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Best Practices for Implementing a Home-Based Servicing Solution

By Jack Beldon

23 January, 2007

Best Practices for Implementing a Home-Based Servicing Solution Jack Beldon, FischerJordan 1. Introduction Good customer service is a crucial element in customer retention, but in-house call centers can be one of a company's largest expenses. Outsourcing customer service to off-shore companies will substantially reduce costs, but at the risk of customer resentment and dissatisfaction. A third alternative, made possible by emerging technologies, is Home-Based Servicing (HBS). HBS can offer customer service quality even higher than a brick-and-mortar call center, but at a substantially reduced cost. The home-based workforce tends to be better educated and more technology-savvy, and retention rates are higher. It's easy to see why the call center industry has been shifting toward home-based agents. Studies show that nearly 20 percent of all U.S. enterprises are currently using home-based agents to support their corporate growth goals.

List of Companies with Home-based Agents

 AAA Auto Clubs

 Walgreens

 Virgin Atlantic

 1-800 Flowers

 St. Paul Traveler’s Insurance

 Office Depot

 McKesson Health Solutions

 J.Crew

 AIG

 Proctor and Gamble

 Finland Post

 General Electric

 Holland America Cruise Lines

 Verizon

 IRS

 Mastercard

 Citibank

 JetBlue

The number of home-based agents employed by the $30 billion U.S. contact center industry—estimated at more than 110,000 at present—is expected to triple by 2010, according to IDC. While the benefits of HBS are clear, relatively little is understood about the processes and technologies required to implement a successful home-based agent model. The recruitment, training and management of home-based agents is very different from that in a traditional call center. Companies hoping to make the switch must resist the temptation to simply extend current brick-and-mortar practices to a virtual environment. The Gartner Group reported that 60 percent of companies attempting to build a home-based agent solution will fail. The key to building a successful virtual contact center is to understand the key differences between brick-and-mortar and virtual call centers.

Some of the most significant differences include:

 Training. Proper training is critical in implementing an effective HBS solution, and most companies considering HBS state that training is their biggest concern. While 90% of brick-and-mortar training classroom-based, HBS training relies on virtual training technology.

 Recruiting/Screening. Given that most (if not all) HBS agent recruitment will be virtual, it's necessary to use a far more rigorous screening process than that required in traditional brick-and-mortar centers.

 Operations. The tools and processes used to manage a virtual workforce are very different from those used in a brick-and-mortar call center.

 Technology. Much of the HBS technology requirements can be leveraged from existing brick-and-mortar infrastructure.

Some consideration will be required for adopting VoIP technologies and meeting connectivity requirements. The biggest difference, however, is in the technical support of HBS agents. This paper points out where virtual and brick-and-mortar call center practices differ, describes HBS industry best practices, and answers some of the practical questions you'll face in planning an HBS roll-out—

for example, whether to implement a virtual call center yourself, or use an HBS vendor.

1. Recruiting and Screening Process Variation On-line Recruiting High Candidate Requirements High Localized Recruiting High Screening/Interviewing High The recruiting and screening processes within the home-based servicing model vary substantially from that of brick-and-mortar. Recruiting and hiring employees who you will never meet face-to-face requires processes and technologies specifically tailored for the virtual environment.

1.A. Recruiting Invest in On-line Recruiting Often little marketing effort is required, as HBS jobs are in high demand. Most HBS vendors do not proactively recruit, relying instead on word of mouth advertising. Some vendors average between 1,500 and 3,000 new applicants each month. However, to tap into this large potential pool requires a strong Web presence with an online application process. This is far more important with a virtual call center than a brick-and-mortar call center. The Web sites of HBS vendors should guide the candidate through the application process, and have the ability to track application status. Be Selective The profile of the ideal HBS candidate is substantially different from that of a brick-and-mortar candidate. HBS candidates typically are more educated and experienced than brick-and-mortar reps.

Some additional attributes to consider for virtual agents include:

 Excellent communication skills – Virtual workers don't have the luxury of communicating face-to-face, which means they miss out on nonverbal cues. It also means they have to communicate both their point of view and their personality through media like videoconferencing, e-mail, or the telephone.

