Interviewer:
A natural gas local distribution company (an LDC that distributes gas locally as a monopoly) is trying to centralize its back-office functions. In the past, it has acquired other LDCs and placed them under its brand name.
Our client has asked us to reduce the costs for back-office functions, specifically for the call center. The call center is the LDC’s point of contact with its 2 million customers. Customers call with questions about billing, services, and emergencies. There are 300 full-time customer service associates who work in three shifts.
Recently, a new €50 million call center was built in Manchester because the labor costs are lower there than in London. This has reduced operating costs from €16 to €12, but this is not enough and our client wants further reductions.
Candidate:
So, our client is a natural gas local distribution company that wants us to figure out ways to reduce costs in its new phone center. Are there any other objectives?
Interviewer:
No. And by the way, we don’t want to open a call center overseas.
Candidate:
Can you give me a cost breakdown?
Interviewer:
Labor is 60%, toll-free calls are 20% and miscellaneous items, licensing fees, training, IT, and utilities make up another 20%.
Candidate:
Can you give a call breakdown? I’ll assume the majority of the calls are about billing.
Interviewer:
That’s right, billing calls make up 60% of the traffic while 39% regards service and less than 1% are emergency calls.
Candidate:
The number that worries me is 60% labor cost. We need to see how we can reduce labor, possibly by automating the phone lines and making information available online. Some of the billing questions can be automated, things like
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how much do I owe? What address do I send my check to? Did you receive my last payment? These types of questions can be answered by touch-tone.
But there will also be questions that can’t be automated, such as not understanding a bill, as well as service calls, connecting and disconnecting th gas.
Interviewer:
Okay, so you want to automate some of the services as well as enhance our website?
Candidate:
Yes. I’ll assume that a phone call to a human costs about €10 per call, while an automated call costs around €1. I’ll also assume that a visit to the web site costs approximately €0.5.
Interviewer:
Ok.
Candidate:
Do we have any information about the average length of a call?
Interviewer:
Yes, 5 minutes total. That includes 3-3.5 minutes talking to the customer and
2 minutes of post-call work.
Candidate:
Is the after-call work computerized? Can the service rep write it up as he goes along?
Interviewer:
Some of the work could be done that way.
Candidate:
We need to do a workflow study. How does out our time compare to other
LDCs?
Interviewer:
We’re somewhere in the middle.
Candidate:
Then we should benchmark our performance against the leaders. Do our computers regularly shut down?
Interviewer:
Not since we moved to the new facility.
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Candidate:
Finally, I’d like to examine the pattern of calling. When are the peak times? Is there any dead time? Can we bounce queued calls to our other phone centers? Can we use more part-time workers?
Interviewer:
Good, we have about a minute left.
Candidate:
Let me summarize. I’d try to reduce our labor costs by automating come of the calls, making more information available on the Web, staggering work shifts, using part-time workers, and having queued calls bounced to other phone centers. I’d try to reduce talk time and after-call work by having the phone rep input the work while on the line with the customer. And I’d review the information that the phone rep is recording. Is everything necessary or are we collecting some information out of habit?
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