Conventional management thinking says: Labor is expensive, and automation reduces that expense. Although in many cases this statement is true, competitive advantage in the area of customer service isn't a simple matter of replacing people with technology.

At least it's not that simple to Robb Munson, vice president of membership administration at Kaiser Permanente, an Oakland, Calif.-based nonprofit health plan that operates in nine states and Washington, D.C.

Munson, who until recently managed two large call centers in California and six others in Kaiser's other regions, envisions an interdependent relationship between humans and technology, rather than an adversarial one. He uses the analogy of a three-legged stool to describe his view. The three legs of the stool are vision, culture and training, and the seat of the stool is technology.

"Performance in a call center is dependent on a clear vision, a strong people-centered culture, and an effective training program," he says. "If the legs of the stool are in place, I can leverage technology effectively and efficiently. But if one or more of the legs is broken, the technology investment can be a waste of money."

So beginning with his vision-which is to build member loyalty-Munson focuses on creating a work environment that encourages and enables customer service agents to provide fast and helpful service.

"Clearly, from the financial perspective, having sustained revenue is highly important," he says. "And in the call centers I manage, I tell, coach and teach the agents that if we can understand our call centers are not really about phone calls-they're about building loyalty in the customers who contact us-then it's really a different contact. There's a different focus on the call.

"It's not just a phone call; it's an opportunity-or moment of truth-to increase customer loyalty," he says. "My hope is that the member is more loyal to Kaiser Permanente after the call than when they first started the call."

"Knowledge breaks"

To go along with the vision of member loyalty and a culture that supports that goal, Kaiser has implemented an online training program for the 600 agents working in its two California call centers. The centers handle 8 million calls per year servicing 6 million Kaiser members in the Sunshine state.

The technology, from Alpharetta, Ga.-based Knowlagent, enables the call center agents to receive training on their desktop at regular intervals-or remedial training when needed.

"Our call centers were growing," says Munson, who joined Kaiser nine years ago to build a large call center in California from the ground up. "I realized that effective training was the key to ensure we could continue to provide great performance as we grew."

Since then, Kaiser has consolidated 56 customer service centers in California into two large centers located in Corona and Stockton.

During this growth and consolidation process, Munson was finding it difficult to ensure reps were keeping up with the latest changes in health care regulations as well as with the new products Kaiser was offering. As a result, he decided to implement Knowlagent's Web browser-based training technology.

"Now, we schedule reps to receive training sessions a couple times per month," Munson says. "As long as we're meeting service levels-which we do most of the time-reps receive a prompt on their screen at the scheduled time, asking them if they'd like to take a "knowledge break."

If the agent clicks 'yes,' a menu of course modules appears-ranging from Medicare benefits to claims to product offerings to customer service training. In all, Kaiser offers more than 100 Knowlagent courses.

Most of the online training agents receive occurs in the context of their current jobs, but agents can also select topics according to their development goals.

"An agent who is currently handling Medicare calls may be interested in moving into the claims area, for instance," says Munson. "So here's the opportunity to not only hone their skills related to Medicare, but also to learn about how claims are handled."

In addition, managers will instruct call center agents to take a specific course if quality assurance results show they need remedial training. For example, if an agent is scoring low on eligibility calls, the manager will ask the agent to go through the eligibility module on the Knowlagent system, Munson says.

The measure of success

Online training also supplements Kaiser's new-hire training program, a six-week-long instructor-led class, which all new reps attend before taking calls on the floor. With Knowlagent, Kaiser managers also can more easily offer agents update training with the assurance that they are learning the material.

"Prior to using Knowlagent, we had to set up a number of courses and corral folks into (update) training," says Munson. "And the only thing we knew for certain was that they had attended. We did not know how well they understood the training."

But assessment is integrated in the online training system. Agents receive a series of multiple-choice, true-false questions after each session, providing immediate feedback to agents and their managers. "If necessary, we require reps to go through a module a second or third time if they haven't mastered the course material," says Munson.

Indeed, knowledge and a positive, helpful attitude are the key ingredients to good customer service, according to Munson. "I'm looking for people at the outset who really want to provide good customer service," he says, describing his hiring criteria. "Then, I put agents into the six-week initial training program that reinforces the overall vision of Kaiser and of the member service call centers.

"Again, that vision is about building member loyalty. It's about providing correct information. It's about the member experience, and going above and beyond the call of duty in helping them get the information they're looking for."

The good news is: Munson's approach appears to be working well for Kaiser. Since he took leadership of the call centers, membership has grown from 4 million to 6 million in California-even while membership in health plans overall has been falling in recent years.

In addition, for the past two years, the call centers have had the highest employee satisfaction scores among the 110,000 Kaiser employees in California. (The company declined to share the actual numbers.) Call center agent turnover currently is only 5%. And, last year and this year, agents on average answer the phones within 13 seconds.

As in most call centers, Kaiser uses performance management systems to track agents' adherence to schedules, call handling times, and other fundamental call center metrics. But Munson cautions his call center managers to find an appropriate balance between performance measurement and employee satisfaction.

Cost-saving trends

"One of the questions I ask agents is: 'What can I do to make this the best place you've ever worked?'" Munson says. "We ask them: 'What's going on? What challenges are you faced with?' And often times, the issue is not related to the call experience, it's related to the work experience. If you can make many of the agents' issues into non-issues, all of a sudden, your stats go up."

By far, the statistic that Munson finds most significant to Kaiser's vision of building customer loyalty is first-call resolution. "I don't focus too much on (reducing) call-handling time," he says. "A better metric is first-call resolution-and we resolve 95% of our calls on the first call."

Answering a member's question on the first call hinges on good training, Munson adds. "If a member speaks with a less experienced agent who does not know the right information, the member is going to have to call a few times to get the answers he or she is seeking. That certainly does not lead to customer satisfaction or loyalty."

It's a very different strategy to focus on the agents themselves, according to Dr. Jon Anton, director of benchmark research at Purdue University, West Lafayette, Ind.

Purdue's Center for Customer-Driven Quality found that 90% of consumers form their perception of a company based on their customer service center experience, and 60% will terminate their relationship with a company based on a bad experience with a customer service center or agent.

"We see companies spend a lot of money investing in self-service technologies so their customers never have to talk to people at their call center," says Matt McConnell, co-founder and vice president of marketing for Knowlagent. And some companies also are investing in offshore outsourcing to reduce call center costs, he notes.

While Kaiser offers interactive voice response and Web self-service, the focus is on helping members. As a result, agents are educated on how self-service technology can accomplish that goal.

"Let's say someone is calling about eligibility for a group of members," says Munson. "This is an opportunity for the agent to educate the caller about the IVR system. So we're training agents to educate members on how IVR can make the process of checking eligibility simpler."

In addition, Kaiser does not outsource its call-center activities, he says. In fact, Munson does not see a trend developing to move call center operations offshore.

"I've seen otherwise," he says. "Companies are going to invest in their onshore call centers and in their people, because that's where the competitive advantage continues to reside. Especially as costs go up, there had better be a competitive advantage or everybody is simply going to compete on price. And that's a losing proposition."

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