oversight

Social Security Administration: More Cost-Effective Approaches Exist to Further Improve 800-Number Service

Published by the Government Accountability Office on 1997-06-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Subcommittee
                 on Social Security, Committee on Ways
                 and Means, House of Representatives


June 1997
                 SOCIAL SECURITY
                 ADMINISTRATION
                 More Cost-Effective
                 Approaches Exist to
                 Further Improve
                 800-Number Service




GAO/HEHS-97-79
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-271867

      June 11, 1997

      The Honorable Jim Bunning
      Chairman
      Subcommittee on Social Security
      Committee on Ways and Means
      House of Representatives

      Dear Mr. Chairman:

      This report responds to your request that we identify (1) how well SSA’s 800 number provides
      service to the public and (2) what steps SSA needs to take to ensure that improvements to the
      800 number are cost-effective.

      We will send copies of this report to the Commissioner of Social Security and other interested
      parties. We will also make copies available to others upon request.

      Please contact Cynthia Fagnoni, Associate Director, at (202) 512-7202, if you have any
      questions. Other GAO contacts and major contributors to this report are listed in appendix IV.

      Sincerely yours,




      Jane L. Ross
      Director, Income Security Issues
Executive Summary


             The Social Security Administration (SSA) administers the nation’s largest
Purpose      federal program—Social Security—as well as the largest cash welfare
             program, Supplemental Security Income. In addition to administering
             benefits, SSA records the wages of nearly every U.S. worker and issues new
             and replacement Social Security cards. SSA’s programs touch the lives of
             nearly every individual in this country. Each day, thousands of people
             contact SSA to file claims for disability or retirement benefits, ensure that
             their records are up to date, obtain a Social Security card, or ask questions
             about SSA’s programs.

             A major goal of SSA, set forth in its strategic planning documents, is to
             provide world-class service to the public. To help reach this goal, SSA is
             seeking to improve its toll-free 800-number service. Since the 800 number
             became available to callers nationwide in 1989, SSA has struggled to keep
             pace with caller demand, which grew from 41 million calls in fiscal year
             1989 to 121 million in fiscal year 1995. In addition, once callers reach SSA’s
             800 number, they may conduct only simple transactions such as ordering
             Social Security card application forms or making appointments to file
             benefit claims. SSA has initiatives under way to improve the 800-number
             service, including improving callers’ access and expanding the range of
             transactions that callers may initiate or complete with one call to the 800
             number.

             The Chairman of the Subcommittee on Social Security, Committee on
             Ways and Means, House of Representatives, asked GAO to review (1) how
             well SSA’s 800 number provides service to the public and (2) what steps SSA
             needs to take to ensure that improvements to the 800 number are cost-
             effective.


             To ease the burden on its 1,300 field offices, SSA established teleservice
Background   centers—each with its own telephone number and geographic
             responsibility—that by 1988 were serving 50 percent of the population.
             Concerned about staff reductions and field office workloads, and in
             response to a GAO recommendation to improve the quality of its telephone
             service, SSA established the nationwide 800 number using its existing
             network of teleservice centers. As of January 1997, SSA employed over
             4,000 representatives at 40 answering sites, which include 37 teleservice
             centers ranging in size from 13 to 573 employees.

             SSA   thought callers to the 800 number would have basic questions about
             SSA   programs and would conduct simple business such as reporting



             Page 2                                        GAO/HEHS-97-79 800-Number Service
                   Executive Summary




                   changes in benefit status. SSA hoped that the 800 number would replace its
                   local field office telephone service, still leaving more complex tasks, such
                   as filing claims, to field offices. After start-up problems with the 800
                   number resulted in high busy-signal rates, however, the Congress directed
                   SSA to restore telephone access to local field offices. Today, when calling
                   SSA, the public may call either the 800 number or one of SSA’s field offices.


                   SSA is seeking to improve and expand its 800-number service while facing
                   growing workloads and shrinking resources. As the baby boom generation
                   ages, more and more people will be applying for and receiving benefits.
                   SSA’s workloads will also grow because of increased responsibilities, such
                   as legislative requirements to review the continuing eligibility of SSI
                   beneficiaries resulting from the Personal Responsibility and Work
                   Opportunity Reconciliation Act of 1996.


