Today’s interview is with Ron Davis, who is co-founder and CEO of Tenacity, a new technology/software company that is helping contact centres change agent behaviours and transform their workplaces through peer accountability. Ron joins me today to talk about employee retention, turnover and engagement in the contact centre, the size of the problem, social physics and what Tenacity are doing to help address the situation.
This interview follows on from my recent interview – Customer data mapping, engagement and developing trust – Interview with Rachel Lane of Verint – and is number 167 in the series of interviews with authors and business leaders that are doing great things, helping businesses innovate and delivering great service and experience to their customers.
Highlights of my interview with Ron:
- Tenacity is working on solving the agent retention, turnover and morale issue that exists within contact centres.
- They are a spin-out of The Media Lab at MIT.
- In outsourced contact centres (onshore or offshore) they have to deal with 8-12% agent attrition rates every month. Whilst in-house contact centres may have to deal with attrition rates that range from 2 to 8% per month.
- The cost of that sort of turnover will vary according to industry and organisation but Ron estimates that for an average telecoms company that turnover could cost the firm between $6-7,000 per employee in terms of recruitment, on boarding and training and getting them up to speed.
- To make it real, for example, a 500 person contact centre might turnover 500-600 people a year, which at $6,000 per person would add up to a cost of upwards of $3mln per year.
- Ron estimates the global size of the problem, with respect to large contact centres, at around $5bln per year. That number would be much much higher if you included every non contact centre customer service department.
- In many, surveys of contact centre mangers employee attrition shows up in the top three most important issues that they are dealing with. However, it is often ranked as the most important issue that they continually deal with.
- This is a big issue for outsourcers/BPOs as they tend to compete on cost. Therefore, assuming that they can achieve a certain quality threshold, better cost control can equal more market share.
- Tenacity are skeptical about the impact of the many gamification initiatives that we see emerging in the contact centre space right now.
- Tenacity’s approach is based on the notion that you can actually re-engineer social dynamics in the workplace. Good managers do this already but because of the economics of contact centres there is not a lot of space (budget) for good managers. So, Tenacity are helping contact centres do what good managers would normally do. However, they are finding ways of automating it through their software.
- The science behind their approach is based on the ‘social physics’ book and work done by Professor Alex Pentland and his colleagues as part of The Human Dynamics Group within The Media Lab at MIT.
- Social Physics is an emerging area of research at the intersection of Big Data and social network analysis/theory i.e. they are trying to understand how humans behave in networks, and how particular behaviours spread through the social milieu.
- Their research and analysis has shown that they can both predict/forecast behaviour but also that the social context can be used to ’nudge’ behaviour.
- The research has also shown that this type of analysis is a better predictor of team performance than any IQ, background or talent methods. Through their work in large organisations they identified a poorly performing team and through a small nudge the team started performing like a high performing team with a resultant boost to productivity and falls in absenteeism and turnover etc.
- This made Ron and his co-founder Hanna think that there could be an application for this type of approach in industries where ‘middle management’ skills were missing, that suffer from high staff turnover costs and that could benefit from a software/automated solution. Hence, they arrived at contact centres.
- In practice, Tenacity’s application gathers data from within the organisation including KPIs and other performance metrics and combines that with their observations of social behaviour.
- To get employees engaged with the application they run a series of challenges and set up discussions/competitions in their virtual ‘water cooler’ area. They also have a stress management feature where employees get paired with a ‘buddy’. In doing all of that Tenacity are able to gather the data they need to figure out what the problems in the network look like.
- To deal with identified problems they have three different kinds of interventions. Two are straight forward social engineering elements and one is analytics based. Here’s some examples:
- Responding to specific problems….For example, because they know that new employees suffer lower integration and the highest attrition rates so they might run a challenge that says to the rest of the team……take someone on your team that has been with you for less than two months out to coffee, take a fun selfie, upload it to the water cooler and whoever gets the most likes/votes will win $150.
- Responding to general issues i.e. stress management. They have a programmes in place with exercises that help employees manage stress. They way it works is that employees team up with a buddy so they can help each other manage their stress levels and hold each other accountable. However, the programme rewards their accountability buddies rather than them as research shows that this is up to 7 times more effective than rewarding the employee directly.
- Finally, they use analytics to help management identify areas/issues that need addressing and couple these with recommendations for specific actions to help address those issues.
- An optimal social network also disseminates best practice faster.
- This is all about the building up of social capital or the use of it to change behaviour.
- These methods are proving very popular amongst agents in the contact centres that they are working with and they are achieving 60-70% active participation rates.
- They have currently completed two paid pilots with large organisations. One is a large telecom company in the US and the other is with a global BPO.
- Here are some of their results:
- US Telco
- Reduced attrition by over 2/3rds in the intervention group and by over 1/2 in the centre as a whole;
- A significant positive impact on their NPS scores; and
- A 7.5x (or 750%) ROI after 6 months.
- Global BPO
- At one of their US centres, they achieved a 55% reduction in attrition – this is lower than the telco example but is based on a much higher overall attrition rate that BPOs suffer from (as highlighted earlier);
- A 10-15% reduction in unplanned absenteeism per month;
- A 7.0x (or 700%) ROI after 6 months.
- US Telco
- Tenacity have just completed a new finance raising round and are now in the process of growing their sales and tech teams to help them grow.
- Some people have suggested their approach is similar to taking a behavioural economics approach. However, Ron believes that they are taking more of a sociological approach where the nudges are applied at the network level rather than at the individual level.
- For too long has the contact centre industry been trying to get more juice out of an already dry piece fruit. This approach is not about squeezing harder to get more juice out the existing fruit but rather is about re-hydrating or putting the juice back into the fruit.
- Following the completion of their latest funding round, Tenacity are hiring and are specifically interested in hiring 2 enterprise sales people in the coming couple of months. They are looking for people that are hungry, smart and comfortable with a more evangelical and consultative sales approach. If that sounds like you then Ron’s contact details are below.
About Ron (adapted from his LinkedIn profile)
Ron has set records in sales, graduated with honours from Harvard Law School, driven cross-functional initiatives in a big corporation, written publicly on politics, gotten some of the world’s most formidable people as investors, and talked his way into Techstars.
He is the co-founder and CEO of Tenacity whose main purpose is to change human behaviour for the better.
For industries like call centres with high turnover costs, Tenacity is a peer coaching platform invented at MIT that is up to 7 times as effective as incentives. It improves the employee work experience by helping employees manage their stress and build relationships with coworkers, which raises retention and saves so much money that we can sell it to heads of operations, instead of HR.
To find out more about Tenacity check out www.gotenacity.com. You can also say Hi to them on Twitter @TenacityHealth and if you want to get in touch with Ron then reach out to him via Twitter @ronpdavis or LinkedIn here.