Original Publication: Customer Management Insight - September 2007
View Online
Your company’s customer service agents wear many hats, but perhaps their most important responsibility is acting as the public face of your business. Agents are on the front line, serving as one of the few — and sometimes only — interfaces between the company and its customers. This contact, while limited, can define the reputation of a company both in the minds of consumers and in the opinion of regulators. Successful interactions can result in satisfied customers, word-of-mouth referrals and increased revenue over time; however, a less-than-satisfactory experience can have exactly opposite results. Companies have suffered bad press, consumer complaints, loss of business and enforcement actions from state and federal law enforcement agencies because of the poor conduct of their customer service agents.
Well-designed and properly implemented customer service procedures and call center practices are critical to ensuring a positive interaction with customers and compliance with consumer protection laws. Policies dictating agent behavior are often created with the best of intentions, such as increasing revenue, maximizing compensation for agents, and responding to consumer needs. However, if compliance with company procedures and relevant laws is not a central goal, even the best of intentions can result in unforeseen and problematic consequences. The following are an overview of key “do’s and don’ts” to keep in mind in when developing customer service and call center procedures, with a particular emphasis on striking a balance between increasing revenue, maintaining a satisfied customer base and achieving legal compliance.
Do design human resources policies to ensure that proper candidates are hired and retained.
Hiring practices should ensure that new-hires possess characteristics that indicate a willingness and ability to comply with company policies. Research into the backgrounds of potential candidates, including drug screenings and criminal history checks, can be helpful in identifying risk factors. Information regarding a candidate’s creditworthiness may also shed light on, but certainly not be dispositive of, a candidate’s ability to abide by company policy, as poor credit could be an indicator of a predisposition to cut corners or commit fraud.
Companies should also take steps to limit attrition among agents. High attrition rates may signal underlying sources of stress and dissatisfaction among employees and may also indicate that, at any given time, a number of agents do not plan to stay with the company.
These agents could be more inclined to violate policies and procedures for their own short-term gain. Further, high turnover rates result in a constant influx of new agents. These agents may be more likely to inadvertently violate company policies due to inexperience.
Do implement effective and ongoing training programs.
Training programs should clearly communicate the importance of compliance to employees, particularly for new-hires. Training materials should also be regularly reviewed and revised to ensure that messaging is up-to-date and consistent with the company’s policies and changes in the law.
One source of information regarding necessary improvements in training may be feedback from employees who have completed a training program. A formalized process for identifying the ongoing training needs of agents should include interviews or questionnaires issued immediately after initial new-hire training. Subsequent feedback, obtained 90 to 180 days after agents are on the floor and taking calls from customers, may be useful to identify additional areas where the training could be improved.
Do prepare telephone scripts and call-handling guides with compliance in mind.
Central to an effective compliance program are telephone scripts and call-handling guides that provide clear and unambiguous direction to agents. If customers request information outside of the scripts, agents should be directed to solicit the assistance of a supervisor or manager, as consistent messaging is key to compliance.
In that vein, scripts should be reviewed by a company’s legal or compliance department prior to being used and whenever revisions are made thereafter.
Do monitor and supervise customer service reps for compliance issues.
Monitoring calls on a regular basis is an effective way to ensure compliance with company policy. Monitoring should be conducted by a variety of means, including side-by-side (where instant feedback can be provided) and remotely (where the agent is unaware that the call is being monitored). In order to obtain a true picture of an agent’s behavior, a statistically significant number of calls should be monitored on a monthly basis. Lastly, it is important to check with your legal department prior to monitoring, as state laws regarding authorization to monitor and record calls may vary.
Span of control (the ratio of frontline agents who report directly to a manager or supervisor) is another important factor in maintaining compliance. Factors to consider in determining the proper ratio include the mix of new versus experienced agents, user-friendliness and technological capabilities of computer systems, hours of operation and volume of calls.
Typically, the optimum ratio falls between 10 and 15 agents per supervisor.
Do develop compensation and incentive packages that encourage appropriate and compliant behavior.
Compensation and incentive packages are often designed to encourage customer service agents to optimize sales. While this goal is undeniably important, care must be taken to ensure that compensation programs do not inadvertently promote unethical behavior. Plans with higher incentive quotients (low base salary, high bonus potential) reflect a higher degree to which agents must persuade consumers to purchase goods or services and, as such, could invite non-compliant behavior. State and federal regulators have taken notice of this dynamic, and have brought enforcement actions against companies whose compensation programs were too heavily skewed toward bonus payouts for completing sales.
One way to encourage compliant behavior is to develop programs that are: 1) weighted more heavily toward base salary (60 percent or higher base salary is a good target); 2) comprised of individual and team incentives; and 3) incorporate other factors indicative of quality customer experiences, such as customer survey responses, low call-back rates or lack of consumer complaints.
The compensation program for site-level supervisors and management also can play a crucial role in compliance. Tying supervisor and manager compensation to compliant behavior by agents provides a strong incentive for compliance at all levels. Management also should regularly review agent compensation reports for irregularities. Higher-than-normal bonus payouts or unusual changes in payout amounts from month to month may be indicators of non-compliant behavior.
Do maintain and enforce disciplinary policies that provide clear guidelines for violations of company policies and procedures.
Detecting and reporting violations of company policies and consistent application of disciplinary provisions is critical to compliance. Developing written standards of conduct for all employees (agents, supervisors and management) ensures that baseline policies and procedures are known to all. Following up with a system that detects violators and includes, but is not limited to, monitoring calls and reviewing compensation reports alerts agents that the company views compliance as a high priority. Consistent application avoids perceptions of discrimination or favoritism, reduces the likelihood of confusion among agents, and, again, sends a clear signal to agents regarding a company’s commitment to compliance. To ensure consistent application of disciplinary policies, discretion in applying penalties, particularly at the site level, should be limited.
It is also important to maintain employee records regarding all disciplinary actions. Documentation of violations followed by detection and application of disciplinary policies shows that a company understands its compliance obligations. These records also may be extremely helpful in the event of a regulatory investigation or litigation.
Don’t think that outsourcing customer service will relieve your company of liability.
Outsourcing customer service functions does not necessarily alleviate a company of legal liability. In fact, regulators have found numerous companies liable for statements made on their behalf by third-party service providers. Contracts with outsourcers should contain provisions requiring compliance with company policies and relevant laws. Companies should also closely monitor the activities of outsource providers.
Don’t fail to respond to consumer complaints in a timely and comprehensive manner.
Consumer complaints are generally the single most important factor in a regulator’s decision of whether to instigate an investigation. High levels of complaints, particularly referrals to consumer organizations, the Better Business Bureau or state and federal law enforcement agencies, are sure to attract attention. Companies should set benchmarks for responding to complaints received directly from consumers to head off referrals to these agencies. Companies that receive repeated referral complaints should have a dedicated team ready to respond promptly and comprehensively to the issues raised.
Don’t underestimate the importance of quality representatives.
A single rogue, non-compliant employee can expose a company to extensive liability, particularly in a high-volume environment. Care must be taken to ensure that every agent meets required standards and that he or she abides by company policies and procedures.
It is also important to note that an agent never knows the true identity or profession of a caller. Many questions have been raised (and likely more than a few investigations opened) by regulators who experienced first-hand compliance issues in their personal interactions with customer service representatives. Agents should assume that they are speaking with a regulator (or the CEO of the company) at all times.
jeff Kauffman is an Associate in the Advertising Law Practice Group of Kelley Drye Collier Shannon.
jkauffman@kelleydrye.com
.