 Problem-solving skills – HBS employees have to be able to tackle problems head-on, to generate and implement solutions independently, and to ask for help when they get stuck.

 Demonstrated loyalty – Virtual workers should agree with the goals and values of the company. Because virtual workers don't have everyday face-to-face interaction with fellow employees, their personal and company ties can be weaker than those of brick-and-mortar workers.

 Strong technology skills – The virtual workplace is defined by its technology. Workers have to master the laptop, the printer, and the fax machine.

 Experience in relevant industry – Although experience in a similar functional industry is desirable, specific call center experience is not. "We don't look for people who have call center experience," says Jim Ball, chief architect of Alpine Access Recruit Without Borders Recruiting for home-based agents can be nationwide, regional/local. There are benefits to both strategies, though nationwide recruiting offers more benefits overall. Nationwide

 Broad and Deep Talent Pool One of the greatest advantages of home-based servicing is the ability to tap into a nationwide talent pool. The allure of working from home gives access to an even broader range of potential applicants—people who wouldn’t consider working in a traditional brick-and-mortar call center. This includes stay-at-home parents, people with disabilities, and retirees. All may have exceptional skills and work experience to offer. This is a primary reason why the home-based work environment is ideal.

 Diverse Workforce When your agents come from all over, you can have a much more diverse workforce.

 24-hour Availability Agents recruited from different time zones can let you offer longer hours of customer service at no increased cost. Regional/Local

 Face to Face Interaction When HBS agents live within the area, it's easier to conduct face-to-face group meetings. Research shows that face-to-face meetings are effective in overcoming a sense of isolation and making agents feel part of a team.

 Homogeneous Team The shared geography makes bonding between virtual agents more likely, which also encourages the sense of being part of a team. Compensation The price of a home-based agent falls somewhere in between a brick-and-mortar agent and an offshore agent. McKesson Health Solutions states that high demand for the HBS openings allows them to offer their agents 16% less than brick-and-mortar reps. Forrester Research supports McKesson’s conclusions by asserting that the pay scale for virtual agents runs 15% below that of traditional brick-and-mortar agents. Usually cheaper labor means lesser talent, but not in this case. HBS provides superior customer service at a lower price. Choosing whether to hire employees or contract independent agents is an important decision in an HBS roll-out. Most HBS vendors contract independent agents. This saves them from paying benefits to their agents, and allows for efficient cost management since most agents are paid to the minute that they work. Even companies that hire their agents as employees usually do so on a part-time basis to avoid paying for benefits. Benefits make up 30% to 40% of a traditional brick-and-mortar reps compensation. 2.B - Screening and Interviewing Rigorous Screening Process Screening for HBS agents will vary significantly from that for traditional brick-and-mortar agents. The areas with the greatest variation include:

 Virtual Screening. Given that most (if not all) HBS agent recruitment will be virtual, companies must use rigorous screening processes that compensate for the lack of face-to-face interaction.

 More Qualified Candidates. The caliber of HBS agents needs to be higher than a brick-and-mortar candidate, and thus requires a more sophisticated screening process.

 Large Talent Pool. The large pool of candidates from which to choose gives you the luxury of selectivity when screening your candidates.

In light of these differences, HBS screening and interviewing typically involves:

 Automation. To reduce the effort required to cull through a large talent pool, most companies automate the recruiting process and much of the screening process. This can result in significant cost savings.

 Problem Solving. Since HBS agents work on their own, the interview process usually includes numerous mock calls and problem-solving scenarios to evaluate their ability to work independently.

 Technology Skills. Often companies administer a rigorous computer aptitude test to ensure the candidate can handle the technological demands. The test measures a prospect’s ability to navigate the Windows operating system, manage the client and telephony desktop, and download files. You can avoid revamping your entire screening process by using a virtual agent screening vendor. In addition to screening services, such vendors include a peer-review system that lets prospective workers and employers vouch for each other's performance.

2.Training Process Variation Training Conversion High Training Content Medium Training Delivery High Training agents remotely is very different from training in a conventional classroom environment. Implementing an effective training program in a virtual environment can present the most significant barrier toward establishing a successful HBS model. In addition to ensuring that agents are knowledgeable about products and processes, HBS training tools can be used to maintain employee engagement, and also can be integrated into the screening process.

