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Reinsurance                 Last update February 9, 2007



How important is the management of telephone usage to a business? If you add up the total minutes of telephone usage in a month, a figure that should be available from your telephone reports, and compare it to the total working minutes available from everyone in the company, you will find that the telephone is by far the biggest consumer of time you have. And that is after the email revolution. If you sit patiently listening in on the flow of normal calls in the company, you will be surprised at how much of that time is wasted. Much of this section is about reducing your phone bill, because that is the easiest part. Training people to pleasantly get to the point quickly, and to pleasantly end a conversation that is over, is the hard part. You will also find it profitable to review your practices to eliminate time wasters such as interminable robot messages which assume callers have never heard the "beep" before or don't know what to do after they have finished leaving their message (the robot carefully advises them to hang up). Another wasteful practice is frequent password changes on the voice mail system. This actually reduces security while driving your employees nuts. Phone message passwords are actually unnecessary when accessed from the recipient phone.



Most companies are paying a rate per minute that is higher than the telephone company's lowest offer, and can get a lower rate just for the asking. It can be difficult to find out from the phone company just what the lowest rate is, but you know you can get residential long distance for 5 cents a minute, so your company probably can too.

It may have been several years since the telephone contract has been reviewed, and rates have been dropping dramatically. Even when the term of the previous contract has time to go, the phone company will still offer a lower rate. You are always required to sign a long term contract when you get a lower rate, but again, if you ask, the representative will promise you that when rates go down again, you can get the lower rate. That promise is a negotiating tool, not a contract, but it will be helpful. But you have to ask every time.

If it has been a year or more since the last busy study, also known as a traffic study, it is likely that the number of lines in and the number out are not optimal. The study will measure the number and duration of calls on each of your lines. This allows you to select a desired service level, the percentage of busy signals tolerable during peak periods, and derive the optimal number of lines. There are certain peak periods on outgoing calls caused by break periods, where all the employees try to make personal calls all at once, that are impossible to service and should be ignored. The ubiquity of mobile phones probably defuses that issue anyway.

The phone company will be happy to do a busy study at no cost to the company. If there are fewer lines than needed, it generally shows up in complaints from the field, or officers calling in. Therefore in the usual case, there are too many lines and a significant saving can be realized with no effect on service.

Comment: You had some great insights on the Phone system. Our traffic study showed that instead of the 46 lines we had for local calls we only needed 7 or 8. That meant only one T1 instead of 2, as soon as the T1 contract is up, and $30 a pop we save for each of the smart trunks we didn't need (46 less 8). Of course they didn't give up that traffic study info easily it took a diligent effort to get them to share it. Jeanette Higgins.

Many companies have more phones than people, and more extensions than phones. Extensions are not trunks, so the cost is apparent only when the block of extensions you purchased are used up. However, when those plugs in the wall are functional with an extension, you don't have control of who plugs in.

When phone units and extensions are related to specific people, you have the beginning of control. You still have to examine your phone records, but at least you know where to start when you suspect a problem. In one company one extension with a noticeable long distance bill was located in the garage elevator. It was a dial able extension rather than an emergency hook up. That may be a little more negligent than leaving live plugs in unused areas of the building, but not more than leaving connected phones in those areas.

Mobile phone calling plans also get out of date quickly as prices drop. Even though there is now a cheaper plan that allows more minutes, and even if your plan is no longer offered, the phone company will let sleeping dogs pay. That happened to me and if you have a number of mobiles, it has probably happened to you.

It is just as wasteful to have the wrong plan as it is to have an outdated plan. If the user never runs over the limit purchased, you are purchasing too many minutes.

While figuring out a land line phone bill can be a challenge, a review of mobile phone usage is simple at the web sites of the carriers. For example ATT's site details available calling plans and cost, and registration of an individual phone not only shows the plan but allows tracking of usage. Tracking the minutes used is important, since many people will tend to buy a plan with too many minutes, and then use the mobile instead of a cheaper land line because they have all those minutes. The issue of personal use fits in there somewhere also. One company routinely paid a combined bill for a number of mobiles, but saw no detail and didn't ask that the detail bills be turned in. It is much more effective to have the user pay the bill, and then attach a copy to an the expense account. Even if you never look, you at least look like you are looking.

