This is another entry in our semi-regular series You Make The Call. Below you will see a scenario that is based on a real situation that happened during an actual project. We present the scenario and then ask you, our loyal readers, to respond in the comments section as to what you would do in this situation. After a few days have passed, we’ll post a wrap-up detailing what actually happened and how successful (or not) of a resolution there was to the situation. As always, suggestions for system resolutions are often a part of the solution, but the solution usually has a large process component to it as well. Without further adieu, here is our new scenario.
The Contract Team
The extended warranty team in your company is under pressure from upper management to shorten the length of time it takes to enter a contract for an extended warranty. In the last half of this year, their time to enter a contract has doubled from the first half of the year. You are asked to help out that business area and to determine where they can save time and get the contract entry process back down to the previous durations.
Your first meeting with the manager of contract entry shows you a man who is frazzled from the backlog of contracts waiting to be entered. His staff of five contract entry personnel seem as ragged as their boss. As you talk through the problems, you find the manager has three large concerns. First, the spike in duration for contract entry time coincided with the replacement of their old mainframe-based contract entry system with a new, web-based CRM (Customer Relationship Management) tool. Second, every day that contracts are delayed in going through the entry process, that is another day the company is delayed in collecting revenue. Lastly, a customer service problem is on the rise because customers who have submitted contracts for renewal but have not yet had their extensions entered into the system and are failing to receive service.
After meeting with the manager, you spend time shadowing the contract entry team members. While you watch, you have your stop watch out and track how long it takes to perform each step in the process. On average, most contracts only cover two or three pieces of hardware and can be entered in under 10 minutes. Of that 10 minutes, 3 minutes is spent entering customer information, 3 minutes entering product information and 4 minutes to print the invoice and mail it to the customer. The old system is no longer available, so you can not compare timings before and after the CRM implementation.
You gather example contracts from the old and new systems and notice that the total number of data elements has doubled on the new contract. It seems as if the amount of information captured during contract entry has significantly increased with the implementation of the CRM tool. You discuss your findings with the contract manager and he agrees with your assessment.
As a last step, you interview managers from the Call Center and the Service Repair departments to see if they are experiencing similar backlogs during their processes as well. Surprisingly, you find out that processing times in both of these areas have decreased since the implementation of the CRM tool. The call center’s 200 agents and the repair team’s 25 technicians are all averaging slightly lower processing times. These two teams offer glowing praise for the new tool and how much visibility they have to data about their customers open calls, call history and contract status; data they did not previously have access to see.
Now you sit back at your desk and wonder where to go from here. Why would the processing time of one team spike so dramatically when none of the other teams seem to be having a difficult time? Your report is due in a few days so you better get writing!
In the first half of this post, we looked at a service contract department whose contract entry time had doubled. Now lets see what we did to get the data entry time back under control.
At first glance, this would seem to be another situation of a system implementation gone awry. It looks like the project team really messed up the implementation of the new contract management system. But did they really?
We know that only one of three teams, the smallest team in terms of personnel, is having an issue. The other two much larger teams really like the new system and all of the advantages it brings. We know that the contract team is capturing twice the amount of information they were previously, which leads to a lengthier data entry process for this specific team. We know that the company’s revenues and customer service levels are hurting due to the backlog.
First, we adjusted the training material to reference a process with fewer steps. The contracts team had already discovered how to shave off a few steps in the process to cut their entry time and their suggestions were sound. This would save time for new team members, but was already reflected in processing times for existing employees.
Second, we made recommendations on ways the application could be improved in the future to shave some time from the process, but the suggested changes were actually very minimal. With our changes, we felt we could reliably shave 30 seconds from the 10 minute process, but we could not decrease the process to 5 minutes, the time claimed for the old system.
Our last suggestion was to give the process time. That might seem to be an odd suggestion until you understand contract renewals. Customers generally renewed their service contracts on a yearly basis, but it had only been 6 months since the CRM system had been implemented. While all the old contract data was converted into the new system, the number of data elements that were missing from the old system were half the total data required in the new system. Most of the additional contract entry time was taken up by filling in this missing data. By the next year, more than 80% of the contracts entered would take significantly less time to renew because all needed data would exist in the CRM tool. In the short term, we suggested making use of contract labor to process the easier to process contract renewals.
When the process times for the division as a whole were taken into account, total labor time actually decreased with the implementation of the CRM tool. Only five employees had increased labor time while 225 saw a decrease. The entire point of a CRM tool is knowing your customer, and by forcing entry of customer data at the start of the process, contract entry, the rest of the division saw great savings, plus customers generally had a better overall experience when interacting with the company.
Options We Discarded
The first rejected option was to contact each of our customers who were not yet up for renewal and get the needed information and have a temporary team do nothing but ‘fill in the gaps.’ The problem with this was that most customers hated doing inventories of their products at renewal time and were unlikely to do a supplemental inventory mid-contract just to fill out the gaps in our information. We expected a really low response rate were we to try this, so it was deemed a waste of time to even pursue.
Next, we suggested that the invoice printing and processing be sent to an outside vendor who specializes in mass mailings. We suggested modifying the system so that the documents automatically printed at a remote site and not in the contract entry personnel’s location.
Lastly, we discussed an option that was eventually enacted once labor costs went too high. The entire department was outsourced to a low cost region where the company had established a regional office. Margins on extended warranties usually need to be large to support the infrastructure to support the warranties. With a high labor cost for data entry and a market that couldn’t tolerate any price increases, the company was left with little alternative than to shrink overhead or reduce their service. Maintaining service quality won at the end of the day as that was what was important to the customer, not the nationality of the person entering their contract.
So how did you do? Did you think of alternatives that we did not? Do you disagree with our decisions or reasoning? Let us know in the comments!