Calling Sacramento

California's state capital and its suburbs are fast becoming the major port of call for many people on one end of an 800 number.

By Fred Sandsmark

If you dial a toll-free number regarding your E*Trade account, EarthLink membership or Apple iMac, there's a good chance you'll talk with someone in or near Sacramento. These companies, and dozens of others, have opened call centers in the capital region over the past three years. And the growth isn't limited to technology companies: Wells Fargo, The Gap, Federal Express, Safelite Auto Glass, USAA auto insurance and Examen (a legal information service) have established centers here too.

Sacramento's boom is part of a broader trend that's seeing spectacular growth in the use of 800 numbers. Last year, AT&T alone carried about 30 billion toll-free calls-some 40 percent of all voice calls on its network.

"Behind most 800 numbers is a call center," says Andy Bencosme, EarthLink's senior manager of technical support. Bob Gills, president of CallCenterCareers.com, a Web site for call center professionals, estimates that there are 80,000 call centers in the country, employing more than three million people.

Advances in telecommunications technology and customer-centered business practices have converged to make these telephone hubs the centerpieces of many companies' growth strategies.

On the technology side, 3Com, Alcatel, Cisco, Lucent, Nortel and others are refining Automated Call Distribution (ACD) systems-the maligned but effective machines that, at their most basic, ask callers to "press 1 for this, press 2 for that and press 3 for something else." But current ACD technology is a far cry from the proverbial voice mail hell. Some systems have voice recognition, so callers don't have to punch buttons; the best ones not only route calls to the agent who's best able to deal with the problem, but they also track the content of the calls and record how quickly-and how well-they're answered. This allows call center managers to budget human and technology resources better.

Customer Relationship Management (CRM) has also played a role in call center growth. The term applies to a variety of business practices that often revolve around an interdepartmental database of customer contacts-the kind of database that's essential in a call center, where a customer may never deal with the same person twice. The goal of CRM-to keep customers happily returning for more-is essential in the era of eCommerce.
"Customer retention is so key," says Gills. "When you're one click away from the competition, it's easy to lose people if you're not on top of your game."

Oracle, Hewlett Packard, PeopleSoft and Siebel Systems are just a few of the big guns producing CRM packages. When it works right, CRM does more than simply solve problems and keep customers happy; CRM can also predict difficulties. For example, EarthLink claims it can determine when a customer might cancel his service based on how infrequently he uses it. Customers in this danger zone are pre-emptively contacted to see if they need technical support or other help-an extra month of free service, for example-to keep their accounts active.

According to market research firm Datamonitor, CRM focus can, in some cases, turn a call center into a profit center by providing opportunities for more sales. This is especially true in new, technology-intensive centers like many in Sacramento.

EarthLink, the nation's second largest Internet service provider with nearly five million users, employs 1,000 people in its 100,000-square-foot Sacramento center near the intersection of Interstates 5 and 80. One of seven operated by EarthLink in the United States, the center occupies foul-floors of a sleek, glass-sheathed office tower. It handles a staggering 65,000 calls per week between 6:00 a.m. and mid night-about a quarter of EarthLink’s total support call volume.

At first glance, the place appears to be a standard cubicle farm, albeit one with perhaps the largest collection of thousand-dollar Herman Miller Aeron chairs in the same place. Putting greens and other break-time playthings are wedged between cubes; the Macintosh support area is demarcated with signs, reminiscent of Checkpoint Charlie, announcing, "You are leaving the Windows Sector" in four languages.

But high spirits and comfy chairs can't mask the daunting workload. The most apparent reminder is an LED signboard in each room ticking off the number of calls waiting and how long callers have been holding. More detailed information on phone queues, including the amount of time each individual agent has been on a call, is available to supervisors. The data is generated by the center's telephone switch and fed to its PeopleSoft Vantive CRM application.

Because Sacramento is one of several EarthLink facilities, incoming calls are routed at "cloud level" -a procedure where the company's central ACD system sends a call to Sacramento, Atlanta or some other center based on which one has the shortest wait time for a particular need. All centers are constantly supplying performance feedback to the cloud-level ACD. In Sacramento, calls average 11 minutes and are answered in about 30 seconds -- both better than EarthLink's national averages.

While EarthLink's center is among the largest in the Sacramento area, eHealthlnsurance.com occupies the other end of the spectrum. Although it's headquartered in Sunnyvale, the company's call center is located in a quiet business park in suburban Folsom and employs 92 people who handle about 35,000 calls per month.

Operating from 5:00 a.m. to 11:00 p.m. Pacific time, the eHealthInsurance.com center is a highly specialized operation: The staff is mostly licensed insurance agents. Many employees are licensed in several states because health insurance is largely regulated on the state level and the company does business in 47 states.

"A number of us are licensed in all the states," says Rob Hurley, vice president of sales, "and then we vector callers from certain regions of the country to our people licensed in those    states." The Lucent Definity ACD does this automatically based on Automatic Number Identification (ANI), something akin to Caller ID, which provides the caller's phone number.

Data from the Definity switch is linked to eHealthInsurance's own Web-based, back office knowledge base-something Hurley plans to augment with a third-party CRM application as the center moves toward 24-hour operation.

Data collected by the Definity telephone switch is utilized extensively in all aspects of eHealthInsurance's business planning. "We can get tremendous data off of it," says Hurley. "We know what lines are blocked at any time, so we know how many callers were blocked from getting in here. And we can read the call volumes and see how they relate to the advertising that we've done."

