Understanding the Call Center Market

Definition and Growth

Call Center – An entity where a group of people, as a main task, communicate with customers, client’s etc. via telephone, video conferencing, fax, e-mail and other electronic media.

Call centers are usually split in three size groups:
1. Small – Less than 50 CSRs – 40% of total of call centers – 60% growth rate;
2. Medium – 50 – 150 CSRs – 35% of total # of call centers 25% growth rate;
3. Large – More than 150 CSRs – 25% of total # of call centers – 15% growth rate.

• The total number of call centers in the US is estimated to be between 50,000 and 70,000;
• The total number of seats in the call center market is estimated to be between 3 to 5 million (which is 3-5% of the domestic workforce). Some estimates the number to climb to almost 7 Million seats by the year 2000;
• In total revenue numbers (hardware and software) the call center technology market is estimated at $ 3.2 billion in 1996 with a steep growth up to $ 10.5 billion in 2001;
• This results in annual revenues (hardware and software sales) ranging from $640 in 1996 to $1,500 in 2001 per seat.

Background

• Much business is conducted via the telephone. In fact, more than 50% of all goods and services sold in the US today are sold via the telephone. Moreover, this percentage is still rising;
• Almost 80% of all companies with more than 50 employees have a formal call center;
• Call centers offer big competitive advantages through excellence in customer service. The bar for customer service is constantly getting raised. Numerous studies have shown that poor customer service is the single most significant reason for a customer to go to the competition;
• Companies are increasingly realizing how crucial customer service is to their bottom line and are seeking to employ technology that will help them provide the highest level of customer satisfaction possible. Very often, this technology will also bring productivity gains (or operational savings) as an important additional benefit;
• This high demand for call center technology has spurred an annual compound growth rate (total US revenue) of approximately 20-50% depending on the source of information. Projections estimate that this growth rate will be sustained at least for the next 8-10 years. What is now an industry with annual hardware and software revenues around $3.3 billion will be at $10.6 billion in 2001.

Technology Trends

• Increasing competition is making companies revisit their use of their customer bases. Selling to existing customers is significantly more profitable than initiating sales to new customers;
• Companies are shifting their view of the call center from having been a back office necessary evil and cost center to become a front office entity with the potential of generating revenue. As a natural function this also makes companies view call center technology spending as revenue generating investments. Return on investment is suddenly becoming a part of the picture and call centers are becoming a part of company’s long-term revenue growth strategies;
• The other major focus in call centers is to streamline the operation and increase the efficiency of the single biggest cost in the call center – The staff of customer service representative (CSR). Salaries account for roughly 40% of the total call center operational budget;
• Many inbound call centers are still not very effective even though products already in the market offer significant improvements. Most call centers receive customer information manually (as opposed to CTI), transfer calls from CSR to CSR and over-staff with inbound- only CSRs. IVR, although widely and successfully deployed, is still not utilized for doing much more than the simplest information exchanges. The current upgrade cycle will see the mainstream call centers finally implement well established technologies such as basic CTI, extended IVR, Web integration, skill-based routing and call blending;
• IVR and faxback has been in call centers for a number of years offloading some of the traffic from the CSRs to computers. In the past couple of years (for most companies only within the last year) Internet access to company information has really taken off. The challenge for the call centers in the future will be to tie in all the various access vehicles to the call center. In the future, the call center will not only receive requests via telephone calls but also via e mail, voice mail, fax and their Internet web pages;
• Electronic commerce via the Internet is emerging as an important trend. In 1994, consumers spent about $200 million buying goods and services on-line, despite well-publicized security problems, according to a study by Cambridge, Mass. -based Forrester Research. Projections for the year 2000 range from $4 billion to $23 billion. More than 25,000 merchants and 6 million businesses were on-line in 1995. By the year 2000, more than 1 million merchants and 15 million businesses will be conducting commercial transactions online;
• Internet Provider (IP) telephony is starting its entry into the call centers. Revenues are expected to grow with a compound annual growth rate of 149 percent, to $1.89 billion by the end of 2001. As voice quality picks up speed, the lingering question is whether Internet telephony vendors will partner with telcos or surge into fervent competition;
• Predictive dialers (PDs) were introduced in the late 1980s to increase CSR talk times in credit centers. Dialers automatically generate outbound calls off databases and pass the completed calls to CSRs. Frequently CSR efficiency is tripled with the implementation of predictive dialers;
• PDs are increasingly being utilized in blended call centers where CSRs that are not needed for inbound traffic (due to low calling volume) can place outbound calls for either telemarketing purposes or follow up on earlier placed inbound calls;
• The addition of video call centers to the communication method can in some type of transactions raise the level of customer service by providing a more “warm and fuzzy” feeling for the customer. One of the first applications to take off is video kiosks for banking. The banks want fewer branches due to cost. However, not all customer bank transactions can be performed via ATMs (e.g. loan applications, check orders, wire transfers etc.). The idea is to have a combination of ATMs and video kiosks to replace some of the local branch offices;
• Other industries that are looking at the video kiosk option are: Insurance, medical (for non critical diagnostics), rental car companies, travel agencies with customers connecting from video kiosks in supermarkets, hotels, airports, train stations and other places with high “potential customer concentration”.