Mobile phones provided by the company to employees tend to be a lot like company credit cards. If the charges are billed directly to the company, whether as individual bills or in a large list billing, the whole expense becomes invisible, and the employee will often not even see the bill, or have any incentive to chose the most efficient calling plan. In fact, the incentive is just the opposite. The plan with the largest number of minutes management will allow will permit personal use with no concern, since it is now "free".

The best approach is not to provide company mobile phones to anybody. You will find that the people who need to be reached will, like most other people, provide a mobile for themselves. But if you do provide phones, presumably you intend them for business use, and not as a perk. If that is the case, the only controllable way to handle charges is to have the employee submit the bill on an expense account, calculating the percentage of business use. That percentage would be the percentage of the monthly charge reimbursed by the company. This approach is likely to lead to a conscious limiting of personal use, as well as the selection of the most appropriate calling plan, since it will be hard for the person approving the account to ignore a bill appearing every month where the minutes paid greatly exceed the minutes used.

The phone companies used to offer something called WATS, wide area telephone service, which meant the company had unlimited long distance calling for a fixed price. Since incremental use was free, companies allowed employees personal use after hours, and created remote access numbers so the employees could use the lines from home. The WATS went away, but often the remote access numbers and the personal use did not.

There is no economic justification for retaining home access to the company's phone system. The residential long distance plans generally have lower charges per minute than are available on business plans. Business calls from home should be paid by the caller and put on the expense account. If the company wants to provide personal calling free as a perk, it is cheaper to just let the employee turn in the expense account. The company at least knows how much and for whom it is paying. There is also a serious control problem with remote access. The numbers, and passwords if any, tend to get out to favorite people, and those favorite people have favorite people, and so on. Your phone bill will show the calls made on the number, but will give no indication of where the call to the remote access came from.

Is it time to consider IP telephony? The early problems with calling over the internet appear to have been worked out, and it seems possible to get unlimited long distance calling at a fixed low cost, or at a per minute cost a small fraction of regular long distance. The problem is that switching from your present system is tantamount to a huge conversion with a marginal pay off. The per minute charges on long distance on the old systems are dropping so rapidly it is doubtful there will be much of a payoff for a lot of headaches and the diversion of the significant IT resources required to make the change.

You are likely to see pressure to make the conversion from your IT staff, as well as from vendors. The technology is so superior it is conceptually enticing to IT types. A recent NYT article likened the regular telephone technology to tin cans connected with a taut string. The fixed connection occupies a continuous place on the line, so the T1 capacity is limited to 24 digitized calls at a time. Internet protocol sends information in packets that do not occupy continuous connection, so the capacity is many times greater. The phone companies have too huge an investment in circuit switching to rapidly switch (NPI), ) but if they were starting from scratch today they would use packets.

The company needs to have a basic set of phone usage reports. This is particularly important for the units such as policyholder service which provide service primarily by telephone, as you are measuring performance as well as expense. The basics are the number of calls, duration of calls, and amount of off line time. All modern internal phone systems accumulate this data, but often leave it to the company to create reports from the raw data. If you don't have the necessary reports it is because nobody is going to do the programming until it is requested.

When the reports aren't available or if available, aren't used, it is likely you will have huge discrepancies in the performance of individuals. In one company, one clerk was handling 43 policyholder calls a day while the clerk next to her with the identical function was averaging 12. Even posting the reports daily on the intranet failed to resolve the problem until the manager addressed it with the clerk.

Posting performance reports will not manage the unit automatically, but having the information generally available can redirect the attention of the immediate manager. Posting also provides recognition of good performance and generally increases the work accomplished.

