There are many ways to lead ranging from fear to example but I've found that one is more effective than any other. We've all been taught both in life and school that leading by example is the clear choice, probably because it is a permutation of the Golden Rule.
Those who do lead by example are likely to gain the respect of team members who share similar values, most frequently of hard work, ethics, dedication, etc. What about those team members who do not necessarily value the same things? What if the example you set is not so obviously observed? Much of a manager's job is done behind closed doors or after hours so it becomes difficult for those examples to be demonstrated.
So what leadership method could be better? Leading by serving. If a leader adopts this mantra of leadership through servitude it encompasses the positive aspects of the aforementioned example but also implies a mindset that will resonate with all team members. No matter what values and viewpoints a team member might have, s/he will always appreciate a leader that consistently has his/her best interests in mind, always seeks to provide assistance or advice, and always puts the needs of the team first.
I do not mean to imply that a leader should cater to every individual's demands. There are many times that a leader has to act in a way that is similar to "tough love" in order to mentor, advise and guide both the employee and the team to long-term success.
To illustrate this point, I'll share a story. At one point I had to deal with a subordinate (we'll call him Joe) who was feuding with several other employees. It started out as playful banter but eventually caused tension to form between Joe and several employees from other departments. During this escalation, there were several accusations made against Joe for fairly insignificant yet still inappropriate actions.
Part of servitude is loyalty and as an expression of this my first action upon hearing of these accusations was to pull Joe aside and ask, "What really happened?" This way he knew that my first commitment was to him keeping him from becoming defensive. We were able to discuss his view of the situation and what actions had caused the escalation and misunderstandings. I was then able to offer suggestions for behavior modifications that might lead him to better outcomes in the future and he was very receptive. My suggestions were taken to heart because I immediately saw him working to modify his behaviors.
I believe that the servitude mentality is also the fastest way to become what the book "Good to Great" defines as a Level 5 Leader. By viewing your leadership position as one of serving your team, the only logical path is to assemble the most competent individuals whose individual skill sets are likely superior to your own. Since they will know that your loyalty is to the team, not yourself, they will return that sentiment and you're team will be highly effective.
Ultimately this concept of leading by serving is only mildly different than leading by example but I believe the nuances create significantly different outcomes. Ultimately you'll find that leading with a mentality of serving the needs of your team is rewarding and effective because it helps to build a trusting and collaborative team dynamic.
Saturday, November 1, 2008
Friday, March 28, 2008
No Profit in Pay Per Click
There are now many companies offering to setup and manage pay-per-click (PPC) campaigns for other businesses. Some of these providers are even funded by venture capital and headed by lots of smart people. In fact, I used to work for one of these such firms and watched them burn more than $5,000,000 trying to create a PPC campaign management business. That money bought them about 2,200 customers, of which less than 200 were retained. Two questions abound from this:
1. Why were they not able to keep more than just 10% of the customers?
2. Is this company unique, or are other, similar companies in just as poor shape?
A Little Background:
These companies are all trying to setup and manage PPC campaigns such as Google's Adwords and Yahoo!'s Search Marketing on behalf of small, local businesses. The idea is that they can be experts in search engine marketing (SEM) and gain some economies of scale to be able to deliver better value to the client than the client get for him/herself.
The Problem:
On the surface it seems like the perfect marriage of two buzz words, "local search" and "pay per click". The problem is in the value proposition to the business owner. With two hours of time from the business owner's teenager, most small businesses would have no problem setting up an Adwords campaign. Of course it will not perform as well as a professionally designed campaign, but you have to look at the incremental value, which is probably around 50% or less. When you start adding in a 25%-50% markup on the click costs, outsourcing this becomes cost prohibitive very quickly, especially when you are talking about hundreds, or even thousands of clicks per month when only 1%-2% of them convert into sales.
