BANKING'S CHALLENGE: TURN CALL CENTERS INTO PROFIT CENTERS-NOT COST

Call centers as profit centers-versus mere adjuncts to customer service-are a great concept. But getting there requires clear strategy, supported by well-trained people and technology.

Bankers, intent on slashing overhead and boosting sales as they move to an electronic future, are beginning to look to a sales tool that senior executives in other consumer-oriented businesses would consider firmly entrenched in the past: the telephone.

But while most bankers see promise in telephone-based sales and customer service activities, few have broken from the old business model- fixating on the branch network as the focal point of banking, and the call center as a mere customer service adjunct-to implement a strategy that leverages well-trained customer service representatives (CSRs) and new telephone-based technologies. "It's as though bankers know the call center is becoming important; they just don't know how important. They're still trying to apply the old ways of doing business to the call center," says Cheryl O'Donoghue, vice president of Lombard, IL-based Financial Training Resources, specialists in call center consulting and training. "They must look at the call center in a new light."

The new light to which O'Donoghue refers is that of a profit center. According to research conducted by FTR for the American Bankers Association, most banks (68 percent) operate call centers as cost centers or as units focused on reducing overall operating expenses and providing a customer service channel; only 9 percent of bankers queried characterize their call centers as profit centers. Yet in other businesses like telecommunications, healthcare, and catalogue sales, experts say that call centers significantly contribute to profitability.

It's a distinction bankers are just beginning to understand, says David B. Miner, director of financial services marketing, Versatility Inc., a Fairfax, VA-based firm specializing in call center software. Miner, who joined Versatility last year from Sanwa Bank California, says bankers are being forced to reevaluate their perspectives on call centers by a more demanding customer base and the proliferation of electronic delivery mechanisms that reduce face-to-face interactions between bankers and customers.

Although ATMs and telephone-, PC-, and Internet-based banking all represent important components of an alternative delivery strategy designed to give customers more banking options, these channels offer fewer opportunities for bank personnel to establish rapport with customers. "Underlying all these delivery mechanisms, the call center becomes the eyes and ears of the organization," says Miner.

As such, computer telephone integration (CTI) technology, coupled with skilled CSRs who are incented to produce more profitable results, are critical to achieving optimal call center customer service and profitability. CTI enables callers to be identified and calls to be forwarded to the appropriate CSR or bank staff member. Although a nascent technology in banking (only 4 percent of those banks surveyed by FTR last year reported having CTI, although 38 percent plan to install the technology within the year), Miner says that CTI contributes to the evolution of bank call centers and to bottom-line profitability.

Miner argues that, by implementing CTI, a bank could potentially slice 15 seconds off the length of the typical inbound call. At a call center averaging 10,000 calls a month, that translates into a savings of 42 staff hours a month; a call center handling 50,000 calls a month could save the equivalent of one full-time employee, he estimates.

But other industry sources contend that bankers should not focus on minimizing the length of time spent on incoming calls-studies suggest the result is a decline in perceived customer service which could translate into customer losses-but rather on profitability, or what Harvard University Graduate School of Business Administration professor Leonard Schlesinger says is "the cashflow that can be derived from the customer relationship."

Without question, technology can play a big role in managing costs; integrating other technologies like middleware that supports a single view of a customer's relationship with the bank and computer screen configurations that guide staffers through well-defined scripting help convert the call center into a true cross-sell outlet.

Miner offers a scenario in which a bank's voice response unit (VRU) includes a sales pitch for automobile loans, and 5 percent of the 250,000 customers who call in each month request an operator to learn more about the loans. Estimating conservatively, that 15 percent of those transferred calls result in applications, that 60 percent of the applications are approved (a rate Miner says is in keeping with his past banking experience), and that 80 percent of approved applications are funded, a bank could book in excess of $150 million in new loans on an annualized basis.

Mortgage companies have been particularly adept at converting call centers into sales tools, says Dina Vance, a senior consultant at FTR. It's not unusual, for example, for a mortgage company to reap response rates in the ten to 12 percent range on outbound call center marketing, she says-as compared to the typical direct mail response rate of 0.5 percent.

The CIT Group/Consumer Finance is one mortgage lender that is committed to turning its call center into a profit center. The company books 90 percent of its mortgage loans (about $10 million a month) through its national home equity call center in Lombard,IL, according to center manager John Grudzien, who says that staff is hired from inside and outside the banking industry. Its system-which draws calls from 45 states primarily through advertising-can classify a caller according to a customer profile in 30 seconds and guides sales agents through the appropriate sales pitch. Ongoing training includes weekly motivational sessions. "It gives them the confidence they need to talk to customers," he says.

But technology alone won't pay the rent on a call center; it takes a well-trained staff of sales agents-much more than just pleasant voices-with specialized skills and financial incentives tied to performance. "We're really talking about building relationships over the telephone," says O'Donoghue. "You do that with people, not with technology."

That's encouraging for bankers like Vicki Dunscombe, senior vice president of Columbia, MO-based Boone County National Bank, a $550 million- asset institution. The bank recently completed work on a call center with four full-time CSRs who field calls that require more attention to detail than its VRU provides. Instead of emphasizing technology-it lacks critical mass to justify the investment in computer telephony and related technology-the bank's focus is on enhancing customer service and improving sales initiatives. "A call center can be expensive. Hopefully, the pay-off will be happier customers and the opportunity to sell more products and services."

Patricia Murphy is a Baltimore-based banking and financial services writer.

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