                   Although SSA’s 800 number has consistently provided accurate and
Results in Brief   courteous service to the public, callers have had difficulty getting through.
                   To address this problem, in early 1996 SSA increased the number of
                   representatives answering calls and implemented a new nationwide
                   automated menu. These efforts brought SSA closer to its goal of having
                   85 percent of callers get through to the 800 number within 5 minutes of
                   their first attempt. Not all callers who got through actually spoke to a
                   representative, however, or successfully used one of the automated
                   service options. Moreover, SSA came close to accomplishing its goal largely
                   by diverting SSA staff from work responsibilities unrelated to the 800
                   number. SSA’s plans include further increasing the percentage of callers
                   who get through to the 800 number within 5 minutes and expanding the
                   limited range of transactions that callers may complete using the
                   800-number service. As 800-number and other workloads continue to
                   grow, expanding services while maintaining access levels will challenge
                   SSA.


                   SSA’splans do not sufficiently reflect lessons learned from the private and
                   public sectors on cost-effectively improving 800-number service. For
                   example, SSA could save a significant amount of money by automating
                   more of its routine transactions and by finding ways to verify callers’
                   identities using automated features. For those transactions deemed
                   complex enough to require personal assistance, private-sector leaders in
                   800-number service save money and enhance service by locating their call
                   agents at a few large centers. In contrast, SSA maintains a large number of




                   Page 3                                        GAO/HEHS-97-79 800-Number Service
                             Executive Summary




                             teleservice centers and has not developed a specific plan and timetable for
                             reducing the number of these centers.

                             Because SSA continues to offer customer service through its field offices, it
                             needs to carefully consider how changes, such as expanding the range of
                             transactions that callers may conduct or complete using the 800 number,
                             fit into and affect SSA’s overall service delivery strategy. For example, SSA
                             needs to compare the cost of conducting additional transactions using the
                             800 number with other service delivery methods to identify the most cost-
                             effective approach. SSA also needs to collect data for more fully assessing
                             how quickly and completely the 800 number serves customers. By
                             adopting the kind of 800-number initiatives used by some private- and
                             public-sector organizations, SSA could provide effective service while
                             controlling costs.



Principal Findings

Improving Access and         Ongoing, internal surveys and regular monitoring have consistently
Service Will Challenge SSA   indicated that SSA’s 800-number staff provide courteous and accurate
                             service and that customer satisfaction is high. Moreover, in an
                             independent study, SSA’s 800-number service received the highest overall
                             score among nine organizations considered to be the best in the business.
                             Meanwhile, SSA’s 800 number has never been able to keep up with caller
                             demand. Each year, the number of callers trying to reach the 800 number
                             has grown, while the percentage of callers actually reaching a call agent or
                             automated service has declined. Callers have had particular difficulty
                             getting through during peak calling periods.

                             SSA’s performance goal for fiscal year 1996 was to have 85 percent of
                             800-number callers reach the 800 number within 5 minutes of their first
                             try. To help reach this goal, SSA installed a new nationwide automated
                             menu and bolstered its call agent workforce in early 1996. Despite a few
                             technical problems, the percentage of callers who got through within 5
                             minutes increased from 74 percent in fiscal year 1995 to 83 percent in
                             fiscal year 1996—just short of SSA’s 85-percent goal. Getting through is not
                             the same as being served, however, and many callers who reached the 800
                             number hung up before speaking to a representative or completing an
                             automated transaction. Moreover, SSA increased access rates in large part




                             Page 4                                       GAO/HEHS-97-79 800-Number Service
                            Executive Summary




                            by diverting 2,300 employees from other work areas, causing these
                            employees’ usual work to accumulate.

                            SSA subsequently raised its access goal for fiscal year 1997 to having
                            95 percent of callers get through to the 800 number within 5 minutes. In
                            addition, SSA is planning to increase the number of transactions that can be
                            completed in one call, which will occupy telephone lines and reduce
                            customers’ access. With growing workloads and limited resources, SSA will
                            have difficulty improving access while adding services. To achieve its
                            access goal for fiscal year 1997, SSA plans to divert even more employees
                            from other duties to answer 800-number calls—an action that could cause
                            other workloads to accumulate.


SSA Must Take Certain       SSA must take certain steps to cost-effectively improve its 800 number and
Steps to Cost-Effectively   can draw from the experiences of other public and private 800-number
Improve the 800 Number      services to do so. For example, consistent with private-sector trends, SSA
                            could better use its automated menu to cost-effectively handle routine
                            calls. To identify transactions suitable for automation, SSA needs to
                            develop additional and more detailed data on the reasons for and
                            frequency of customer calls. At this time, the need to verify callers’
                            identities—to protect individuals’ privacy and prevent program fraud and
                            abuse—severely limits progress in automating many transactions.

