67
Retail
26.04
Banking/Finance
27.03
Other
29.47
Media
30.83
Credit Card
31.55
Chemical
31.98
Telecommunications
32.75
Insurance
33.83
Healthcare Provider
35.89
Catalog
38.67
Publishing
39.42
Outbound Teleservices
40.00
Public Sector
40.00
Consumer Products
40.32
Pharmaceuticals
40.90
Cable Television
43.37
Aerospace
44.00
Travel
45.73
Brokerage
45.75
The results show that service level was
significantly related to six variables;
1. As service-level performance decreased (for
the purposes of this study, higher service-level
performance equals poorer performance – i.e.,
it took longer for centers to answer 80 percent
of calls), caller satisfaction increased.
2. As service-level performance decreased,
abandonment rate increased.
3. As service-level performance decreased,
average speed of answer increased.
4. As service-level performance decreased,
percentage of calls blocked increased.
5. As service-level performance decreased,
average queue time increased.
6. As service-level performance decreased,
average abandonment time increased.
Among these six variables, only four related to
service-level performance in the manner predicted:
Transportation
46.10
abandonment rate, ASA, percentage of calls
Utilities
51.35
blocked and average queue time. It is logical that
Automotive
52.09
Computer Software
52.71
since fewer calls can be answered quickly, more
Government
53.12
callers would abandon the call (abandonment rate).
Computer Hardware
53.88
As wait time increased, more calls are blocked by
Average all industries
37.62
the call center because the queues become filled,
Figure 1: Industry Categories and Service Level
causing callers to wait longer.
(Goal: 80% of calls answered in __ seconds)
If any or all of these variables were related to
customer satisfaction,
Variables
Mean
n
Correlation
then service level
Customer satisfaction
53.43
559
0.09*
would be an appropriate
Abandonment rate
5.23
962
0.25*
proxy and would be
Adherence
84.54
743
0.02
Average speed of answer (CSR)
33.24
914
0.46*
important to measure.
Average talk time
4.84
956
0.05
However, only one of
After-call work time
2.75
939
0.05
these (ASA) is related
Inbound calls per 8-hour shift per CSR
58.78
884
0.00
Percentage of calls closed on the first contact
70.01
861
0.06
to caller/customer
Percentage of calls blocked
1.39
626
0.14*
satisfaction, indicating
Average queue time
36.80
862
0.45*
that service level is
Average abandonment time
71.26
908
0.26*
not as good as the
Total inbound calls (per year)
3,707,262.00
851
-0.04
Annual turnover of inbound CSR staff (full-timer)
24.00
889
-0.01
single variable alone
* p<0.05
in predicting/causing
caller/customer
Figure 2: C
orrelations Between Service Level and Variables of Interest
satisfaction.
Two variables had
The correlation between two variables
negative relationships (opposite to predictions)
(reflecting the degree to which the variables are
with service level: caller satisfaction and average
related) (see Figure 2), were completed between
abandonment time. No correlation was found
service level and the variables of interest.
between service level and adherence to schedule,
average talk time, after-call work time,
Managerial and Practical
inbound calls per shift, calls closed
Implications
The
percentage
of
calls
closed
on
on first contact, total inbound calls
This study indicates service level
annually or turnover, although it was
is not a key metric for call centers;
the first contact and the average speed of
predicted that there would be significant
certainly not as important as the conand clear relationships. A follow-up
sultants and professional magazines
answer are found to be the two significant
regression analysis showed that only
suggest. Firms using service level as
two of the variables – ASA and first-call
a standard for call center efficiency
predictors of caller satisfaction.
resolution – were determinant (causal)
and effectiveness waste resources on a
of caller satisfaction.
comparatively unimportant factor. The
The determined issue is the
new rulers of call center management
presumed centrality of service level in the call
satisfaction and measures of call center
are speed of answer and first-call resolution. ■
center professional literature. Not only were
efficiency and effectiveness, the findings of this
many of the presumed relationships virtually
research show that service level is actually not
Endnotes
nonexistent, but when they were found, they were
that important in the operation of a call center.
1. Slifer, D. (2004), “Service-level management:
small and some even opposite of what would be
It is not a critical variable for caller satisfaction
Guaranteeing customer satisfaction,” Available at
expected. This disparity is particularly important
and is not important for call center efficiency and
www.seneca.com/news-whitepapers.html
in terms of caller satisfaction.
effectiveness. Indeed, the negative relationship
2. Cleveland, B. (2002b), “Easy access: Ten guidelines
If we assume there really is nothing more
between service level and caller satisfaction
to speed-dial your way through the customer service
important to the effectiveness of a call center
found (as service-level performance decreased,
gridlock,” Operations and Fulfillment, August, 26-29.
than caller satisfaction, we would assume that
caller satisfaction increased) suggests that call
3. Anton, J. (1997), Call Center Management by the
if no other relationship were found; yet, in
centers that focus on reaching service-level
Numbers, West Lafayette: Purdue University.
fact, there should be one between service-level
goals may in fact make it harder to achieve any
4. Cleveland, B. (2002a), “Twelve Traits of the Bestperformance and caller satisfaction. Interestingly,
customer satisfaction goals.
Managed Call Centers,” retrieved Dec. 5, from
a relationship was found, but in a direction
The percentage of calls closed on the first
http://www.incoming.com.
opposite of that predicted. As service-level
contact and the average speed of answer are
5. Klenke, M., and Trickey, P. (2002), “Super balance,”
performance decreased (it took longer to answer
found to be the two significant predictors of
Operations and Fulfillment, November, 31-36.
80 percent of calls), caller satisfaction increased.
caller satisfaction. This suggests that if call
6. Feinberg, R., Kim, I. S., Hokama, L., De Ruyter,
centers want to measure and manage something
K. D., and Keen, C. (2000), Operational
Discussion
that really makes a difference, they would
Determinants of Caller Satisfaction in the Call
In understanding the relationship between
measure only average speed of answer and those
Center,” International Journal of Service Industry
call center service-level performance, caller
closed on first contact.[6]
Management, 11(2), 131-141.
More information and additional material can be found online at
www.CRMproject.com/15758
CRM Transformation
169