Yong-Pin Zhou

Call Center Outsourcing: Coordinating Staffing Level and Service Quality

In this paper, we study the contracting issues in an outsourcing supply chain consisting of a user company and a call center that does outsourcing work for the user company. We model the call center as a G/G/s queue with customer abandonment. Each call has a revenue potential, and we model the call centers service quality by the percentage of calls resolved (revenue realized). The call center makes two strategic decisions: how many agents to have and how much effort to exert to achieve service quality. We are interested in the contracts the user company can use to induce the call center to both staff and exert effort at levels that are optimal for the outsourcing supply chain (i.e., chain coordination). Two commonly used contracts are analyzed first: piecemeal and pay-per-call-resolved contracts. We show that although they can coordinate the staffing level, the resulting service quality is below system optimum. Then, depending on the observability and contractibility of the call centers effort, we propose two contracts that can coordinate both staffing and effort. These contracts suggest that managers pay close attention to service quality and its contractibility in seeking call center outsourcing.

A Call-Routing Problem with Service-Level Constraints

We consider a queueing system, commonly found in inbound telephone call centers, that processes two types of work. Type-H jobs arrive at rate ? H , are processed at rate I»i¾µ H, and are served first come, first served within class. Aservice-level constraint of the form E[delay] = a orP {delay = I²} = limits the delay in queue that these jobs may face. An infinite backlog of type-L jobs awaits processing at rate I»L , and there is no service-level constraint on this type of work. A pool ofc identical servers processes all jobs, and a system controller must maximize the rate at which type-L jobs are processed, subject to the service-level constraint placed on the type-H work.We formulate the problem as a constrained, average-cost Markov decision process and determine the structure of effective routing policies. When the expected service times of the two classes are the same, these policies are globally optimal, and the computation time required to find the optimal policy is about that required to calculate the normalizing constant for a simpleM/M/c system. When the expected service times of the two classes differ, the policies are optimal within the class of priority policies, and the determination of optimal policy parameters can be determined through the solution of a linear program with O( c3) variables and O( c2) constraints.

Call-Routing Schemes for Call-Center Outsourcing

Companies may choose to outsource parts, but not all, of their call-center operations. In some cases, they classify customers as high or low value, serving the former with their in-house operations and routing the latter to an outsourcer. Typically, they impose service-level constraints on the time each type of customer waits on hold. This paper considers four schemes for routing low-value calls between the client company and the outsourcer. These schemes vary in the complexity of their routing algorithms, as well as the sophistication of the telephone and information technology infrastructure they require of the two operations. For three of these schemes, this paper provides a direct characterization of system performance. For the fourth, most complex, scheme the paper provides performance bounds for the important special case in which the service requirements of high- and low-value callers are the same. These results allow the systematic comparison of the performance of the various routing schemes. The results suggest that, for clients with large outsourcing requirements, the simpler schemes that require little client-outsourcer coordination can perform very well.

Managing Response Time in a Call-Routing Problem with Service Failure

Traditional research on routing in queueing systems usually ignores service quality related factors. In this paper, we analyze the routing problem in a system where customers call back when their problems are not completely resolved by the customer service representatives (CSRs). We introduce the concept of call resolution probability, and we argue that it constitutes a good proxy for call quality. For each call, both the call resolution probability (p) and the average service time (1/µ) are CSR dependent. We use a Markov decision process formulation to obtain analytical results and insights about the optimal routing policy that minimizes the average total time of call resolution, including callbacks. In particular, we provide sufficient conditions under which it is optimal to route to the CSR with the highest call resolution rate (pµ) among those available. We also develop efficient heuristics that can be easily implemented in practice.

Are customer satisfaction and customer loyalty drivers of customer lifetime value in mobile data services: a comparative cross-country study

Many research papers have been published on the effect of customer satisfaction and customer loyalty on customer profitability which is related to customer lifetime value (CLV). However, there is limited research on the impact of cross-cultural factors on the effect of customer satisfaction and customer loyalty on CLV. This study aims to fill this gap. Focusing on the usage of mobile data services, 846 samples from China and 689 from the US are obtained. Data analysis suggests that customer loyalty is a driver of CLV, while customer satisfaction is not. This research has important implications for firms about how to enhance CLV in mobile data services.

Strategic Consumer Response to Dynamic Pricing of Perishable Products

Dynamic pricing is a standard practice that sellers use for revenue management. With the vast availability of pricing and inventory data on the Internet, it is possible for consumers to become aware of the pricing strategies used by sellers and to develop strategic responses. In this chapter, we study the strategic response of consumers to dynamic prices for perishable products. As price fluctuates with the changes in time and inventory, a strategic consumer may choose to postpone a purchase in anticipation of lower prices in the future. We analyze a threshold purchasing policy for the strategic consumer, and conduct numerical studies to study its impact on both the strategic consumer’s benefits and the seller’s revenue. We find that in most cases the policy can benefit both the strategic consumer and the seller. In practice, the seller could encourage consumer waiting by adopting a target price purchasing system.

Routing to Manage Resolution and Waiting Time in Call Centers with Heterogeneous Servers

In many call centers, agents are trained to handle all arriving calls but exhibit very different performance for the same call type, where we define performance by both the average call handling time and the call resolution probability. In this paper, we explore strategies for determining which calls should be handled by which agents, where these assignments are dynamically determined based on the specific attributes of the agents and/or the current state of the system. We test several routing strategies using data obtained from a medium-sized financial service firms customer service call centers and present empirical performance results. These results allow us to characterize overall performance in terms of customer waiting time and overall resolution rate, identifying an efficient frontier of routing rules for this contact center.

On the incomplete results for the heterogeneous server problem

In this article, we show that the arguments in Rykov [9] on the optimality of a threshold routing policy when there are more than two heterogeneous servers are incomplete.

How does customer self-construal moderate CRM value creation chain?

Constructing the chain from customer value to organization value at individual customer level.Investigating the moderating effect of self-construal in such a chain.Collecting data points from China in the context of mobile data services.The positive relationship between customer loyalty and duration is moderated by customers interdependent self-construal.The positive relationship between customer satisfaction and customer loyalty is moderated by independent self-construal. Most of the existing literature on CRM value chain creation has focused on the effect of customer satisfaction and customer loyalty on customer profitability. In contrast, little has been studied about the CRM value creation chain at individual customer level and the role of self-construal (i.e., independent self-construal and interdependent self-construal) in such a chain. This research aims to construct the chain from customer value to organization value (i.e., customer satisfactionźcustomer loyaltyźpatronage behavior) and investigate the moderating effect of self-construal. To test the hypotheses suggested by our conceptual framework, we collected 846 data points from China in the context of mobile data services. The results show that customers self-construal can moderate the relationship chain from customer satisfaction to customer loyalty to relationship maintenance and development. This implies firms should tailor their customer strategies based on different self-construal features.

Parametric Forecasting and Stochastic Programming Models for Call-Center Workforce Scheduling

We develop and test an integrated forecasting and stochastic programming approach to workforce management in call centers. We first demonstrate that parametric forecasts, discretized using Gaussian quadrature, can be used to drive stochastic programs whose results are stable with relatively small numbers of scenarios. We then extend our approach to include forecast updates and two-stage stochastic programs with recourse and provide a general modeling framework for which recent, related models are special cases. In our formulations, the inclusion of multiple arrival-rate scenarios allows call centers to meet long-run average quality-of-service targets, and the use of recourse actions helps them to lower long-run average costs. Experiments with two large sets of call-center data highlight the complementary nature of these elements.