Call Center Terminology

A new language is springing up around the call center industry. Here are some of the common terms to know to help you understand and “speak” it.

Abandoned Call – an incoming call answered by the ACD, which is terminated by the originator before it is answered by the agent. ACDs generally keep statistics on how long the callers wait before disconnecting and what percentage of your calls end this way. Service levels should define the maximum percent of abandoned calls acceptable.

ACD (Automatic Call Distributor – devices that accept incoming calls and distribute them according to established criteria to teleprofessionals for response. The criteria vary and may include teleprofessional availability, specific product information, teleprofessional’s expertise area, caller requirements/value, etc.

Adherence – measures the degree to which agents in a call center stick to a schedule worked out either manually or through workforce management software.

Agents – a general term for individuals who handle calls in a call center. Other common names for the same job include, but are not limited to: operator, advisor, attendant, telephone sales representative (TSR), customer service representative (CSR) and telemarketer.

Agent ID – is a numeric identifier used to maintain performance logging for an individual agent. An agent will key this into their computer and/or telephone system when they begin their shift or start up a new work session (e.g. after a break).

Agent Logon/Logoff – the procedure for alerting the ACD to an agent’s availability. Agents logon when they begin their shifts and logoff when they end them.

Agent Sign On/Agent Sign Off — an ACD feature which lets any agent occupy any telephone/workstation position without the ACD losing his or her own personal identity. This is accomplished by having the agent login at a position using a personal ID. Statistics are collected and consolidated about this agent and calls are routed to this agent no matter where he or she sits.

AHT (Average Handle Time) – how long it takes a teleprofessionals to resolve the issue, take the order, etc.

ANI (Automatic Number Identification) – the digits that arrive at the same time as a telephone call that tell you the telephone number of the person calling you. ANT has big value for call centers. By gathering the digits sent and doing a database lookup, your agents can receive a screen of information on the caller along with the voice call. Centers report this saves them 30 seconds per call, since the agent doesn’t have to ask for and enter a name or account number. ANT can also serve as a security ID for various applications.

Announcement Systems — is part of the voice processing family. It’s a device that answers the call, delivers a message but does not record a reply. It may or may not put callers on hold or disconnect the call. Some of the most common applications are handling overflow ACD calls, giving general information to the public and playing promotional messages.

ASA (Average Speed of Answer) — an ACD statistic that indicates how long the average caller waits on hold before his or her call is answered by an agent. This is an important measure of service quality and in many call centers is THE measure used to provide an idea of service quality and any given time.

Blended Agent – a call center agent who answers both incoming and makes outgoing calls. One advantage is more efficient use of the agent. If an agent is sitting idle, he or she is assigned to make outbound calls. Sometimes called universal agent.

