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Don’t Let Customer Service be a Casualty of the Recession

Don’t Let Customer Service be a Casualty of the Recession

In 2008, the quality of customer service was finally on the rise in the United States. Executives had heard the cacophony of complaints and finally decided to do something about it. Even some of the customer service offenders ranked worst in independent surveys – telecoms and cable companies – were making progress. But these advancements are now at risk, despite the fact that customer service is crucial for the success of all organizations, from the one-person doctor’s office to the largest bank or telecom. There is a direct positive correlation between customer service and customer retention, as happy and satisfied customers are more likely to stay with an organization. In turn, revenue and profitability are directly related to customer retention.

When the economy gets tight and revenue falls, companies try to cut operating expenses wherever they can; reducing headcount in functions perceived as “overhead” is considered a good way to do this. According to the US Department of Labor January 2009 Employment Situation Summary (released on February 6, 2009), US non-farm payroll employment was reduced by 598,000 jobs in the first month of 2009. 3.6 million non-farm jobs were lost in the US since the start of the recession in December 2007, with approximately 1.6 million of that total in the last three months (November 2008 through January 2009). While the Labor Department statistics do not show the functional areas of loss, based on history, many of these staff cuts are in customer service and contact center. DMG estimates that more than 80% of companies have already or in the next six months will cut customer service or contact center staff as a quick way to reduce expenses. Unfortunately, many CFOs perceive contact centers as being staffed with expendable, not-highly-trained employees.

I appreciate the need to make tough decisions to keep a business solvent, but I question the rationale behind cutting customer service before other staff and operating areas. During turbulent economic times, like the present, contact centers often receive more calls than ever. Many financial services contact centers are receiving additional calls because people are worried about the security of their savings and investments or want to refinance. Insurance companies are receiving more reimbursement requests as people watch every penny; this generates more calls to check on the status of pending claims and to argue their disposition. And, consumers are calling their telecom and cable providers to save a few bucks by changing plans or questioning bills, even for small amounts. So, while staff is being cut, call and inquiry volumes are increasing, not a great combination for customers or agents.

Most large contact centers with more than 250 agents can sustain staff reductions of 10% to 20% without a major impact on the service level. This can be achieved by making better use of existing applications, specifically workforce management and self-service. However, once the cuts go deeper (and they are expected to), service quality suffers. Customers will find themselves waiting longer to speak with overworked and often unhappy agents.

DMG Consulting believes that leading companies will take a contrarian approach during this recession. They will strive to preserve their hard-earned and expensive gains in customer service and satisfaction. Sure, cuts to contact centers and service organizations will be necessary, but they should not be any greater than in any other area of the company. We recommend that companies prioritize the customer-facing activities that directly contribute to revenue generation, customer retention and customer satisfaction, even at the expense of traditionally protected areas. Think about it this way – if a company puts its customers first when times are bad and they are in need, customers will put the company first when times are good. Yes, this is trite, but it’s also true.

Ask the Experts


My call center is considering hiring work-at-home agents. Can you provide any sample work-at-home agent agreements that outline the accountabilities of the agent and the company? We want to make sure we have everything covered.


What is included in your work-at-home agent agreement will depend on your business model. If you hire contract employees in your call center, you will need one type of agreement. If you are hiring salaried employees, you’ll need a different agreement with employee-related terms. The exact terms for either agent agreement should be written by your legal department and must take into account employment or contractor-related terms that are relevant in your state.

Here is a list of categories that a work-at-home agent agreement may address, depending on whether it’s for employees or contractors… [Read More]

DMG Consulting LLC is a leading independent research, advisory and consulting firm specializing in unified communications, contact centers, back-office and real-time analytics. Learn more at