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Cycle Time is a very important operational metric.
1. Process Cycle Time is the duration from when the first step for the process starts to when the last step ends; i.e. = Queue Time + Processing Touch Time + In-between Steps Wait Time.
2. Sales Cycle is the duration of time from when the prospect is first contacted (or contacts the company) to when the prospect makes the decision to buy/purchase (sometimes measured to the moment of completion of the purchase).
3. Handle Time is the duration from when customer is contacted (or contacts) to the end of interaction with the customer. In call centers = IVR Time + Hold Time + Talk/Chat Time + Call Notes/Closing Time.
4. Resolution Time is the duration from when customer first contacts with an issue to when the issue is considered resolved from customer's perspective.
There are 3 major concepts in Lean. Those are:
1. Learning to See: teaches us how to observe the ways as how people do work or interact with customers and then map and use that observational knowledge to identify opportunities for improvement.
2. Little's Law: indicates the usefulness of Process Cycle Time of processes (such as Sales Cycle, Customer Service processes), as a measure of efficiency.
The above 3 concepts help us understand Average Handle Time (AHT) or Sales Cycle Time.
Also, Cycle time metrics are correlated with other outcome metrics such as Resolution metrics (FCR), Loyalty metrics (Customer Satisfaction - CSAT and Net Promoter Score® - NPS), Win/Loss, and Customer retention.
Y = Process Cycle Time = f(X), where X’s are:
Process: Flow, Sequence of steps (parallel versus sequential), Queue demand, Set-up or creating new content/product/changes, Change-over between product types or upgrades, Waits, Muda, Handoffs, Escalation, Messaging, Approvals and reviews and other non value-added steps, Decision-making, Redundancies, etc.
People: Skills such as solutioning, demeanor, ability to overcome objections, troubleshooting, Opportunity to do Cross-selling, Accountability, Hiring, Incentives, Training, Coaching, Development Knowledge, Search ability, Critical-thinking skills, Fiefdoms and Silos, Culture, etc.
Technology: Too many legacy systems, Channels, Network connectivity, Data quality, Manual entries, etc.
It is very important for managers to understand the relationship of each of these X variables with Y and the correlation between the X’s.
Impact of AHT:
The metric AHT (now ubiquitous) used for managing customer interaction time, came from queuing theory and Lean methodology. In the early 1990s, both customer relationship management (CRM) and Call management systems (CMS) calculated AHT and were provided to managers. Over time, it became the metric of choice to measure operational performance. Supervisor and managers were (and continue to be) incentivized to maintain low Handle Time. However, in the last decade, the sole use of AHT led to negative consequences on customer experience (CX). For example, untested speech analytics and introduction of Interactive Voice Response (IVR) -- that was meant to reduce Handle time and allow self-service happen easily, led to escalating situations and bad customer experiences. Read our blog post about de-escalation where negative impact of such technologies on CSAT and other customer experience metrics are discussed.
Ben Bennett in his Customer Management IQ Blog says,
“I am strongly pro average handle time as a target, so long as it is used appropriately, and all the elements that make up the average handle time are applied correctly. My reasoning follows, plus why I consider the average handle time got a bad name. Of course, like the majority of measures, average handle time cannot be used in isolation, because it does not measure call center service levels, efficiency, quality, outcome or customer experience of the call, although these are reflected through the handling time.”
Managers need to use AHT appropriately and to understand the X’s that predict the variation of AHT. Managing AHT attuned with customer's expectations requires critical-thinking skills on part of a customer-service rep or inside-sales rep. Appropriate training and practice platforms help employees achieve the balance between AHT and Customer experience.
Impact of Sales Cycle Measurement:
Also in the 1990s, Sales Cycle became the mantra for sales managers. This is discussed in Anneke Seley's (our strategic adviser) book Sales 2.0 and Anneke provides great case studies of repeatable and standardized processes managing Sales Cycle. Many sales leaders think that making the sales process repeatable and standardized means making it bureaucratic and involving mindless check-boxes tasks. That is not what Lean tells you to do. Lean tells you to focus on removing non value-added activities and optimizing value-added activities. Moreover, it says that Sales Cycle must align with Buyer’s buying behaviors. David Brock in his blog says,
"Making sure sales people understand Lean principles, giving them the tools by which to evaluate everything they do, eliminating those steps that do not create value, eliminating everything that creates waste is critical to maximizing the performance of our people and teams."
Adhering to process is not sufficient to improve the sales cycle. Allowing the salesperson to have the flexibility to adjust and realign the process after having a thorough understanding of the customer’s needs, helps with the sales cycle. This requires critical-thinking skills training for the salesperson. Appropriate training and practice platforms help employees achieve the balance between Sales cycle and Wins.
Our Games simulate all these Lean-endorsed behaviors and helps your employees acquire the skills needed to maximize your customer-acquisition and customer-retention metrics, while managing Cycle time. All the metrics handled by our games are reflected on the screen. An example is provided below.
Our PAKRA Console and Analytics utilizes game-mechanics that in turn helps your employees adopt the skills to manage AHT and Sales Cycle. Our consulting services help you acquire a deeper understanding of the actual processes that affect your customer’s experiences and the process cycle time.
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