Several aspects of training must be considered:

 Training Conversion – converting paper-based training to computer-based training.

 Training Curriculum – additional content required for virtual agents.

 Training Delivery – the platform and frequency for delivering training to virtual agents.

2.A. Training Conversion Often the first thing that comes to mind in training virtual agents is how to convert paper-based training materials to a computer-based or on-line medium. Most HBS vendors have identified this as the most time-intensive process in implementing the HBS model. The initial step is to decide whether to perform the conversion in-house, or to outsource to third-party vendors. HBS vendors such as Alpine Access retain curriculum design engineers experienced in converting training materials to CBT. However, they generally do not offer their conversion services as a standalone offering. Another option to consider is offshore vendors, which offer a viable cost-effective alternative.

2.B. Training Curriculum Virtual agents will require some additional content above and beyond that offered in traditional brick-and-mortar settings.

Most of the additional content will focus on the special skills that virtual agents must master, including:

 Time management, since HBS agents lack external structure and supervision.

 Communication tools for distance collaboration.

 Special technologies – “Presence” tools for revealing an agent's online status (e.g. on the phone, in a meeting, etc.). – Disaster recovery for dealing with agent computer crashes and other technical difficulties.

2.C. Training Delivery The platform and frequency of training has a large impact on training effectiveness. 90% of brick-and-mortar training takes place in a classroom where extensive coaching ensures full understanding. This is difficult to replicate in a virtual environment. Brick-and-mortar training averages a 4 to 1 student to instructor ratio, whereas virtual training averages a 15 to 1 student to instructor ratio. Empowering Agents in Training Creation The absence of face-to-face coaching in a virtual environment can leave an agent feeling disengaged. One method which has proven to be effective in increasing agent engagement is empowering agents to participate in the training creation process. When McKesson Health Solutions empowered an agent-led Knowledge Committee to create a sharply focused and measurable training initiative for the entire virtual contact center, the results included gains in productivity, quality, and employee morale, as well as in customer satisfaction. Software Tools to Enhance Training Delivery A variety of interactive tools can enhance the virtual training delivery – in particular, asynchronous Web-based tools for monitoring agent calls and Simulated Call software.

 Asynchronous Web-Based Training tools – Enable supervisors to quickly create and send agents personalized videos that cover problem areas recognized during a monitoring session – for example, handling specific caller questions or navigating the screen. – Can serve as an extension of the center's monitoring software, and let agents see (via video demonstration) and hear (via the supervisor's voice-over explanation) in real-time how they could have handled a particular contact better.

 Simulated Call Software – Uses speech recognition to compare agent responses to best-in-class responses. – Creates simulations based on the accumulated experience of real call centers, rather than relying on platitudes and generalized scripts. – Employs speech recognition to make sense of what trainees say during simulated calls. When trainees assist simulated callers, the software compares trainees’ responses to responses that the best agents on your team consider to be most effective. Standardization in the Delivery Process To ensure the instruction is thorough despite the lack of classroom interaction, a virtual audience will benefit from standardization in the delivery process. With brick-and-mortar training, instructors are often granted substantial autonomy in determining training delivery. How much time is spent on a subject and what is taught on that subject vary greatly from instructor to instructor. This type of variation makes omissions too likely when applied to virtual training.

3. Operations Process Variation Workforce Management Tool High Supervision/scheduling High Engagement Low Team Structure Medium Communication High Another area of major difference is operations. Managing virtual agents requires changes in workforce management (WFM) tools, management processes, and communication.

3.A. Workforce Management Tools Most HBS vendors create proprietary software to manage all aspects of the virtual workforce. Many bundle scheduling, communication, call routing, forecasting, coaching and agent ranking functionality into a single application. An effective workforce management tool will be able to:

 Create agent work schedules. The software should balance the forecasted workload against agent availability, shift flexibility, costs, and service level requirements. The scheduling can also take into consideration vacations and time for lunch and other breaks, meetings, and coaching or training sessions.

