When a company decides to turn to a call center to handle its customer service, company heads assume that signing a contract is the best way to get the best service. Not necessarily, says Tava Olsen, associate professor of operations and manufacturing management in the Olin School of Business at Washington University in St. Louis.
“Many common call center contracts misalign the incentives so that a call centers, acting in its own best interest, actually gives contract customers quite poor service, when considered in practical terms beyond the contract,” said Olsen.
“Because these contracts only specify that 80 percent of the calls must be handled quickly, there is no contractual obligation for the call center to treat the remaining 20 percent of the calls well.” Olsen said. “That 20 percent is probably going to be neglected during peak times when the call center needs the most capacity. Delays for these calls can be extremely long with no contractual repercussions.”
Olsen contends that such a policy is rational for the call center because when non-contract, pay-as-you-go customers receive good service, they might generate additional revenue for the firm. What’s more, those clients could become repeat-customers or even enter into contracts of their own. However, the paper shows that such policies are undesirable for the customer. In fact, if the call center schedules calls strictly from its own preferences the contract customers can end up with poorer service than if they hadn’t signed a contract in the first place.
To find a possible solution that could benefit the contracting company, Olsen and Milner’s study suggests seeking more detailed contracts that do not result in the call center handling a client’s calls inconsistently, rather it would provide the customer with the preferential treatment they were expecting. The benefits of such contracts compared with the standard service-level contracts described above are shown to be potentially large for the customer without being unduly taxing on the call center.