Most policyholder and agent contact is still by telephone, and the training and facilities provided for the service personnel largely determines how that experience will go. I asked an expert, Diana Crosby, SVP at American Income Life, to comment. When she established the training program in policyholder service, comments immediately started coming in from the agents as to how friendly everyone suddenly was. Diana put mirrors in front of every person and asked them to smile while they were talking. The Telephone Doctor is worth every cent.

Comment by Ms. Crosby: The training tapes we've used for years are from the Telephone Doctor. Web site is www.telephonedoctor.com. It's basic customer service that doesn't get outdated. In addition to those tapes, we installed software that provides us with data on how fast calls are getting answered and we have a standard to answer 95% of all calls within 20 seconds and that 98% of all calls coming in get answered (meaning they don't backup in the queue and eventually hang up because we can't get to them fast enough). As far as the cubicles, they're the best thing we've done in all departments. For POS, there was a significant improvement directly related to volume of calls that are received. It was much quieter, allowed personnel to focus on their task at hand and not the neighbors at every side. Also made them feel they worked in a "real office" (had some actually say that) and my perception was that they took more pride in their job and that came through in the service they provide to the customers.

Queue control is available in all commercial phone systems, but like report data, it has to be programmed and used. Incoming calls can be directed in just about any way imaginable. In my experience the management thought given to the arrangement of the queue is rudimentary at best. You may be surprised to find that the immediate manager cannot tell you exactly how the queue works. The telephone work load reports should show when the queue procedure needs work.

For example, you can set your service unit so that some operators' primary function is the phone, some take calls only when the primaries are busy, and some answer only when all others are busy. Within each priority set you can direct the new incoming call to the free operator who has handled the fewest calls (giving the most efficient operators a respite reward). One effective idea was to establish a fourth level that rings a phone with a loud ring and a flashing light (available for the hard of hearing at Radio Shack) so that all personnel know when all open lines are busy. There will always be some personnel busied out who can come back in temporarily to cover the surge.

Phone answering menu systems (robots) are an absolute necessity and most callers expect to start with one when they call any substantial company. The system improves call distribution, but there is no reason to make the robot more irritating than it has to be by droning on, treating the caller as if he has never heard a answering system before, or, worse, never offering the option to speak to a human or burying it so deep no one can stay on long enough to get to it.

The best systems approach to your phone robot is to call the general office number yourself. If you hate it, so does everybody else. A company that cares about the caller restricts the menu to 5 or 6 selections and has an early offer to opt out to a human. The first menu item has to be "if you know your party's extension". You can get away with a short mention of your web site service in the introduction. The point when people start screaming is when you start to explain how to use a phone, for example "if you wish to leave a message press 1", or "at the end of your message you can press 1, or just hang up". Another real dumbo is "At the tone, please leave a message".

I need to run a contest to find the most irritating voice mail answering message in the world. You could win a sweatshirt with "most irritating" on it. My favorite is the one that, after saying "I am either out of the office or on the phone, so please leave a detailed message and your phone number, and I will return your call as soon as possible ..." , and then adds "If this is an emergency please press 2 to talk to my secretary Vana". If you do press 2, you of course get Vana's voice mail, which then starts with "I am either...".

How about the ones where a real person answers and tells you the person is unavailable, and asks if you would like his voice mail? If you say yes, the voice mail then asks you if you would like to leave a message, and if so, press 1. If you press 1, the voice tells you you can leave a message after the tone. It doesn't usually end there, but you get the idea. There is usually a number you can press to skip all that, which is probably why the insiders never think about how much of the public's time is wasted with all of that.

A creative friend's phone message had no words at all, just a short burst of him playing the piano, followed by the "beep". People knew what to do after the beep.