 Assign agents optimally to schedules. A recent trend is to give points to agents based on seniority, performance levels, and skill sets, then have the WFM system assign agents by bid order preference to the available schedules, subject to constraints that the center’s WFM analyst specifies.

 Monitor each agent’s adherence to schedules. This takes place in both real time and over relevant intervals, to help supervisors decide when to investigate or intervene. Absenteeism can be prevalent in the HBS model, and consequently your WFM tool must have monitoring capabilities.

 Facilitate communication about scheduling. Another recent trend in WFM software is to provide individualized Web-based portals that present selected information to each agent, supervisor, manager, or analyst. It should be possible to assign permissions at both the group and individual level – for example, allowing supervisors to approve schedule changes only for the agents that he or she supervises.

3.B. Management Processes Supervision and Scheduling The virtual contact center requires a non-traditional style of management due to the lack of on-site supervision. Some contact centers require an initiation period during which new agents work on site to become familiar with products and procedures before establishing their remote offices. Also, most contact centers use monitoring and workforce management tools to aid in scheduling, and verify agent performance and call-handling metrics. The process for scheduling virtual agents is quite different than that for brick-and-mortar agents. The flexible work schedule is a primary reason why demand for HBS jobs is so high, so most HBS vendors allow agents to have input when determining schedules. Alpine Access employs two methods of agent scheduling:

 A "flexible" schedule requires agents to commit to a certain time frame within which they will work enough hours each week to add up to the required 20-35 hours. This time frame remains the same each week.

 A "fixed" schedule requires agents to work the same hours each day of their shift. Alpine determines the work schedule based on the fixed schedule commitment and the client needs. Hours will vary each week depending on client needs A common HBS scheduling practice is to have trade boards where agents can swap shifts. At McKesson Health Solutions, 20% of its at-home staff voluntarily work split schedules, which lets managers better allocate their hours around peak call periods. The company shifts 1,500 agent hours each month from overstaffed times to understaffed times – the equivalent of eight full-time employees. Engagement HBS agents are susceptible to feelings of isolation, so managers must find alternative forms of communication to make agents feel they are part of a team.

Here is a list of best practices for ensuring virtual agent engagement:

 Include home agents in all incentive programs and contests in the contact center.

 Invite home agents into the contact center for occasional meetings and social events.

 Encourage home agents to communicate via email, chat and/or phone with one another as well as with their in-house peers.

 Hold frequent team meetings and have home agents join via conference call.

 Hold occasional social events for all agents outside the contact center – e.g., bowling night, movie night, etc. Team Structure Employing HBS will require defining the optimal team structure. While most HBS vendors employ the virtual-only model, those with established brick-and-mortar operations may use a blended approach. A blended team allows managers to more easily assess and compare performance across virtual and non-virtual agents, and provides an avenue for support and expertise from more experienced brick-and-mortar reps to HBS agents. But these advantages may be outweighed by other factors. A virtual-only team will allow for greater camaraderie to develop among the team as a whole, and will allow the supervisor to focus on virtual team management skills. Ultimately, much of the success of your HBS model will be predicated on the ability of your virtual team to establish trust with each other for seamless interaction, and to be managed effectively – all factors which point toward a virtual-only team as the optimal team structure.

3.C - Communication Virtual agents must have robust communication tools that allow them to communicate freely with other agents/managers while still on the phone. HBS vendors often integrate collaboration (interactive participation) and presence (the ability to see where your colleagues are) into the communication framework. Webex, Raindance, GoToMeeting and Adobe Breeze are examples of Webinar software that enable virtual agents to share thoughts as well as documents in real time. McKesson uses collaboration tools for training via Webcasts and online modules, and the company conducts virtual annual performance reviews with its at-home employees as well. McKesson uses Jabber XCP to encrypt instant messaging communications so that no personally identifiable information is sent in clear text.

4. Technology Process Variation Infrastructure Low Connectivity Medium Support Medium The proliferation of new call center technology solutions has laid the pathway for HBS growth. VoIP is leading the charge by allowing voice to be transmitted over the internet, thereby significantly reducing the cost of making a phone call. Effective implementation of these new technologies requires attention to infrastructure, connectivity, and support.

