Outbound telesales is a process full of waste, poor design and variation that is ripe for the application of improvement tools. Not only can process quality be improved, but also revenue can be increased. Part One of this two-part article addresses the types of waste that may exist in an outbound telesales operation and how to begin resolving those wastes. Part Two of the article looks at agent-assisted automation and paths to higher conversion rates.

Lean Six Sigma (LSS) practitioners often struggle to maintain the attention of their company’s management on quality efforts. There may be a lot of enthusiasm at the start, but interest can quickly wane. Sometimes this is due to the fact that improvement projects are not focused on what the leadership team is most concerned about.

So what is a company’s leadership team most concerned about? It is hard to find something that matters more to management than increased revenue. If revenue can be increased while also decreasing the costs associated with securing that revenue, there will be a greater level of interest and support in LSS.

Outbound telemarketing is a great example of achieving this dual level of success. Not every company has outbound telesales activities, but for those that do, it is a target-rich process full of waste, poor design and variation that is ripe for the application of improvement tools.

The Problems: Muda, Muri and Agent Variation

Value-added analysis is a bread-and-butter element of Lean. With telesales, a potential sale is moving through a process to either an existing or prospective customer. One of the keys to deciding if something qualifies as value-added is whether the “thing” going through the process is changed. In this case, the only possible changes to a potential sale are the sale itself or a customer who says they are not interested. Responses of “call back later,” “my mom’s not here,” a wrong number or an answer left on an answering machine do not change the status of the potential sale.

The inference is that much of the activity that outbound telesales agents engage in is non-value-added (NVA). For example, as good as outbound dialing technology is, a lot of wrong numbers are still dialed – for example, calls get made to Joe’s Pizza instead of an actual prospective customer. When this happens the telesales agent has to spend valuable seconds dispensing with that call.

Another example of an NVA-but-necessary activity is reaching an answering machine, waiting for the message to play and leaving a message. While there can be utility to leaving a message that motivates the prospect to call back, many agents hang up because from the standpoint of the company it is more valuable to move on to try to convert the next call.

Wrong numbers and answering machines are two examples of muda, or waste, in the telesales process, but they are the tip of the iceberg. Table 1 presents a full assessment of waste in the telesales process.

For those familiar with call center operations, two examples in Table 1 may be surprising: call monitoring and agents being coached off the phone. Despite its ubiquity, monitoring is an inspection step that does not improve quality – it only finds the lack of quality (No. 3 of Deming’s 14 points to stop depending on inspection [Deming, 1982]). While coaching has the potential to reduce defects and other forms of waste, if a center’s agent-output metrics are graphed over time and continuous improvement is not seen – despite an investment in monitoring and off-phone coaching time – empirically, coaching is not adding value.

While many Lean practitioners are familiar with muda in all its various forms, some are less familiar with muri. Muri is a type of waste that occurs when people and processes are overburdened and unreasonable demands are placed on them. A long list of factors can contribute to muri, such as production demands, poor work environments or process designs, lack of training, clutter, noise, poor tools/equipment, and more.

Along with multiple causes there are multiple indications of the presence of muri; one such indication is the amount of voluntary turnover. Low turnover does not mean that the process is free of muri. People will stay with undesirable jobs when there are few alternatives. High turnover, however, almost guarantees the presence of muri (pay increases at competitive companies can drive turnover, but that cannot go on forever). And the turnover numbers in call centers in general, and telesales in particular, are shocking.

In U.S.-based call centers, the average rate of turnover for agents is around 35 percent. This is higher than for any other position in a business. And 35 percent is the average – many centers are much higher than that, especially overseas. One call center in Michigan (at the height of the recession) reported her turnover at 100 percent annually. More recently, the leader of a 500-seat center for inbound sales (similar to outbound telemarketing) reported his turnover at 350 percent annually. In overseas call centers, 150 percent to 200 percent turnover is prosaic.

Why is call center turnover so outrageously high? In part because of muri – the unreasonable demands of the job. Cold calling, fundraising and telesales work is physically, mentally and emotionally draining. How many times can an agent endure people hanging up on them, yelling at them and saying “no”? It is hard to not take such responses to heart when they are repeated hour after hour and day after day.

That, in and of itself, is tough. When customer belligerence is combined with the repetition of the job, the administrative tasks, and the wear and tear of talking all day, telesales is an unreasonably stressful job – people quit routinely and in droves. This turnover is enormously expensive (human resources costs related to recruiting, hiring, training new hires, etc.) and it completely precludes the ability to drive center-wide improvements in agent-output metrics. A business starts over with new, lower-performing agents.

Between-agent and Within-agent Variation

A final contributor to telesales sub-optimization is within-agent and between-agent variation. Sally making calls at the beginning of the day is not the same Sally that is making calls at the end of the day when she is tired. Nor is the Sally making a call after she has been cussed at the same Sally making a call after she has closed a sale. Similarly, Sally making calls is not the same as Bob making calls.

Variation reduction has been more the domain of Six Sigma than Lean. What is interesting about between/within-agent variation is that if the root causes of the variation in process adherence are analyzed – disclosure compliance, average handle time, etc. – the bars in a Pareto analysis are always the same (though their relative influence changes across time and call types). The drivers of agent variation usually boil down to:

1. Relatively stable individual differences (IQ, personality, accent, motivation, etc.)
2. More temporal individual differences (mood, focus, fatigue, illness, etc.)
3. Knowledge and skill differences (training, coaching, experience)

Faced with these drivers of unwanted variation, most call centers try a combination of selection improvements, training, coaching, incentive compensation, and a host of efforts to improve the work environment and then sit back and hope they work.

The larger point is this: in call centers, the agents are the process. And when the agents are the process, in a sense there is no process because the result is an attempt to improve each agent one at a time. That is the losing game call centers of all stripes have been playing for 40 years.

Scorecard Tracking

If metrics do not already exist, the first thing a telesales organization needs to do is to create a scoreboard and start tracking key output measures over time – using run charts or, even better, control charts. This long-term scoreboard is needed because this is how the results of the  improvement efforts will be measured.

On the revenue side, conversion rate is a good metric to start with. It might, eventually, make sense to add sale size if that measure matters and if there is a wide variation in performance across agents.

A cost measure is also needed. Sometimes a call center Black Belt will say, “No, we don’t need a cost measure. My managers don’t care about the cost of sales – they just want more revenue.” If that’s the case, then why isn’t the call center staffed with Og Mandino and other illustrious salespeople? The fact that a business is not willing to pay to staff an organization with high-caliber salespeople means that costs do matter. Find a cost metric, such as cost per call, cost per conversion, cost per dollar of revenue, etc. Find one that the management team (hopefully along with the finance team) can get excited about.

With the scoreboard in place, start attacking the waste in its various forms. The way to address NVA activities is to 1) eliminate them, 2) reduce the steps/time it takes to complete them or 3) find a way to get them done less expensively.

Reference

Deming, W. E. (1982) Out of the Crisis. The MIT Press.

Part Two (which will be published Monday, March 24) of the article looks at agent-assisted automation and paths to higher conversion rates.