Blended Call Center — a call center where the telephone switch acts as both an ACD and predictive dialer, allowing agents to both receive and make large number of calls as demand and strategy dictate.

Blocking – occurs when a telephone call cannot be completed. This happens because switching or transmission capacity is not available at that precise time.

Broadcast Fax – a feature of many fax machines and fax boards that lets the user send the text of a single fax to a large number of recipients using a master list of names and numbers.

Calendar routing — a method of directing calls according to the day of the week and time of the day.

Calibrate — to standardize the scoring of the quality of customer interactions. The process of calibration is most useful in situations where supervisors are monitoring agents.

Call Center – a place where calls are placed or received in high volume for the purpose of sales, marketing, customer service, telemarketing, technical support or other specialized business activities.

Call Routing – the list of choices a user sets up within an ACD for where to send incoming calls. Routing tables will reflect the different campaigns that are ongoing enabling the ACD to send calls to the right agent groups or departments. Within the ACD, you can use more sophisticated criteria to direct the call — like skills.

Callpath -software from IBM that lets you integrate one of IBM’s computer systems with selected phone switches. The integration lets the computer redirect inbound calls, initiate outbound calls and monitor call progress.

Campaign – a project or program running in your call center. It generally refers to an outbound project, though not exclusively. The most common use is in outbound dialing, where automated dialers and software programs often enhance their ability to run multiple simultaneous campaigns.

Central Office – telephone company facility where subscribers’ lines are joined to switching equipment for connecting other subscribers lines to each other, locally and long distance.

CTI (Computer Telephone Integration) — The marriage of voice (telephone calls) and data telephone company data, PBX data, ACD data, internal databases, etc.) technology at the heart of the call center industry. This term can also describe the process of connecting a computer to a telephone switch and having the computer issue the switch commands to move the calls around.

Database Integration — connecting your database to internal business systems, like the phone system, ACD, customer databases, etc. The advantage with phones is that when customers call, their information can be sent to the agent at the same time as the call.

Direct Distance Dialing (DDD) — A telephone service which lets a user dial long distance calls directly to telephones outside the user’s local service area without operator assistance.

Direct Inward Dialing – a PBX feature that lets callers reach their party directly, without going through the system attendant.

Distribution Group — a group of telephone extensions or agents on an ACD. Usually used to mean the group of extensions assigned to receive a certain type of call — determined by incoming trunk or other criteria.

DNIS (Dialed Number Identification Service) — is a feature of toll-free and 900 lines that provides the number the caller dialed. The DNES number can be provided in a number of ways, in-band or out of band, ISDN or via separate data channel. This is very helpful in call centers that answer for a number of business or product lines. Each business or product line has its own toll-free number. These calls terminate at a single ACD, but are routed to specialist call groups based on the number dialed.

DTMF (Dual Tone Multi Frequency) — telecom lingo for touch tone. They are the sounds your telephone makes when you press the buttons on the telephone pad. DTMF is used for data entry in I\TR systems.

Erlang Formula — a mathematical way of making predictions about randomly arriving work load (such as telephone calls), based on known information, (such as call duration). Erlang formulas are used to determine call center staffing and the number of trunks occupied.

FCC (Federal Communications Commission — the federal agency that regulates interstate communications including radio, television and telecommunications. Instate communications are regulated by the state public utilities commission.

FTE (Full Time Equivalent) — a way of measuring staff levels, especially for budgets and scheduling. It simply means the number of staff hours required has been divided as though each body is working a frill time schedule. It tells you what your staffing needs would be if your needs were covered only by frill time agents.

Holding Time — the total time, in an outbound environment, from the time you pick up the handset to the time you release the handset in the cradle, which includes dial time, ring time, hold time, etc. You are never billed for holding time, but it is an important figure to determine the number of circuits required. In an inbound environment, callers are frequently charged for holding time, not just talk time.

Hunt Group — a series of telephone lines organized in such a way that if the first line is busy then the next line is hunted and so on until a free line is found. Often this arrangement is used on a group of incoming lines.

