CRM expert advice -- top 10 Q&As of 2006

SearchCRM.com hosts valuable advice from some of the biggest names in the CRM industry every month in our Ask the Expert section. This month we've compiled the best of 2006 to help you get a leg up on the competition.

TABLE OF CONTENTS
   1. Metrics: ROI, IRR, NPV, payback, discounted payback
   2. Measuring churn rate to calculate customer lifetime value
   3. Call center cost per seat -- new vs. existing call centers
   4. Call center quality control
   5. How to prepare a service-level agreement
   6. SAP CRM vs. Siebel CRM
   7. Quality management as a call center industry standard
   8. Call center requirements for voice/data cable, heating/cooling, power
   9. Call center agents -- how to maximize skills, efficiency and motivation
   10. Call center terms -- attrition, utilization, occupancy, shrinkage

Metrics: ROI, IRR, NPV, payback, discounted payback

Q: Are payback and discounted payback methods better than ROI, NPV and IRR? What are your views on this?

A: Each of these figures -- payback, discounted payback, NPV, ROI and IRR -- try to summarize a set of cash flows from a project into a single indicator. But as the dashboard on your automobile, one figure alone cannot tell you the entire investment story. Each has their intended purpose and strengths and weaknesses.

Payback is one of the most common ways to assess the value of a project...

Read more on ROI, IRR, NPV, payback and discounted payback

Measuring churn rate to calculate customer lifetime value

Q: Can you provide some advice on measuring churn rate for an Internet company? For example, in the business of online money transfer, how would you define churn or customer drop-out?

A: Because companies must be aware of both risk and significant declines in activity as precursors to customer defection (churn), my suggestion would be to profile these back-end elements of the customer lifecycle as follows:

    * Zero three month activity = risk
    * Significant drop in activity = probable churn (midway between risk and true churn)
    * Permanent account closure = true churn...

Read more on churn rate and calculate customer lifetime value

Call center cost per seat -- new vs. existing call centers

Q: How can I go about calculating the cost per seat for a 150-seat outbound call center? What accounts should be considered?

A: There are several ways to calculate cost per seat. It is not clear whether you are trying to calculate the cost for a new or existing center. If it is new, you can use activity-based costing tools such as the one we use from Primary Matters (this can also be provided as a service). If it is an existing center, you have to decide which costs to include...

Read more on cost per seat for new call centers and existing call centers

Call center quality control

Q: What is the best way to measure call quality or what are some of the parameters to consider while assessing call quality in a call center?

A: Call quality should be measured through routine call observations of call center agents by a trained and qualified QA associate using a scoring sheet with an appropriate view and weighting of key call characteristics. Depending on the nature of the calls, factors such as the call center agent's opening/closing/customer service skills, technical/knowledge, use of systems, process efficiency/adherence may be considered. A good call quality program has targets for the number of calls monitored per week or month, and a defined process and time allocated to provide feedback and define action plans...

Read more on quality control for the call center

How to prepare a service-level agreement

Q: I am responsible for preparing a plan for the service-level agreements (SLA) between the business side, the IT side and the vendors within a contact center. Are there any specifics I need to include in this plan?

A: SLAs should include commitments for response, escalation and resolution time whenever possible, and should break down the different types of issues. Vendors often have categories predefined, such as major and minor outages. Some companies break down internal issues to troubles (something isn't working) versus service (i.e., a new feature or capability, or a change)...

Read more on preparing a service-level agreement (SLA)

SAP CRM vs. Siebel CRM

Q: At this point, I'd say the jury is still out on how Oracle will absorb Siebel's technology and how that new functionality will play out. Right now, do you think SAP has the upper hand when it comes to CRM?

A: Let's look at them side by side. See the strengths and weaknesses below.

SAP CRM
Strengths: SAP CRM is stronger than Siebel in terms of tighter integration with its back-end ERP system. Tighter integration in sales, service and logistics is also an inherent strength of SAP CRM with SAP ERP. SAP has a deep knowledge of manufacturing and engineer industry verticals. In addition, SAP BW -- SAP's BI application -- integrates seamlessly with SAP ERP and SAP CRM, while comprehensive reporting is almost out-of-box as well. SAP CRM also has the obvious strength when it comes to customers who are already running an SAP shop...

Read more on SAP CRM and Siebel CRM

Quality management as a call center industry standard

Q: Our call center does outsourcing work on behalf of many financial institutions. We are pressed to perform liability monitoring, i.e., record all calls and retain for X number of days (typically 30). Is this becoming an industry standard?

A: There are a variety of regulations that drive enterprises, including financial services companies, to record 100% of contact center calls. Some financial services companies are retaining these recordings for five to seven years -- the calls are maintained online for approximately three months and are archived thereafter. (There are also some financial services organizations moving away from recording, as they'd prefer not to have proof of their mistakes.)

Read more on quality management

Call center requirements for voice/data cable, heating/cooling, power

Q: I am looking for some information on technology standards for the call center. Where should I look for information on things like voice/data cable requirements, heating and cooling recommendations, and AC power and generator backup standards?

A: Generally, these specifications come from the vendor supplying the equipment you are purchasing, and they are very dependent on a number of factors, such as size, configuration, mission criticality and architecture...

Read more on call center technology requirements

Call center agents -- how to maximize skills, efficiency and motivation

Q: How we can we get started with maximizing the efficiency, skills and motivation of call center agents?

A: If your call center agents are motivated, they are much more likely to want to do a good job than if they are unhappy and feel unappreciated by customers and management. As highly-motivated agents are often the most productive, all contact center managers should strive to build an operating environment where agents feel encouraged and supported and are recognized and rewarded for outstanding performance. For example, agents who receive an outstanding quality assurance review or semi-annual/annual performance appraisal are likely to perform even better going forward than they did in the past...

Read more on motivating call center agents

Call center terms -- attrition, utilization, occupancy, shrinkage

Q: What is annualized attrition in reference to the call center? Can you tell me the difference between occupancy and utilization for the call center? How do we calculate leakage/shrinkage?

A: Annualized attrition is generally referred to as turnover – the percent of call center staff lost that year. Some companies will define positive or internal attrition separate from other attrition to show the results of promotions within the company versus those who quit or are fired.

Occupancy and utilization are used interchangeably in the call center industry. Both reveal the percent of time call center agents are on calls or in wrap-up (basically, doing call-related work). ...

Read more on attrition, utilization, occupancy and shrinkage

Browse the Ask the Expert archives for more CRM expert advice

This was first published in December 2006

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