What about automated information for policyholders and agents? The idea is to save your service person's time by having the computer respond from a database to preset questions the caller selects by pressing keys. The more modern systems allow the caller to verbally select. There is a reason these scripts rarely give an option to opt out to a human, or if they do, it is so buried you can't get to it. Most people will put up with a robot directing a call to the right person or department, but they will not put up with a robot answering all of their questions. They called to talk to a person, and they will press the operator button the first chance they get. These systems are expensive, require daily at least downloads from your files, and don't work. That is, they are so seldom used by the customer that the time saved does not justify the cost.

One company had set up such a system instead of a web site, apparently on the theory that everyone has a phone, but not everyone has a computer. When, several years later, the company added a responsive web site using the same database, it quickly became clear how much the agents had been using the earlier system to obtain issue status. There was an immediate chorus of complaints that the web site status information did not include the applicants name. Certainly it was obvious that this was the only way an agent could identify a particular case. But, remarkably (or not so remarkably) there had never been any complaints that the database lacked this identifier when the only access was by telephone robot. When the applicant name was added to the web site, the sudden drop in calls to the issue clerks implied that the previous use of the automated response facility had been zero, or close.

If you have one of these systems, see if you can get usage statistics. It can be tricky, because most people punch a few keys and then hang up in frustration, for find the one that says "operator". I haven't seen one designed so that you could tell how many customers were satisfied. That might be on purpose.

Voice mail is supposed to be a convenience, but as it comes from the vendor it is anything but, and too many companies never make any changes. Perhaps the biggest time waster is the password. You have to change it to one of your own creation before you can use your voice mail, and it better be 5 digits. Then the system will demand you change the password periodically, and it better not catch you trying to use one you have used before. There are a lot of numbers with 5 digits, but not that many that have anything to do with birthdays or your dog, so pretty soon you run out of combinations you have any hope of remembering. The answer, of course, is to change the parameters to not require a password at all. These can be set phone by phone, so those who imagine someone might really want to sneak over to their phone to listen to their messages can use a password, but everyone else can save a lot of time.

Here is a quote from Dan Mitchell's On the Web in the NYT.

THE PASSWORD IS . . . This should come as no surprise to anyone other than control-freak corporate technology managers, but forcing employees to change passwords constantly runs counter to the stated goal of making systems more secure, according the RSA Security. Because employees find it nearly impossible to keep track of ever-changing passwords, they tend to use ones they can easily remember, which means intruders can easily guess them. Another tidbit from RSA's survey of 1,700 companies: frequent password changes drive workers crazy, and increase password-related calls to help desks, driving up costs.

I have seen the responsibility for the phone system in Personnel, Supply, EDP,or nowhere. Often that person is just the one that knows who to call at the phone company. There is a lot the phone system can do for you, such a different queuing for different departments, detailed reports, an effective answering menu, and so on. You need your own expert, and the logical person is the one who handles your servers and LAN. Bill Doyle is one such expert, who comments to the right.

Comment by Bill Doyle: Many companies have their own PBX system. The Nortel Meridian is pretty common. Any company that doesn't have someone that is knowledgeable of how to connect the wire to the phone system is throwing money away. They end up calling the phone company tech at $70 hour with a two hour minimum. Just to move a phone will cost you $140, and you have to wait for the Tech to show up.
Most companies have a PC Tech that is already accustomed to running Network Cable (CAT 5) and crimping the ends on the cable. There is little difference in handling phone cables. So the next time you're paying the $140 for the phone move, have your PC tech follow the telephone company tech around. He should be able to pick it up and you will save dollars and time.

A promising alternative to policy service by telephone is live chat. A cross between telephone and email, it is a continuous conversation on a screen, each end typing the message that instantly appears on both screens. A good way to see the possibilities is to try it on the LivePerson site.

Live Chat is also discussed on the eBusines page. Like email, chat eliminates much of the irrelevant and repetitive elements of the telephone call, but like the telephone is instant enough to have the feel of a conversation and personal contact missing in an email. It should be possible for a service representative to handle three or more simultaneous chat sessions, and complete them in about the time one phone call would take. In addition, the policyholder has a writing of what has been said. Usually a follow up email is offered containing a transcript of the session.