To Sell or Not To Sell: Determining the Tradeoffs between Service and Sales in Retail Banking Phone Centers

Throughout the financial services industry, the call center is being recognized as a critical delivery channel, helping firms to keep existing customers, expand their business, and control costs. For banks, call centers provide a cost effective means of servicing in customer requests, and are essential in retaining customers. The traditional role of the call center as a question and answer base for the customer is still a strong motivator for their existence, There is, however, a growing tendency to blend sales related activities with traditional transaction based activities at a financial service firm's phone center. Institutions view the opportunity to sell additional products as the key to a successful phone center operation. While service-oriented businesses in other sectors of the economy are experiencing a similar proliferation in call centers, the dichotomy of a service center and a sales center is much more apparent in banking. Other sectors do not fully blend service and sales in the call center operation as fully as is the desire of financial services firms. The move to sales elsewhere in the financial services industry has been ongoing for some time. The last decade has seen a growing number of banks implementing cross-sell programs across their branch networks in an effort to become higher profit, sales-driven organizations that leverage the delivery system expense structure. Today, these sales efforts in the branches are being extended to alternative delivery channels, a major one of which is the phone center. Lack of management focus, poor hiring practices, lack of training, ineffective organization for marketing, poor service, and not knowing customers or products are only a selection of some of the barriers between resources and sales in banking that have been documented. This paper identifies some of these roadblocks in the context of retail banking phone centers. The authors show that the nature of phone center operations makes them extremely susceptible to the increasing and changing resource needs of a sales organization. The authors provide a snapshot of retail banking phone centers, a review of related literature, and then present an analytical approach to characterize the tradeoffs between service and sales in phone centers. The situation at a specific phone center is described and analyzed. The authors demonstrate that cross-selling costs. In addition to its visible costs, such as training and technology, cross-selling is shown to have detrimental effects on customer service because of the additional burdens and operational load it creates on the system. With a move to more selling, capacity needs sharply increase in terms of customer service representatives and information processing resources. These capacity implications can be easily overlooked, since they are less visible than what one would expects to encounter. The authors show how restaffing can overcome some of the congestion related problems induced by additional sales activity. The authors use a performance model described in the paper in conjunction with an optimization model to determine economically optimal staffing levels for call centers. However, they note that staffing is not the only factor to be considered. Design of customer request processes and human resource practices that support the design are equally important in determining the success of a cross-sell program. The authors intend a second phase of this study a detailed filed study of call center operations across the entire financial services industry.