4.A. Infrastructure Our research indicates that most companies without HBS agents already have 60% of the required technology infrastructure to support remote agents. The components which will require the most scrutiny are phone configuration, workstation configuration, Private Branch Exchange (PBX) setup, and application server setup.

Phone Configuration Several options exist for configuring the optimal phone setup for your HBS agent:

 PC Agent/Softphone. PC agents using software-based VoIP don't need telephones - they can use their multimedia PCs, equipped with headsets, to answer telephone calls, Web calls, voice messages, and e-mail messages. All switching is accomplished via the managed Internet Protocol (IP) backbone. JetBlue agents use Softphone.

 PC Agent/IP Phone. An IP Phone is a traditional telephone-style appliance used in conjunction with the PC. The connection is through the PC, but agents can use traditional telephone-style hardware versus headsets.

 Hybrid Agent. This option integrates the PC with existing telephony environments. The client software runs on the agent's PC, but delivers telephone calls to a traditional telephone.

 Phone Agent. In this scenario, the PC is not required at all. The system will deliver calls to any telephone number. Agents log in and out of the system via Interactive Voice Response (IVR). Alpine's implementation of this option requires a dedicated phone line for each agent. Workstation Configuration Security and performance considerations determine optimal workstation configuration for virtual agents. Although most HBS vendors require their agents to have their own PC, many limit the capabilities to ensure maximum security is maintained. Transforming the PC into a “thin-client” (front-end terminal) can reduce security risk by preventing agents from storing customer information on their PC harddrive. Some client/server applications share the processing load with the client, thus requiring a fully-functioning PC. In these cases, gaining the security of a thin-client requires a redesign of the client-server architecture, such that the server performs most of the processing. PBX/ACD The PBX serves as the primary routing tool once a call is received from the Public Service Telephone Network (PSTN). The advent of VoIP technology is forcing traditional brick-and-mortar call centers to upgrade or replace their PBX systems. The ability to transmit voice over the internet at no additional cost makes VoIP an attractive option. However, stability issues (for example, dropped calls) prevent some HBS vendors from allowing virtual agents to use VoIP phones. Alpine uses VoIP tools within their own facility, but does not allow their HBS agents to use VoIP phones.

The PBX solutions for HBS agents include:

 Replacing the existing PBX and Automatic Call Distributor (ACD) system with a converged or IP-based PBX/ACD system.

 Treating the remote agents as their own “department” by supplementing the existing system with a converged IP-based PBX or ACD system.