The model that many of the companies are using is basically the same. They select some keywords, create a 1 page landing site, and then drive paid traffic to it. Some record the calls, many provide detailed reports to prove how well the program is or is not working and then bill the customer for as many clicks as they can generate. This produces widely varying invoices at the end of each month, and can end up costing the small business hundreds of dollars per converted customer.
It is also very important to realize that the goals of the PPC provider are not necessarily the goals of the advertiser. The advertiser is looking for more customers, but the PPC provider doesn't typically get paid on the volume of customers sent, but rather on the volume of visitors sent. The metrics typically used to measure success of a PPC campaign are things like Click-Through-Rate (CTR) which measures the ratio of impressions (number of times the ad is shown) to clicks (number of times the ad was clicked). That has very little to do with the rate at which those clicks turn into customers, and that's where the value proposition degrades because the business owner doesn't need visitors, s/he needs customers.
Even though clicks can be a path to new customers, by themselves they are useless to a small business and are expensive to buy. If you don't believe me, ask your friendly neighborhood plumber how much value he places on a click, or a visit to his site, and he'll surely say zero. But a competitive word like "plumber" will cost you more than $1/click in most cases. Multiply that by even a modest 200 clicks per month, and the guy just paid $200 and probably only got a 1% conversion rate!
Solutions?:
What's the answer then? Does PPC not work at all? My personal experience of working for one of these PPC campaign management companies (the one that blew $5 million) taught me a few things. For ease of reference, let's call them "Leads Team". Leads Team showed that across all their customers, the small business could expect to spend a total of about $65 per call generated. Of those calls, probably only about 1 in 5 (on a good day) were motivated buyers. Of those motivated buyers, let's just say the business closed 2. That means that of the $325 spent to ring the phone, only 2 sales were generated. In order for that program to make any sense at all, each job obtained has to make at least $165 in profit...which can be a tall order. You might be thinking that Leads Team was simply incompetant, which may be true, but you should also know that they outsourced the campaign management to another, more experienced firm that handles many other company's campaigns.
So if PPC doesn't work, then why are VC's dumping millions into companies doing it? Think back about 10 years and you'll remember this is not the first time VC's pumped money into hopeless ventures. PPC DOES work! It's this particular model that is hopelessly flawed. Putting all your eggs in the PPC basket is ill-advised but it does have a place in a well laid out Internet marketing plan and there are companies out there with better, more effective approaches.
The way Prospect Genius structures its offering is quite different, and in my opinion will work much better for both the vendor and the client. By using a more substantial microsite, rather than a landing page, they can leverage the power of SEO and supplement it with PPC. That allows the business to pay only for a few, highly valuable keywords, and do the rest of the heavy lifting with the SEO.
Service Magic on the other hand, takes another approach that also seems to work. They do not charge for clicks at all, but instead charge only for the call. They SEO their own directory heavily, which allows their customers to be found in search engines. Once a customer places an inquiry, they then deliver that lead via email to at least 3 advertisers in their directory, who then compete with each other to woo the customer.
Conclusion:
If you are looking to start a business offering PPC services to other businesses, you'd better have an extremely unique way of doing it. Right now the only people making money at it is Google and Yahoo! and that's because the VC money, and all the dollars spent on PPC goes directly to those two companies. Until they start offering reseller pricing to companies like Leads Team, there will not be sufficient margin to provide value to the customer and earn a profit at the same time.
1. Why were they not able to keep more than just 10% of the customers?
2. Is this company unique, or are other, similar companies in just as poor shape?
A Little Background:
These companies are all trying to setup and manage PPC campaigns such as Google's Adwords and Yahoo!'s Search Marketing on behalf of small, local businesses. The idea is that they can be experts in search engine marketing (SEM) and gain some economies of scale to be able to deliver better value to the client than the client get for him/herself.