ICP (Intelligent Call Processing) — the ability of the latest ACD to intelligently route calls based on several bits of information, including information provided by caller, a database on callers and system parameters within the ACD such as call volumes, agent groups and agent availability.

Inbound Calls — are calls that are answered by teleprofessionals (not initiated). Common inbound calls are for customer service, technical support, catalog order-taking, telemessaging, and emergency medical services.

IVR (Interactive Voice Response) – a system that directs the caller to make choices by pressing numbers in their phone’s keypad. I\7R can be used as a backup to a live teleprofessional during high activity periods

List Enhancement — adding information such as telephone numbers to a list to improve its performance or value. List enhancement can be as simple as adding telephone numbers or as complicated as adding a virtual biography of demographic information to each person on the list.

Outbound Calls — are calls that are initiated by teleprofessionals. Common outbound calls are for fund-raising, lead generation, sales, surveys, etc.

Pop-Up Screens – (also called “screen pops” – one of many “windows” that automatically appear on the teleprofessional’s monitor displaying the caller’s name, address, purchasing history and other relevant information.

PD (Predictive Dialer) — a device that automatically dials the numbers for outbound telemarketers. PDs can increase called efficiencies by 100 – 300 percent.

Service Bureau — a company that does high volume marketing for others. Some of the services that are done are outbound telemarketing, lead generation, receiving 800 or 900 number calls, fund raising or whatever else managers may not want to have done in their own call centers.

Skills-Based Routing — a method of routing incoming calls based on matching the type of call with the defined skills of agents. In other words, someone calling about a broken refrigerator should be directed to a refrigerator expert, not a vacuum cleaner expert. The process also covers defining overlapping skills and call types.

Spike – a high volume of calls. Spikes are one of the biggest problems in scheduling and overhead for managers. Careful scrutiny of call density and caller patterns is necessary to maintain the proper staffing level during spikes.

Web-Enabled Call Center – the ability of a call center to handle some types of customer service/support functions over the Internet. A simple example might be with “agent call me” or “call back buttons” where a customer browsing a website can have a call from an agent initiated to them by clicking on the button. A sophisticated form of that might also be to provide the agent with the screens that the customer was looking at prior to the call.

Workforce Management Software — is the art and science of having the right number of people. . . agents.. . at the right times, in their seats, to answer an accurately forecasted volume of incoming calls at the service level you desire.

Wrap Time – The time taken by the TSRs/CSRs after the customer call has ended. This might include completing an order form, addressing a catalog request, conferring with a company expert to obtain additional information or e-mailing a response. Also known as After-Call Work.

Types of Call Centers

Both the ownership and source/origination of calls are considered when categorizing call centers.

Call centers can have either their own call centers or they can farm some or all of their call center functions out to service bureaus.

1. Service bureaus are companies that do high volume marketing for others. Some of the services that can be done are outbound telemarketing, handling 800 or 900 number calls, providing help desk support or setting up leads for sales reps.

Service bureaus have been growing at a significant rate over the last three to four years and growth rates in the magnitude of 50% in revenue are expected to continue. These companies typically are driven by their customers’ demands and as more service bureaus incorporate quality monitoring into their organizations, quality monitoring will become a requirement for them in order to compete. The technology adoption pattern of “the few largest leaders lead while all the rest will follow” is very true of service bureaus. Two of the largest US service bureaus are SITEL and APAC, who have been looking at or recently implemented automated quality monitoring programs. Service bureaus operate on relatively small margins and ROI justification is key in penetrating this segment.

Although service bureaus will generally operate from their own facility, the larger ones, will contract manage an in house operation, where the facility is owned by the customer and the staff and management is done by the service bureau. EDS operates many facilities in this fashion. Toshiba for instance operates one of their facilities in California this way as well.

2. In house call centers are as the name implies; call centers that are managed by the facilities in which they are located, for the most part.

Companies may have multiple IN HOUSE call centers; in banks for instance, there are Telebanking Call Centers, Mortgage Applications, Securities, Collections etc. all with different telephone monitoring and recording requirements. For the most part, the recording solutions are not enterprise-wide solutions, so it is important not to overlook any in house call centers.

