South African Airways (SAA) is South Africa’s national airline carrier. A state-run entity, it services all major domestic and international routes. Like many airlines the world over, SAA is operating under immense cost and operational pressures in the context of the global economic recession, but compounding its poor performance were deep-rooted operational flaws and inefficiencies that were crippling its service delivery and doing incredible damage to the airline’s brand, both domestically and internationally.
SAA operated a host of call centres internationally. Together Reservations and Voyager (SAA’s frequent flyer programme) generate the highest amount of client contact and contribute the most operational costs.
By early 2008, the call centre was in crisis. Faltering under huge cost pressures, it was operating at a significant loss and drawing widespread public criticism for its poor service delivery. A business improvement team was introduced to SAA who’s mandate it was to analyse and implement bold decisions that would assist in putting the business on a path that would stem the financial losses, improve service deliver, rebuild the brand’s reputation and produce a renewed level of flyer loyalty.
Part of the crisis management and turnaround strategy was a decision to outsource operational units like the call centre. The tender specifications set the bar high: the outsourced contact centre would have to take over the management of 200 permanent unionised and flexi agents. The provider would not only have to transform the poor internal service ethic and deliver world-class service, but also actively contribute over time to delivering revenue generating services which would include the cross-selling of complementary services. It wanted the successful bidder to show a convincing business case for the cost savings it could deliver. And most of all, it wanted to be able to restore the levels of service, efficiency and accuracy within the contact centre environment thereby improving the customer’s experience when engaging with SAA and giving them the faith to support the business.
SAA’s contact centre tender was an open market request which meant that any appropriate company would be able to respond. Merchants responded with an intensive eight week investigative bid in which consultants were flown in from its operations around the world to assess the requirement and brainstorm the best possible solutions for SAA. The result was a detailed submission involving a five year operating model, showing cost models and a sound business plan, projected cost savings, and outlining Merchants’ operational vision for the SAA contact centre.
Merchants’ intensive analysis and research into SAA’s existing operations had revealed key areas that would need to be transformed in order to restructure and reposition the contact centre into a healthy, viable, revenue generating business unit.
Poor agent performance, salaries and benefit packages that were significantly inflated versus the market, limited performance management and high levels of antagonism between union members and management all resulted in a very challenging environment. The poor working environment both at an emotional and physical level had negatively impacted on the retention of key talent which translated into a lack of broad-based experience and competencies being available to drive the business. Poorly managed and insufficiently trained staff managed to answer only 10% of calls within 20 seconds.
Merchants’ solution was to raise this answer rate to 80%. We projected that we would be able to save SAA in excess of R100 million over five years on operational costs savings alone. The add-on effects of greater revenue generation through cross-selling and better service delivery through better trained and motivated agents were unquantified, but estimated to be significant. A massive upskilling and renegotiation of employment conditions would have to be rolled out, supported by a significant increase in the management resources relating to the functional areas of quality, training, coaching and mentoring as well as daily focused performance management.
HOW WE DELIVERED
The employee issues including the divide between the opposing factions of labour and management were initially one of the biggest challenges to overcome. Merchants undertook the individual assessment, renegotiation and recalculation of cost-to-company for every contact centre employee. The task was undertaken with rigor and diligence, deploying some of the best resources in this area and working with SAA to make the process as inclusive and as fair as possible. Merchants were in a position to deploy some of SAA’s people into the greater Dimension Data business, offering alternative opportunities and options to staff who were looking for new and alternative career opportunities.
During the contracting and set-up process, there was significant resistance to the outsource which resulted in industrial action which impacted service out of SAA’s contact centre. Given that this happened over December – traditionally SAA’s busiest period – the potential for even further service degradation was daunting for SAA. SAA, therefore, made the decision to build a Disaster Recovery Centre to support their business during this time. Merchants rose to the challenge, setting up a 100 seat contact centre to support SAA’s calls within four days.
Fortunately, employee issues were accommodated with SAA permanent staff being given the opportunity to transfer to Merchants or remain with SAA and be redeployed within another functional area. All Flexi staff were transitioned to Merchants.
In parallel with supporting SAA’s ongoing internal issues, Merchants continued to identify a world class site for SAA’s contact centre. After a thorough evaluation of a range of buildings across a number of locations around the greater Johannesburg area, a short list was put together and using a comprehensive assessment model we were able to prioritise the selected sites taking into account numerous factors including: the impact of asking our flex staff to relocate, transport, childcare facilities, crime and security. The selected site in Parktown ticks all the boxes and will be a facility that SAA will be proud of and will be a great place to work. Through continued internal communication and support to our people, we believe that we are building an empowered group of people that will allow us to deliver on our vision to deliver unparalleled customer service to SAA and to SAA’s customers.
“Merchants projects saving in excess of R100 million over five years and raises call efficiency rates from 7% to 80% - restoring the contact centre as a strategic business enabler to assist in SAA’s business recovery.”
WHERE TO NEXT
The level of engagement with SAA to date has been amazing. Merchants has been integrally involved with working closely with SAA at a greater level of partnership than is the norm. We believe that this has benefited both parties and will allow Merchants to deliver a solution that can continue to be appropriate and responsive to SAA’s business needs. Our scalable hosted facility has the capacity to expand and to share costs and skills over airlines to help them remain competitive and viable as they combat the global recession. In addition, the savings we’ve demonstrated to SAA only cover operational savings – the revenue from skilled cross-selling by our agents is still unquantified and we’re excited about the potential this has to contribute to SAA’s turnaround.
Merchants has a holistic service profile to offer that includes our flexibility and commitment to our clients, our wide range of diverse skills and resources, and our global reach. We look forward to harnessing every part of our experience and capabilities to help SAA deliver against some critical business objectives now and in the future.