The Problem:
On the surface it seems like the perfect marriage of two buzz words, "local search" and "pay per click". The problem is in the value proposition to the business owner. With two hours of time from the business owner's teenager, most small businesses would have no problem setting up an Adwords campaign. Of course it will not perform as well as a professionally designed campaign, but you have to look at the incremental value, which is probably around 50% or less. When you start adding in a 25%-50% markup on the click costs, outsourcing this becomes cost prohibitive very quickly, especially when you are talking about hundreds, or even thousands of clicks per month when only 1%-2% of them convert into sales.
The model that many of the companies are using is basically the same. They select some keywords, create a 1 page landing site, and then drive paid traffic to it. Some record the calls, many provide detailed reports to prove how well the program is or is not working and then bill the customer for as many clicks as they can generate. This produces widely varying invoices at the end of each month, and can end up costing the small business hundreds of dollars per converted customer.
It is also very important to realize that the goals of the PPC provider are not necessarily the goals of the advertiser. The advertiser is looking for more customers, but the PPC provider doesn't typically get paid on the volume of customers sent, but rather on the volume of visitors sent. The metrics typically used to measure success of a PPC campaign are things like Click-Through-Rate (CTR) which measures the ratio of impressions (number of times the ad is shown) to clicks (number of times the ad was clicked). That has very little to do with the rate at which those clicks turn into customers, and that's where the value proposition degrades because the business owner doesn't need visitors, s/he needs customers.
Even though clicks can be a path to new customers, by themselves they are useless to a small business and are expensive to buy. If you don't believe me, ask your friendly neighborhood plumber how much value he places on a click, or a visit to his site, and he'll surely say zero. But a competitive word like "plumber" will cost you more than $1/click in most cases. Multiply that by even a modest 200 clicks per month, and the guy just paid $200 and probably only got a 1% conversion rate!
Solutions?:
What's the answer then? Does PPC not work at all? My personal experience of working for one of these PPC campaign management companies (the one that blew $5 million) taught me a few things. For ease of reference, let's call them "Leads Team". Leads Team showed that across all their customers, the small business could expect to spend a total of about $65 per call generated. Of those calls, probably only about 1 in 5 (on a good day) were motivated buyers. Of those motivated buyers, let's just say the business closed 2. That means that of the $325 spent to ring the phone, only 2 sales were generated. In order for that program to make any sense at all, each job obtained has to make at least $165 in profit...which can be a tall order. You might be thinking that Leads Team was simply incompetant, which may be true, but you should also know that they outsourced the campaign management to another, more experienced firm that handles many other company's campaigns.
So if PPC doesn't work, then why are VC's dumping millions into companies doing it? Think back about 10 years and you'll remember this is not the first time VC's pumped money into hopeless ventures. PPC DOES work! It's this particular model that is hopelessly flawed. Putting all your eggs in the PPC basket is ill-advised but it does have a place in a well laid out Internet marketing plan and there are companies out there with better, more effective approaches.
The way Prospect Genius structures its offering is quite different, and in my opinion will work much better for both the vendor and the client. By using a more substantial microsite, rather than a landing page, they can leverage the power of SEO and supplement it with PPC. That allows the business to pay only for a few, highly valuable keywords, and do the rest of the heavy lifting with the SEO.
Service Magic on the other hand, takes another approach that also seems to work. They do not charge for clicks at all, but instead charge only for the call. They SEO their own directory heavily, which allows their customers to be found in search engines. Once a customer places an inquiry, they then deliver that lead via email to at least 3 advertisers in their directory, who then compete with each other to woo the customer.
Conclusion:
If you are looking to start a business offering PPC services to other businesses, you'd better have an extremely unique way of doing it. Right now the only people making money at it is Google and Yahoo! and that's because the VC money, and all the dollars spent on PPC goes directly to those two companies. Until they start offering reseller pricing to companies like Leads Team, there will not be sufficient margin to provide value to the customer and earn a profit at the same time.
Wednesday, January 9, 2008
Embrace Technology or Die!
When I look at the situation the RIAA has created for itself, I see one glaring, and soon to be fatal mistake. The RIAA zigged when i-Tunes zagged and that difference is why i-Tunes brings in massive amounts of profit when all other forms of music sales are going broke.