Call centers are also categorized by whether the calls are outbound or inbound or most recently, both. One of the major distinctions between these is the “switch” type.. . for an inbound call center, a large volume of calls are answered and routed quickly and efficient use can be made of human resources.

3. Inbound call centers use ACDs and are as the name implies; customers or prospects call into the call center.

4. Outbound call centers are those call centers where calls are made by the company to people offsite. Outbound call centers use predictive dialers as their equivalent to an ACD. Predictive dialers automate the entire dialing process with the computer choosing the person to be called and the dialing number. The call is only passed to the agent when a live human answers. Predictive dialers screen out all non-productive calls before they reach the agent:, all busy signals, no-answers, answering machines, etc.

5. Blended call centers incorporate one of a variety of technologies to use the telephone switch as both an ACD and a predictive dialer. Blended environments are those who answer both incoming and outgoing calls. One advantage is more efficient use of the agent. If an inbound agent is idle, he or she is assigned to make outbound calls. Another advantage is variety for the long-term highly skilled agent, removing some of the assembly line quality to the job.

It is important to determine early in the sales process, what the environment of the call center is as well as the specific hardware (be it an ACD or predictive dialer) that our products would need to integrate to. For Symphony CTI, Insight or any other product to function in these environments, specific integration to the model, version etc. of the PBX, ACD and/or dialer must be accomplished.

Vertical Markets and Applications

Call Centers typically use one or more types of voice recording devices, depending upon the application. In instances where user protection against criticism, litigation or liability is involved, 24 hours, 7 days a week recording is typical.

In cases where random or selected recording is done for the purpose of monitoring an agent’s telephone performance, quality monitoring products like Insight and Prelude are used. Live or recorded service observe sessions provide call center management with insight as to exactly what happened between the “hello” and “goodbye”.

In the overview that follows, liability recording applications will be represented by (L) and Quality Monitoring applications will be represented by (QM).

Total call center hardware and software market in % of revenues by vertical markets (US):

Total 100% Source: Frost & Sullivan

Banking & Financial Services

This category includes banks, investment companies, financial trading and credit cards companies.

Call centers are vital in the financial services industry because customers call for a variety of inquiries. Also, as a result of many mergers and acquisitions during the past few years, these companies have been purchasing call center equipment to reduce costs and increase employee productivity. In addition customers are demanding convenience.

Brokerage and investment firms — use call centers for quoting current yields and prices, customer inquiries, opening new accounts, transferring electronic funds between accounts, direct marketing response and calls to place buy or sell orders.

Commercial and savings banks — use call centers for account inquiries, credit authorization, transfer of funds between accounts or banks, customer service on mortgages or loans, reporting of lost or stolen cards, notification of overdrafts on accounts and telemarketing sales campaigns.

Credit and charge card companies/credit bureaus — use call centers for credit verifications and customer inquiries or complaints as well as new account telemarketing campaigns.

Mortgage companies — use call centers for direct response to advertising, application request and customer service and loan-processing applications.

Travel and Transportation

Airlines, train and bus companies — use call centers for flight information, reservation services and customer service.

Automobile and truck rental agencies — use call centers to enable customers to make changes or cancel reservations, get customer support for road service problems and make billing inquiries.

Hotel, motels, and resorts — use call centers to allow customers to make reservations and request special guest services.

Travel agencies and cruise lines — use call centers to provide trip information, booking confirmations and schedule changes.

Automobile clubs — use call centers to offer customer service, booking, travel packages, and emergency road repair and service.

Telecommunications

This expanding market includes telephone companies and tele-communications manufacturers Telephone companies and tele-communications companies use various call center applications. These include requests for telephone service, phone bill inquiry, payments and adjustments and information requests. Because of the increasing level of competition in the telecommunications industry and the deregulation of the industry, the telecommunications end-user market will likely continue to grow and expand. For example, local telephone carriers can now provide long-distance service and long distance carriers can provide local telephone service. Also, telephone companies can now offer cable service and vice versa.

