Back-Office Departments Are Essential to the Customer Experience
For more than 20 years, enterprises have downplayed the importance and contributions of their back-office operating groups. These departments are an integral component of the overall customer experience and are involved in many steps throughout the customer journey. While their responsibilities vary by industry, function and company, back-office departments are responsible for processing credit card chargeback requests, handling new applications, making credit decisions, taking care of claims, managing program changes, approving and granting refunds, and a lot more.
What this means is that a back-office department is involved in processing a large percentage of the interactions that flow through many banking, investment management, brokerage, insurance, telecom, retail, utility and other enterprises, even though the customer is rarely aware of their existence. However, companies’ lack of visibility and control, and under-investment in back-office areas, has resulted in service quality issues that increase costs and directly impact the customer experience.
The Size of the Back Office
The cost and magnitude of the back-office is rather astounding, and significantly larger than what is referred to as the front office. DMG Consulting research has found that there are 2.5 times as many back-office workers as front-office employees, based on data from the US Bureau of Labor Statistics Occupational Employment Statistics Survey, May 2014. And, while these numbers are for the US, DMG’s research has also found that there are also far more back-office workers than front-office resources, on a percentage basis, in many other developed countries.
In the US alone, DMG estimates that the cost of back-office activities was $758.8 billion in 2014, 4.4% of the country’s $17.4 trillion gross domestic product. So, whether companies like it or not, it’s time for them to do something about their back-office challenge. It’s too important and expensive for them to continue to ignore, and the back-office situation is not going to improve by itself, without a major change in perception and investments.
The Service Challenge
The lack of insight into back-office activities has cost companies millions of dollars in known expenses (staff, real estate, systems, etc.). Additionally, the absence of systems to manage and optimize the performance of back-office departments has profound implications for service quality. Although the actual cost has not been quantified for the US, DMG estimates that approximately 20% of all inquiries received by customer service departments and contact centers result from mishandling by the back office. The impact on customers is staggering, even if it’s not fully appreciated by executives.
What to Do About the Back-Office Problem
It’s time for companies to invest in their back-office operating areas. Companies need to evaluate each function and, where lacking, introduce practices and applications that provide the necessary oversight and transparency that will allow back-office departments to improve their performance. The new back-office workforce optimization (WFO) solutions are helping companies introduce many of the practices that have been highly effective in enhancing the performance of their front-office contact centers.
The core component of a back-office WFO suite is the work allocation system that tracks and manages the distribution of all work at the item level. Once the volume and state of the work is known, companies are positioned to manage the quality, timeliness and cost of their output. However, if a company wants to realize the full benefits from a back-office WFO solution, they also need to modify their operating policies and procedures and change their approach to servicing.
The days of treating front and back office operating groups as separate and independent silos are gone. It’s time to look at interactions from the perspective of customers, and to accomplish this essential goal, companies need solutions that enable them to evaluate and measure the entire customer journey.
Donna Fluss (donna.fluss@dmgconsult.com) is the president of DMG Consulting, a provider of contact center, analytics and back-office market research and consulting.
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