The "zig" that the RIAA made was a fundamental decision to resist technology. Admittedly, it is the same mistake that I started to make in my hesitation to get into the blogging world. At first, I saw it as a silly way to pass time and a great way to beg for identity theft. In much the same way, the RIAA has looked at peer to peer networks and digital music as a great way to steal music and nothing more.
I was shoved into an epiphany of sorts by a former colleague of mine when his blog post suggested that a digital footprint could in fact be used as an asset for things like college admission. This got me thinking about all the positive ways to utilize these new technologies, and ultimately lead to this blog's creation.
Unfortunately, the RIAA has no such former colleague, and as such is digging it's grave. The market clearly doesn't want to buy CD's any more. We demand much more convenience than before, and more importantly, easier access to our music and videos than ever before. CDs are now seen as cumbersome relics of an era foregone, but the RIAA clings tightly to it regardless.
Before the RIAA began to sue its customers (another HUGE mistake), they should have looked more objectively at the data surrounding music and file-sharing. If they had put their biases aside, they would have realized that file sharing actually INCREASED the volume of CD sales, largely attributed to the "try before you buy" scenario it presented. This singular piece of information should have forced them to find a way to embrace this new technology, rather than fear it.
It is amazing to me that the industry insiders missed such a golden opportunity. They has all the knowledge, power, and resources available long before Apple ever thought of i-Tunes. They could have put their heads together and created at least some viable alternatives to the i-Tunes model, but instead the took the opposite approach and tried to stop the adoption and usage of this technology. As we're seeing now, that is going to be their undoing as they spiral ever downward into oblivion as i-Tunes continues to perform very, very well.
The "zig" that the RIAA made was a fundamental decision to resist technology. Admittedly, it is the same mistake that I started to make in my hesitation to get into the blogging world. At first, I saw it as a silly way to pass time and a great way to beg for identity theft. In much the same way, the RIAA has looked at peer to peer networks and digital music as a great way to steal music and nothing more.
I was shoved into an epiphany of sorts by a former colleague of mine when his blog post suggested that a digital footprint could in fact be used as an asset for things like college admission. This got me thinking about all the positive ways to utilize these new technologies, and ultimately lead to this blog's creation.
Unfortunately, the RIAA has no such former colleague, and as such is digging it's grave. The market clearly doesn't want to buy CD's any more. We demand much more convenience than before, and more importantly, easier access to our music and videos than ever before. CDs are now seen as cumbersome relics of an era foregone, but the RIAA clings tightly to it regardless.
Before the RIAA began to sue its customers (another HUGE mistake), they should have looked more objectively at the data surrounding music and file-sharing. If they had put their biases aside, they would have realized that file sharing actually INCREASED the volume of CD sales, largely attributed to the "try before you buy" scenario it presented. This singular piece of information should have forced them to find a way to embrace this new technology, rather than fear it.
It is amazing to me that the industry insiders missed such a golden opportunity. They has all the knowledge, power, and resources available long before Apple ever thought of i-Tunes. They could have put their heads together and created at least some viable alternatives to the i-Tunes model, but instead the took the opposite approach and tried to stop the adoption and usage of this technology. As we're seeing now, that is going to be their undoing as they spiral ever downward into oblivion as i-Tunes continues to perform very, very well.
Sunday, December 30, 2007
A Case Study in Build vs. Buy Decision Making
Every business with any sort of programming staff on hand has been faced with a build vs. buy decision. The company in this particular case study has a propensity for building everything stemming primarily from a cash flow problem in combination with a tendency for the management team to prefer intangible vs. tangible costs.
Building was the right choice:
In many cases over the years the decision to build many of their in-house tools has proven advantageous. One of the divisions has many hourly workers, and they needed a time card system of some kind. At the time, open source was not what it is today, so they had the choice of paying monthly for ADP's software, or using their own. This proved to be a great opportunity to create a simple tool that later grew as demands changed. Today they have a nice little application that handles the time card functionality as well as all the other HR data they need to collect and with a click of a button they can generate fully customized reports.