Insurance

Because insurance companies depend heavily upon the exchange of information over the telephone with large numbers of customers, they should continue to account for a significant share of revenues. Insurance end-users include companies that supply life, property, homeowners, automobile, casualty, accident, theft, fire and health insurance. They use call centers for applications such as the provision of claims information, customer service, answering business inquiries, sales transactions, telemarketing and policy revisions.

Government and Education

Government includes local, state, and federal offices, motor vehicle bureaus, Social Security offices, unemployment insurance offices, police stations, prisons and public libraries. Government call center applications include processing of claims or applications for unemployment insurance, Social Security benefits and driver’s licenses; provision of information services; filing for jury duty; and lottery services.

As a result of reductions in budgets and workforces in local, state and federal governments, there is an emphasis upon streamlining functions and reducing cost. In order to continue providing necessary services to their constituents, governmental offices must use call centers. The IRS, Social Security Administration, state motor vehicle bureaus and unemployment offices and many local government offices have instituted call centers to handle high volumes of telephone callers.

Medical

Rising healthcare costs force health institutions to invest in call center technology because it enables them to be as efficient as possible in billing and other aspects. Also, as the U.S. population ages, so will the number of people who need health care.

Medical end-users include hospital administrative offices, medical clinics, health insurance companies and health management organizations, nursing care organizations, medical laboratories, doctors, nurses and other health-care providers. Call center applications for these end-users include patient bill inquiries, pharmaceutical purchase and billings, scheduling doctors’ appointments, laboratory tests, and diagnostic examinations, sharing medical and financial information, providing medical advice and collecting medical payments.

Retail

This segment is growing due to the large number of direct mail outlets, catalog houses and home shopping television networks that have arisen for shopper convenience.

Call center applications for retail stores include marketing research, lead generation, marketing campaigns, customer inquiries and complaints, catalogue sales, customer service, telephone orders and direct response order processing. Retail organizations are continuing to use call centers for both inbound and outbound calling.

Other End-Users

Entertainment companies include cable television companies, radio and television stations, videocassette rental stores, electronic toy companies, theater, arts and entertainment organizations, professional sports organizations, movie theaters and newspaper, magazine and publishing companies. There are many call center applications for entertainment end- users.

Cable television companies need applications for customer service, installations and subscriptions dispatching staff for repair and technical support, and pay-per-view service.

Radio and television stations use call centers for fundraising drives, calls to live talk shows and calls for prize giveaways.

Large videocassette rental stores use call centers to enable customers to order videocassettes from home.

Electronic toy companies provide customer service, sales and information for those who have purchased or wish to purchase their products.

Theater, arts, and entertainment organizations sell subscriptions and tickets for single performances of theater productions, operas, classical and contemporary music concerts, dance recitals and various other entertainment events.

Professional sports organizations sell individual game and season tickets for baseball, basketball, football and hockey games, as well as for tennis and golf tournaments.

Movie theaters set up call centers for listing movie times and locations.

Newspapers, magazines and publishing companies permit customers to place classified advertising for jobs, real estate and personal ads over the telephone. They also use call centers for billing inquiries, renewal of subscriptions and customer service.

High-technology companies include computer hardware manufacturers, business machine companies and on-line service providers. High-technology companies use call centers for many applications.

Personal computer manufacturers use call centers to handle the large volume of calls received from people interested in purchasing a computer or obtaining technical assistance.

Software developers need telephone agents to answer questions concerning the specifications of new product offerings and to sell these products.

Similarly, electronics manufacturers, business machine companies and on-line services use call centers for sales operations, customer service and technical support.

Utilities include power companies and gas service providers. Utilities also use call centers for various applications. Power companies and gas service providers use inbound and outbound calling for customer service and collections. Other applications include help desk for reporting power failures, billing inquiries, customer input of meter readings and outbound calls concerning emergency staff coverage (dispatch). Deregulation in the telephone, cable and utilities industries is expected to increase opportunities for call center equipment providers.