1. See attached slide on final page
2. There are a number of problems facing Sof-Optics (detailed below). The most severe problems are in the CSR department:
a. Major problems:
i. Going forward, Sof-Optics will be under pressure to lower prices since B&L (the industry leader) just slashed prices by 25%. This is especially troubling, given the point that follows…
ii. Loss of customers (and sales) due to long customer service wait times or lack of phone lines available (i.e., getting a busy signal). Given that this is a high fixed cost industry, volume is especially important so that Sof-Optics can remain competitive on price and cover their high fixed costs of production. iii. The company had higher than expected start-up costs and, as a result of that, as well as their inability to scale more quickly, they did not show a profit in their first three years of operation.
b. Other problems:
i. Low (but quickly improving) yields on turning “buttons” into lenses – which prevents their variable production costs from being lower.
ii. Cost of returns are high, primarily due to misfits of lenses. A full 16% of standard lenses were returned and 74% of those were due to misfits. iii. High CSR staff turnover due to increasing volume and stress. This is a driver of the high wait times issue noted above.
iv. Customer dissatisfaction with delivery times due to the Postal Service not meeting expectations.
3. There are a number of ways that Sof-Optics could improve the system – specifically the CSR department. These ideas generally fall into four categories: Improve CSR speed, reduce call volume or call requirements, better balance volume with capacity, and other customer experience ideas:
a. Improve CSR speed
i. Specialization: Have CSRs specialize in specific types of calls (for example, a “order taking” rep or “new account” rep). Given the high turnover that is typical of a call center, this specialization will allow new reps to move up the experience curve more quickly and help them to reduce their average call time. All reps should probably still be trained to take standard orders, so that, during high volume periods they can help with those call as well. In order to accomplish this, they should:
1. Use touch tone routing (if available in 1980): When customer calls, rather than going immediately to a rep they should hear a menu of options to choose from (“touch 1 to place an order, touch 2 to check order status”…etc.).
2. If touch tone routing is not available, then use a “tiering” system to answer calls. For 5 out of 6 call types, the customer must provide their name and account number or other basic information. Dedicate 1 or 2 people as “Tier 1 CSRs” to 1) determine the call type and 2) collect this basic info. These Tier 1 reps would then pass the individual on to a “Tier
2” specialist – to take the full order, check order status, or create an account. In this system, the goal would be that when people call they experience no (or very little) wait before talking to a Tier 1 rep. Once they talk to the Tier 1 rep, they would experience any wait before talking to a Tier 2 specialist. Ideally, this system improve speed while simultaneously making the customer feel like they’ve waited less since they talk to a live human being much earlier in the process. b. Reduce call volume and call requirements
i. Reduce call requirements for some CSRs: Although new account creation and status checks are a relatively small fraction of total calls, they take up about 42% of total CSR time. We’ll come back to status checks in the balancing capacity and volume section.
1. New account creation: Since this is a value added activity (you don’t want to tell customers to call back later, maybe they’ll call a competitor!), we need to continue to handle these calls on demand. There may be a way, though, to take down some basic information from the customer quickly (enough to start the order process) and then ask the...
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