Another success story is in their telemarketing department. They needed to find a way to take calling lists in from the clients they serve, and then contact those customers and report back the changes. Software for telemarketing applications is typically geared toward large firms and costs thousands and thousands of dollars which they really didn't have to spend. Instead they plodded through the development of their own, customized solution and over the years have refined it as needs arose. They were well served by the ability to change things on the fly as clients' needs changed and today, they have a solution far better than anything commercially available since it is designed for their unique situation.
Building was very wrong:
This same organization later decided to branch into another area and needed to create a CRM solution. The new venture would be a much more traditional telemarketing situation and was intended to scale much larger than the other side of the business. Having seen success with the last CRM-like solution created, they decided to build yet again. Rolled in with this CRM though was a large need for reporting capabilities, as well as accounting, billing, and invoicing functionality. Despite the much larger scope, the decision was made and off they went.
Unfortunately, it was an ugly thing to watch. Delay after delay caused high tensions and missed deadlines as they tried to create things they had never dealt with before. No one on staff had any experience with accounting, and since there was no one defining specifications, the developers were just stabbing in the dark. This whole project just went horribly wrong.
A couple years into the business, they were having many problems and finally decided to buy a new solution for thousands of dollars. Unfortunately, undeterred by the cost, and wooed by the sales person that told them how easy the migration would be, they pressed forward, signed the deal and started implementation. That's where they met insurmountable challenges that they simply were not equipped to handle. To this day (about 3 years in), they are still struggling to fix the system that is handcuffing their growth.
What's the right answer?
Of course, the right answer is “it depends.” I also believe though that some simple principles can be employed to maximize the chances for success. Firstly, a real cost-benefit analysis HAS to be run on both scenarios. Intangible costs can be astronomical and can really cripple companies who underestimate it. The firm in this case study was bitten by a lack of analysis quite badly. They had an opportunity to be very early to the market, and could have grown very rapidly, but due to a severe underestimation of the resources required to build and maintain their CRM system, they have been struggling just to stay alive.
A company should seriously look into building, or obtaining open source solutions that they have sufficient staff to maintain when they are looking at building single task tools. If they are looking at a time card tracking tool, then it makes sense to build it. This is especially true when there are unique needs surrounding the situation. I cannot stress enough though the importance of looking ahead and not underestimating the resources needed to maintain the software.
The decision to buy comes in when looking at complex systems. Something such as a CRM can be very complex indeed. When combined with needs for invoicing, billing and overall accounting, it is extremely complex. At that point it will span several departments including sales, marketing, accounts payable, accounts receivable, procurement, and advertising. All of these departments will need to be stitched together in order to make the CRM of any value. The company in the case study had success in the first CRM-like application because it was focused on outbound tele-sales and had nothing to do with any other departments. Fundamentally, if your firm does not have substantial in-house experience with the type of application you need to develop, then buying it is probably your best bet.
The Value of Proper Evaluations
A past client was having trouble with office morale and communication. They were what I would consider to be the typical small to medium sized office with all the normal problems. They had been growing over the last several years at a healthy but manageable pace but they had not addressed some of the growing pains that were occurring.
While the management had a stated goal of providing as much information to the staff as possible, the staff still seemed to feel left out. There was a significant disconnect between the view from the top down and the bottom up, which was leading to issues festering at the lower levels without management's knowledge.
When I started to work on this problem, the one thing that seemed the most lacking was structured feedback. Some of the IT staff had expressed a discontentment with the evaluations they were receiving, citing that they were created for other departments and never properly adapted to the IT roles. Other departments felt that the evaluations did not go in depth enough, or define specific metrics for them to feel that they were helpful.
This all lead me to the idea of implementing both a new evaluation system, as well as 360 degree evaluations.