 Extending the existing PBX/ACD system with a gateway, and IP Phones or Softphones. Application Servers Business application servers are often used within the HBS model to shift processing away from the PC client. Several HBS vendors – for example, Alpine – use Citrix servers to do all the processing, and then send screen shots to the HBS agents’ PCs. In addition to increased security, this reduces bandwidth requirements and increases stability. McKesson Health deployed a central Citrix server farm with thin clients to provide remote agents with secure access to applications and centralized data resources. 5.B - Connectivity Last-Mile Connectivity The bandwidth and availability of residential network services, including DSL, cable, and dial-up, define the last mile connectivity for home-based agents. Some HBS users employ dial-up connectivity, but this method is being phased out as broadband becomes available. Most HBS vendors lay the burden of the cost of local connectivity on the agent. Secure Connection A secure connection through a Virtual Private Network (VPN) using multi-factor authentication, such as a password combined with a key fob, is normally a requirement of the HBS model. There are essentially two types of VPN to consider: IPSec, the most common form of secure connectivity, requires software to be installed, configured, and updated on each remote PC. Most vendors use proprietary VPN software that does not allow the agents to use the VPN client built into Windows. An important benefit of this solution is that it allows file-sharing. A second alternative is SSL―Secure Sockets Layer―which is a browser-based VPN that requires little or no software on remote PCs. However, SSL does not support file-sharing or web-enabled applications. 5.C - Support Virtual agents will require a dedicated technology support team that goes beyond standard help desk support. For example, West's support system includes desktop streaming technology to take over the agent’s machines and help solve problems. (The remote assistance system built into Windows is disabled when the connection is through an application server, transforming the PC into a dumb terminal.) After McKesson Health converted from brick-and-mortar to HBS, they found that they needed to hire a new pool of IT people to support remote agents. In some rare cases, IT may be forced to make a house call. 6. HBS Vendors Now that you are aware of the major considerations for an effective HBS solution, the question becomes, “Do I implement in-house or do I partner with an HBS vendor?” The challenges in establishing an HBS model have resulted in the emergence of several HBS vendors: Vendor Model Clients Industries Alpine Access Part-time employees Office Depot Consumer Products, Travel, Retail Willow CSN Independent Agents Travelers Insurance Insurance West Independent Agents NBC Telecommunications, Travel, Retail Live Ops Independent Agents GE Finance Financial Services, Travel VIP Desk Independent Agents Mastercard Financial Services, Travel HBS vendors are well-versed in virtual technologies and processes, and have experience with a diverse set of Fortune 500 companies across varying industries. Partnering with an HBS vendor can alleviate concerns about the knowledge gaps you are likely to have concerning home-based servicing. 7. Recommendation Home-based servicing is here to stay. If you resist incorporating HBS practices into your call center operations, you will fall behind the competition. However, employing the HBS model is not a simple matter of converting training materials and extending existing brick-and-mortar practices. As a starting point, you should perform a thorough analysis of your HBS capabilities, along with a benchmark against current HBS best practices. It's a good idea to use an HBS vendor to bridge the knowledge gap. Even if your ultimate goal is to run HBS in-house, it would be smart to use an HBS vendor to pilot a process. About Jack Beldon Jack Beldon is a senior associate at FischerJordan, where he has executed several high impact projects in commercial banking profitability forecasting, Six Sigma/ Sarbanes-Oxley reengineering, and home-based servicing strategy. Before joining Fischer Jordan, Mr. Beldon worked at Accenture, where he led several ERP implementations for fortune 500 companies. Mr. Beldon holds an MBA in International Management from Thunderbird, The American Graduate School of International Management. About FischerJordan FischerJordan, www.fischerjordan.com, headquartered in New York City, is a boutique management consulting firm founded in 2004 by alumni of the Mitchell Madison Group and Inductis. FischerJordan has delivered hundreds of millions of dollars of bottom line impact to Fortune 100 financial services companies through its focus on analytics-driven marketing strategy, rewards/loyalty strategy, and reengineering strategy. References Tim Houlne, “What is Driving the Home Agent Explosion? Success”, Contact Professional Susan Campbell, “New Study by IDC Predicts Homeshoring Will Triple by 2010”, TMC Net Christopher Carrington, “Home-based Employee Model Delivers Ultimate Customer Experience”, TMC Net, August 2006 “Home-Based Agents: A Cost Saving Alternative To Offshoring?”, TMC Net, June 2004 Jason Compton, “Making the Right Call”, CRM Magazine, August 2004 Christopher Carrington, “Home-based Employee Model Delivers Ultimate Customer Experience”, TMC Net, August 2006 “Home-Based Call Center Strategy Pays Off”, NewsFactor, September 2006 Anna Bednarz, “Distributed Call Center Strategy Pays Off for McKesson Health Solutions”, Network World, August 2006 Mary Bartlett, “Admissions 101: Selecting the Best Agents for Home-based Work”, Contact Professional Anna Bednarz, “Distributed Call Center Strategy Pays Off for McKesson Health Solutions”, Network World, August 2006 “Envision Telephony’s Click2Coach”, Call Center Magazine, August 2000 “2006 Products of the Year”, Call Center Magazine, March 2006 Allan Rosenberg, “Best Practices in Workforce Management”, Call Center Magazine, May 2005 “Frequently Asked Questions”, Alpine Access Website Anna Bednarz, “Distributed Call Center Strategy Pays Off for McKesson Health Solutions”, Network World, August 2006 Susan Hash, “Staff Management Trends in 2006”, Call Center Magazine, August 2006 Tara Weiss, “How to Manage a Virtual Workforce”, Forbes Magazine, July 2006

About the Authors

About Jack Beldon Jack Beldon is a senior associate at FischerJordan, where he has executed several high impact projects in commercial banking profitability forecasting, Six Sigma/ Sarbanes-Oxley reengineering, and home-based servicing strategy.