How to Build a Better Call Center

Once viewed simply as low-cost channels for resolving customer concerns, call centers are increasingly seen as powerful service delivery mechanisms and even as generators of revenue. Research by HBS Professor Frances X. Frei and her colleagues Ann Evenson and Patrick T. Harker of the Wharton School points toward new ways of making them work.

Almost everyone has dialed a simple phone number—be it to order a pair of socks or reserve a flight to New York—only to end up navigating a seemingly endless labyrinth of options, all because a mechanical voice continually invites them to “Press 1 (or 2, or 17) now.”

Aggravating? Yes. But call centers, with their attendant voice response units (VRUs—also known as automated voice response systems), need not be so inefficient. When a company manages its call center well, effectively linking a triad of service, information technology and internal processes, both the customer and the company can triumph.

That’s especially true in the financial services industry, where call centers have moved beyond their most obvious function—as low-cost channels for resolving a myriad of customer concerns—to become powerful means of service delivery with the potential to generate substantial revenue.

HBS Professor Frances X. Frei and her colleagues Ann Evenson and Patrick T. Harker, both of The Wharton School at the University of Pennsylvania, have studied the use of call centers in this industry. In their working paper Effective Call Center Management: Evidence from Financial Services (pdf), they go beyond earlier research to look at the broad context of call center service delivery.

“Although much literature has recently been written about various ways to steer customer interactions to sale opportunities,” write Frei, Evenson and Harker, “the topic of effective service delivery had almost entirely been overlooked. Before being able to generate revenue through the call center, institutions have to fully understand and be able to implement superior customer service.”

“Each service interaction forms the basis of a consumer’s perceptions of the overall quality of an organization,” they continue. “How well a business is able to manage and implement the service delivery process has a direct effect on retention of existing clients, and can have a significant impact on acquiring new business. The result is that satisfaction is based on how well an institution meets and exceeds a customer’s expectations in every interaction.”

In research focused on 11 major financial institutions, Frei, Evenson and Harker created a model demonstrating precise links among three main elements (or “drivers”) of superior service delivery. These are: 1) effective people; 2) effective internal processes; and 3) effective information technology (IT). The word “effective” is emphasized, they say, “to clearly make the point that individual elements of this mix may be better or worse across different institutions, but making them work together effectively is the key to developing world class service delivery.”

The results of their research not only illustrate the relationships among the elements, but also highlight various factors within each element (for example, how information technology practices affect each other) and how each element relates to overall service delivery.