Evaluation Overhaul:
I started with the revamping of the existing evaluation documents. I decided to make them modular, so that each department would have one section of common questions, so that everyone was rated on a common set of standards. This section is also used for the 90 probationary period evaluations, giving it dual purpose. After the initial section, the next several modules are interchangeable based on the department the employee is in, making the evaluation completely customizable to the individual workers' roles, with little effort on the part of the evaluator.
Most importantly, this evaluation results in a numeric score. Each question is given a score of 1-5 where 5 is basically unattainable perfection, and 1 is absolute abominable performance. The scores are then averaged at the end and a single numeric score then represents the employee's performance, allowing for the greatest degree of objectivity.
Ushering in the 360 Degree Evaluations:
The 360 degree evaluation, for those unfamiliar, is given to superiors, peers, and subordinates so that a wholistic (or 360 degree) picture can be painted of the person being evaluated. Again, I used the concept of numeric scores, but this time a scale of 1-10 was used in order to capitalize on the familiarity of a base-10 system of grading. I assigned each person an alpha-numeric code that was then used on the evaluations. This way they could be handed out to the evaluators, and anonymously returned to the person who was to tabulate the results.
The results were keyed into spreadsheets that automatically tabulated categorical scores, as well as an overall score. Once completed, the person could see how their work was perceived in areas such as leadership, business acumen, teamwork, communication, etc.
Results:
The results of this simple revamp was astounding. The most remarkable impacts were seen where people who expected very positive evaluations, received the opposite. This honest and anonymous feedback had profound effects on those individuals.
Communication has improved dramatically as management is now informed about the needs and expectations of their staff, and the staff now understands management's roles and obligations better. The past resentment is now completely gone, replaced instead with a collaborative environment from top to bottom.
It is truly wonderful to see such a transformation. Many of the people have expressed gratitude for the changes made as they are now receiving helpful and specific feedback. They say they are better informed about the individual failures and successes they had throughout the year and are now able to have the top-down and bottom-up expectations and opinions be properly aligned.
While the management had a stated goal of providing as much information to the staff as possible, the staff still seemed to feel left out. There was a significant disconnect between the view from the top down and the bottom up, which was leading to issues festering at the lower levels without management's knowledge.
When I started to work on this problem, the one thing that seemed the most lacking was structured feedback. Some of the IT staff had expressed a discontentment with the evaluations they were receiving, citing that they were created for other departments and never properly adapted to the IT roles. Other departments felt that the evaluations did not go in depth enough, or define specific metrics for them to feel that they were helpful.
This all lead me to the idea of implementing both a new evaluation system, as well as 360 degree evaluations.
Evaluation Overhaul:
I started with the revamping of the existing evaluation documents. I decided to make them modular, so that each department would have one section of common questions, so that everyone was rated on a common set of standards. This section is also used for the 90 probationary period evaluations, giving it dual purpose. After the initial section, the next several modules are interchangeable based on the department the employee is in, making the evaluation completely customizable to the individual workers' roles, with little effort on the part of the evaluator.
Most importantly, this evaluation results in a numeric score. Each question is given a score of 1-5 where 5 is basically unattainable perfection, and 1 is absolute abominable performance. The scores are then averaged at the end and a single numeric score then represents the employee's performance, allowing for the greatest degree of objectivity.
Ushering in the 360 Degree Evaluations:
The 360 degree evaluation, for those unfamiliar, is given to superiors, peers, and subordinates so that a wholistic (or 360 degree) picture can be painted of the person being evaluated. Again, I used the concept of numeric scores, but this time a scale of 1-10 was used in order to capitalize on the familiarity of a base-10 system of grading. I assigned each person an alpha-numeric code that was then used on the evaluations. This way they could be handed out to the evaluators, and anonymously returned to the person who was to tabulate the results.
The results were keyed into spreadsheets that automatically tabulated categorical scores, as well as an overall score. Once completed, the person could see how their work was perceived in areas such as leadership, business acumen, teamwork, communication, etc.
