Customer Service: A Profit Center not a Cost Center

By: Vincent Amen

This is a case study showing how Padgett-Thompson, a seminar company,increased revenue by 47% by refocusing the call center on outstanding customer care. Padgett-Thompson is a respected learning institution with an impressive track record of providing popular, skill-building training since 1977.

With a database of 6.2 million customers and prospects, Padgett-Thompson annually conducted over 8,000 public seminars with over 380,000 attendees. In addition, each year they have conducted over 2,200 onsite customized training programs for individual companies. Their most popular seminars included:

How to Legally Fire Employees with Attitude Problems
Basics of Accident Prevention and OSHA Compliance
Communicating with Tact and Diplomacy

In line with a corporate mandated belt-tightening, Padgett was asked to reduce cost. Since the call center constituted the largest percentage of overhead or payroll budget, Padgett was directed to reduce call-center cost. The call center is viewed as an order taking operation. Additionally, customer service, especially as administered through the call center, had always been viewed as a cost to be controlled. There should always be downward pressure on the cost of an order to increase margin.

We would like to present a different view, where the purpose of the call center is not to take orders, but to deliver outstanding customer service. Superior customer care drives high customer satisfaction, which in turn increases near-term sales and loyalty. Loyalty, in turn, is a key component of long-term profitability.

Thus, the call center should be viewed as a profit center; a key component of the media mix, measured and rewarded for revenue, customer satisfaction and lifetime value.

Here is some supportive research illustrating the impact of poor customer service on customers, revenue and loyalty. Accenture commissioned International Communications Research to survey customers in the US and UK about their customer service experiences, focusing on telephone and Internet customer service interaction (5/05). Source: e-Marketer, 8/01/05). Almost half said that poor customer service led them to change a service provider in the past year.

Following are the reasons cited for switching:

Poor service or product quality (61%)
Get lower prices (46%)
Service reps lack of knowledge about a providers services or products (39%)
Lack of customized solutions (22%)

Our guess is that poor service, just like poor product quality, refocuses the customer from the benefits of the product to the price. Value-added products compete on benefits, commodities compete on price. Lack of product knowledge is, not surprisingly, a training issue. Training is also a substantial variable in the call center budget and a target of cost-cutting. Customized customer service training solutions are an outgrowth of a company's commitment to quality.

According to this research, the following are the most frustrating aspects of interacting with a customer service representative:

Being kept on hold too long (78%)
Needing to repeat information to multiple CSRs (75%)
Inability of the CSR to solve problems (69%)

Additionally, 43% cited “not personable” and 43% cited “lack of personalized solutions.”

The results of this research certainly seem to uncover substantial opportunity. And that opportunity starts with investing in, and tasking the call center with, providing outstanding customer service. Instead of cutting cost, let’s generate more revenue under the existing cost structure. While intellectually this is a “no-brainer,” implementation involved basic but substantial change in three areas: positioning, measurement and process.

The call center needed to be repositioned as a corporate resource, providing outstanding customer care as a strategic product of the corporation. Representatives then became a corporate asset, moving from a “customer service representative” to “Learning Consultants.” Measurement must include the basic call center metrics as well as a system for recognizing and rewarding achievement in customer service and revenue.

The process had to change in order to view the customer differently. Prior to this, the customer was viewed as a call, as a transaction. Take the order and move on to the next call. The process now had to encompass a view of the customer lifecycle – the customers’ wants, needs, and aspirations from the time they are thinking about training; to the research and investigation of specific training programs; to the actual seminar; and back at the office when they use the skills and concepts taught. Instead of just recording a sale, the learning consultants were expected to help customers make informed decisions based upon their goals. Necessarily, ongoing training became the catalyst for change.

By: Vicent Amen and Scott Hornstein

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