An Internet pure-play, the company also advertises its telephone number, and the ACD data helps Hurley track customer response to various promotions. "That's the beauty of electronic commerce-you can measure stuff," he says. "You can measure performance metrics quite conveniently."

While operations differ, one thing EarthLink, eHealthlnsurance and other call centers share is the Sacramento-area workforce-a pool of well qualified people particularly well-suited to the call center business.

"Sacramento did extremely well in a nationwide search," according to EarthLink's Andy Bencosme. "We did some trial ads in different newspapers to see the response rate, and the technical level of the people that responded in Sacramento by far surpassed every other location that we went into."
For eHealthlnsurance, the draw was the number of workers with experience in health insurance. "We chose this area because it's a great labor force for health care," says Hurley. "There are very significant health care companies in this region, and they have large labor pools that we can attract."

However, some of the region's insurance carriers are also eHealthInsurance's suppliers, so Hurley doesn't directly target their staffs. Instead, his full-time recruiter uses multiple channels--newspaper ads, online job boards, universities and employee referrals.

Barbara Hayes, director of the Sacramento Commerce and Trade Organization (SACTO), says there are other factors besides the labor pool drawing call centers to the region. "We have available space that's ready to go and the telecommunications infrastructure in Sacramento is second to none in the state of California," she says. The region's seismic stability is also appealing to some companies.

In fact, the area is so desirable that SACTO, whose mission is to attract businesses to the region, doesn't actively recruit call centers. Why not? "Because they're coming so fast and furious," says Hayes. "If you look at our prospect database--which has all the companies that ask for information-probably close to 40 percent of them are call center- or IT-related."

The Sacramento labor pool may be a big draw, but it's not a bottomless well. While some call centers require specific skills, others welcome entry-level workers. To increase the supply of potential employees, two separate training programs have sprung up--one run by the Sacramento County Office of Education's Regional Occupational Program (ROP), and one through the Los Rios Community College District. Between the two, more than 100 people--many from welfare rolls, fast-food counters or retail jobs--have trained for call center work, and more are in the pipeline.

"The call center industry is attractive to them because of the high starting wages and benefits and schedules," according to Bruce Winner, head of the Los Rios program. Hourly wages start at $10.25 on average with full benefits. "These are very good entry-level jobs," Winner says.

Bob Gills of CallCenterCareers.com says call center jobs are also well suited for people looking to gain a foothold in technology industries. "There's a lot of entry-level jobs in the call center industry, and certainly they all make use of technology," he says. "So anybody that hasn't had that exposure to technology is going to get it in a call center. It really does provide opportunities for those that are disadvantaged in some way or another."

Los Rios recently received a grant to its training program that should be able to handle between 300 and 500 people annually by 2001. Los Rios maintains an industry advisory board of 20 call center companies who assist in defining its curriculum.  Some board members let trainees tour their facilities, and the program's co-sponsor, the Sacramento Employment Training Association, is used to pre-screen job candidates.

A good deal for workers, training programs are popular  with employers because they reduce employee turnover, one  of the biggest problems in the call center business. Call centers have one of the highest turnover rates of any industry in the nation, some statistics indicating as high as 75 percent. Yet research by Purdue University shows a call center employee with extensive training is half as likely to leave within a year (11 percent versus 23 percent) as one with less training.

Call center work can be stressful-Bob Gills calls it "a tough grind"-but employees don't necessarily burn out. In some cases, they leave because their on-the-job training makes them extremely valuable on the open market.

"After six months, we've trained them out of our price  range," laments EarthLink's Bencosme. His employees are often able to get better pay at IT companies or manufacturers like Intel and Hewlett Packard. To slow the flow, EarthLink provides good benefits and tries to maintain a pleasant and fun work atmosphere--thus the putting greens and Aeron chairs. The company has also established two career tracks for its call center employees--one leading to   management, the other leading to more complicated technical challenges.

Earth Link's dual career path was critical to employee retention. Many workers possessed good technical acumen but less aptitude for managing people. "Before the career paths, we'd lose good people who weren't cut out to be managers," says Bencosme.
EHealthInsurance has a full-time trainer on staff to keep its agents current--both with technology and insurance industry minutiae.

Career tracks and ongoing training are essential because the call center business is presently in the midst of a sea change from telephone support to multi-modal online support.

Indeed, Bob Gills of CallCenterCareers.com says the term "contact centers" may be more apt than "call centers," since customer service is moving to multiple channels-including telephone, e-mail. Web chat, video, IP telephony and wireless devices. "Customer interaction centers" is another dot-com term for call centers.

Purdue University predicts that by 2005, 35 percent of customer contact will be handled by Web self-service, 30 percent by telephone, 25 percent by e-mail and 10 percent by other means. Technology is helping the change, with companies like Kana Communications and eGain Communications--along with Oracle, Siebel, and other players--providing applications that act like ACDs for incoming e-mail. Bob Gills    says the hot jobs in the future will be for people who can integrate and maintain multiple communication modes.

But the future is now, and the change is here: In June, for the first time, eHealthInsurance handled more contacts via e-mail than by telephone.

Hurley believes his company's success depends on changing to meet customer needs. "This center is our response to however the consumer wants to interact with us, and it's critically important that we try to tailor the center to adapt to those different channels of communication as they evolve."

AfterWords

This article first appeared in Silicon Valley Techweek, September 4, 2000. The most embarassing omission is that it doesn't mention offshoring of call center work, which became a very big issue within a year of the article's publication. My only defense is that none of the experts I spoke with mentioned it, either!

Copyright © 2000, 2006 Fred Sandsmark / Marble Publishing

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