Results:
The results of this simple revamp was astounding. The most remarkable impacts were seen where people who expected very positive evaluations, received the opposite. This honest and anonymous feedback had profound effects on those individuals.
Communication has improved dramatically as management is now informed about the needs and expectations of their staff, and the staff now understands management's roles and obligations better. The past resentment is now completely gone, replaced instead with a collaborative environment from top to bottom.
It is truly wonderful to see such a transformation. Many of the people have expressed gratitude for the changes made as they are now receiving helpful and specific feedback. They say they are better informed about the individual failures and successes they had throughout the year and are now able to have the top-down and bottom-up expectations and opinions be properly aligned.
Monday, December 24, 2007
Proper Metrics and Focusing on Your Niche
I have been working with a business whose customer contact center has been hampered by corporate downsizing. They were having trouble getting through the volume of work needed to produce the revenue the corporation was used to seeing.
My assessment of the situation was that they were truly standing on the precipice of elimination from either replacement by inexpensive outsourcing, or corporate implosion from the downsizing.
The Task:
Tasked with staving off both of these I began to look at the information at hand. This contact center was built over the last 5 years, and had clearly found the right answer to their niche's problem. They could take a large portion of the credit for taking business over and over again from their main competitor. When the cash was plentiful, and budgets were plump, the performance was top-tier. But once the budgets became razor thin, the weaknesses began to show.
I learned that over the last few years, the metric used to evaluate the customer service reps' performance was minutes on the phone per day and the past management had found ways to effectively double this metric over the last 12 months. The problem that still remained was that they were still leaving massive amounts of revenue on the table due to an inability to contact sufficient quantities of leads in each market area. What I determined was that they were breaking a fundamental rule, which is that the employees have to be compensated and evaluated in such a way that their goals naturally become the company's goals.
The Tools:
The assets in place were 2 of the 4 original managers, and 6 of the original 12 customer service agents. Fortunately this left a core of knowledge and group of dedicated employees to draw from. The corporation had already decided to outsource the distribution aspect of the business, which cut costs and should also reduce the man-hours needed to handle that operation.
The Solutions:
I took these bits of information that I'd uncovered, and started doing some digging, followed by reflection. I started to formulate a game plan that consisted of cutting any non-core functions, and focusing on that which they did best. I needed them to view the corporation as a customer, and for them to understand that they needed to provide a world-class service to that customer.
They were duplicating efforts in the contact center in NY that were being done in the corporate headquarters in VA. There was no reason for the NY office to be doing any HR, since the HR department was in VA. I simply spoke to all HR related parties, and worked out a streamlining of efforts to avoid duplication. The time freed up by this was then allocated to the supervision of the customer service agents.
The next step was to outsource the "night shift". They are contractually obligated to staff the call center from 8am - 8pm EST. The staff hated working the 5 - 8 shift, and the numbers all pointed to it being a waste of 3 man-hours. By outsourcing this shift, I was able to cut the per-hour cost from $12 to $5.50 with only a few hundred dollars in up-front setup costs. They will recover this in just over 2 months, and save significantly thereafter with an added bonus of happier employees.
In addition I was able to shift an additional 3 man-hours per day during the most effective calling times, which brings me to the most significant and effective change. By simply looking at historical data they already had, I was able to see that from about 8-11 and 2-4 was when they got the largest ROI on their agents' time. This explained why the increases in phone time had no effect on outputs. They were calling the customers during fruitless times of the business day. I enacted "call blocks" where the agents would focus on calling as many customers as possible, and minimize all other activities. This simply meant that they would do all prospecting, data entry, and any other non-calling activity outside of these two call blocks.
The Results:
The effects of these changes were immediately felt. The morale was higher because the agents found it much less monotonous, and they were able to be in better spirits when talking with the customers. Call times actually increased, but more importantly, output increased. They were closing approximately 25-30% more leads than before, AND they were able to help out with other miscellaneous tasks.
Lessons Learned:
Sometimes the little things really add up. None of the changes made were earth-shattering or even difficult, but they were based on an assessment of the data, rather then emotion. It's critically important to utilize the empirical data at your disposal, and to listen honestly to what it's telling you. All I did with this company was rearrange the employees' day, and eliminate non-core functions, which is something businesses do every day. Treating the corporation as a whole as a customer of the NY division, and focusing on the core value that the NY division can provide led to lower costs and higher outputs.
My assessment of the situation was that they were truly standing on the precipice of elimination from either replacement by inexpensive outsourcing, or corporate implosion from the downsizing.
The Task:
Tasked with staving off both of these I began to look at the information at hand. This contact center was built over the last 5 years, and had clearly found the right answer to their niche's problem. They could take a large portion of the credit for taking business over and over again from their main competitor. When the cash was plentiful, and budgets were plump, the performance was top-tier. But once the budgets became razor thin, the weaknesses began to show.
I learned that over the last few years, the metric used to evaluate the customer service reps' performance was minutes on the phone per day and the past management had found ways to effectively double this metric over the last 12 months. The problem that still remained was that they were still leaving massive amounts of revenue on the table due to an inability to contact sufficient quantities of leads in each market area. What I determined was that they were breaking a fundamental rule, which is that the employees have to be compensated and evaluated in such a way that their goals naturally become the company's goals.
The Tools:
The assets in place were 2 of the 4 original managers, and 6 of the original 12 customer service agents. Fortunately this left a core of knowledge and group of dedicated employees to draw from. The corporation had already decided to outsource the distribution aspect of the business, which cut costs and should also reduce the man-hours needed to handle that operation.
The Solutions:
I took these bits of information that I'd uncovered, and started doing some digging, followed by reflection. I started to formulate a game plan that consisted of cutting any non-core functions, and focusing on that which they did best. I needed them to view the corporation as a customer, and for them to understand that they needed to provide a world-class service to that customer.
They were duplicating efforts in the contact center in NY that were being done in the corporate headquarters in VA. There was no reason for the NY office to be doing any HR, since the HR department was in VA. I simply spoke to all HR related parties, and worked out a streamlining of efforts to avoid duplication. The time freed up by this was then allocated to the supervision of the customer service agents.
The next step was to outsource the "night shift". They are contractually obligated to staff the call center from 8am - 8pm EST. The staff hated working the 5 - 8 shift, and the numbers all pointed to it being a waste of 3 man-hours. By outsourcing this shift, I was able to cut the per-hour cost from $12 to $5.50 with only a few hundred dollars in up-front setup costs. They will recover this in just over 2 months, and save significantly thereafter with an added bonus of happier employees.
In addition I was able to shift an additional 3 man-hours per day during the most effective calling times, which brings me to the most significant and effective change. By simply looking at historical data they already had, I was able to see that from about 8-11 and 2-4 was when they got the largest ROI on their agents' time. This explained why the increases in phone time had no effect on outputs. They were calling the customers during fruitless times of the business day. I enacted "call blocks" where the agents would focus on calling as many customers as possible, and minimize all other activities. This simply meant that they would do all prospecting, data entry, and any other non-calling activity outside of these two call blocks.
The Results:
The effects of these changes were immediately felt. The morale was higher because the agents found it much less monotonous, and they were able to be in better spirits when talking with the customers. Call times actually increased, but more importantly, output increased. They were closing approximately 25-30% more leads than before, AND they were able to help out with other miscellaneous tasks.
Lessons Learned:
Sometimes the little things really add up. None of the changes made were earth-shattering or even difficult, but they were based on an assessment of the data, rather then emotion. It's critically important to utilize the empirical data at your disposal, and to listen honestly to what it's telling you. All I did with this company was rearrange the employees' day, and eliminate non-core functions, which is something businesses do every day. Treating the corporation as a whole as a customer of the NY division, and focusing on the core value that the NY division can provide led to lower costs and higher outputs.
Thursday, December 13, 2007
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