                            To conduct transactions deemed too complex to automate, SSA could
                            follow the example of leading private-sector companies that have reduced
                            the operating and administrative costs of using live assistance by locating
                            their call agents in a few large call centers. SSA recognizes that its 800-
                            number service has too many teleservice centers but has not developed
                            concrete plans for reducing the number. Instead, SSA plans to continue
                            connecting its smaller centers together electronically, saving some money
                            by more efficiently routing calls to available representatives. Fewer
                            centers could provide further cost savings, such as reduced rent and
                            utilities and increased managerial control and staffing flexibility.

                            In making decisions about increasing callers’ ability to conduct and
                            complete more business through the 800 number, SSA needs to assess these
                            decisions’ overall effect on service delivery. Some companies primarily use
                            their 800 number to deliver services; SSA, however, continues to rely
                            heavily on its field office structure. Before adding new services, such as
                            claim filing, to the 800 number, SSA should carefully assess the impact of
                            this on its 800 number and other service delivery workloads and its



                            Page 5                                       GAO/HEHS-97-79 800-Number Service
                  Executive Summary




                  cost-effectiveness compared with other approaches. SSA does not now
                  collect enough information to compare the cost of providing services
                  through its 800 number with that of, for example, providing face-to-face or
                  telephone service at its field offices. Nor does SSA collect enough data for
                  measuring the impact of adding new services to the 800 number on the
                  promptness and completeness of customer service.


                  To cost-effectively serve the public’s growing demand for SSA’s 800-number
Recommendations   services, we recommend that SSA (1) expand automated services,
                  (2) reduce the number of call centers, (3) compare the cost of expanding
                  the 800-number service with that of other approaches, and (4) establish
                  additional performance measures to more fully assess the impact of
                  expanding the service on its ability to effectively serve callers.


                  SSA generally agreed with the conclusions and recommendations in this
Agency Comments   report, stating that the report would be useful to SSA as it further refines its
                  800-number service. SSA indicated, however, that 800-number callers may
                  not be willing to use automated services to the extent believed possible by
                  GAO. Because of the cost-effectiveness and growing public acceptance of
                  automated services, GAO believes that SSA needs to continue to seek ways
                  to expand 800-number automated services. SSA also noted that it has
                  progressed and will continue to progress toward consolidating its call
                  centers. GAO continues to believe that to provide cost-effective, live
                  assistance like that found in the private sector, SSA needs to develop a
                  more comprehensive and far-reaching plan for reducing the number of its
                  teleservice centers. SSA also made some technical comments about this
                  report, which were incorporated as appropriate. See chapter 4 for GAO’s
                  evaluation of SSA’s comments and appendix III for the full text of those
                  comments.




                  Page 6                                         GAO/HEHS-97-79 800-Number Service
Page 7   GAO/HEHS-97-79 800-Number Service
Contents



Executive Summary                                                                               2


Chapter 1                                                                                      10
                       SSA’s 800 Number Is an Important Service Delivery Option                10
Introduction           World-Class Service Goal Reflects SSA’s Customer Focus                  12
                       Customer Focus Leads to 800-Number Improvement Efforts                  13
                       Objectives, Scope, and Methodology                                      14

Chapter 2                                                                                      16
                       800-Number Service Has Historically Been Courteous and                  17
SSA Takes Steps to       Accurate but Busy-Signal Rates Were High
Move Toward            SSA Takes Steps to Improve Access                                       18
                       Improving 800-Number Service With Limited Resources Will                24
5-Minute Access Goal     Challenge SSA

Chapter 3                                                                                      26
                       Steps Needed to Expand Automated Services                               26
Steps Needed to        SSA Needs a Cost-Effective Strategy for Providing Live                  30
Cost-Effectively         Assistance
                       Expanding Services Requires Carefully Assessing Costs and               31
Improve SSA’s 800        Benefits
Number
Chapter 4                                                                                      33
                       Conclusions                                                             33
Conclusions,           Recommendations                                                         34
Recommendations,       Agency Comments and Our Evaluation                                      34
and Agency
Comments and Our
Evaluation
Appendixes             Appendix I: SSA Customer Service Pledge                                 36
                       Appendix II: Private-Sector Trends and Best Practices in                37
                         800-Number Service
                       Appendix III: Comments From the Social Security Administration          43
                       Appendix IV: GAO Contacts and Staff Acknowledgments                     45

Bibliography                                                                                   46




                       Page 8                                    GAO/HEHS-97-79 800-Number Service
                       Contents




Related GAO Products                                                                           48


Tables                 Table 2.1: SSA’s Performance Measures and Goals for Fiscal Year         24
                         1997
                       Table 3.1: Transaction Types Suitable for Automation                    27

Figure                 Figure 2.1: 800-Number Automated Menu                                   20




                       Abbreviations

                       GPRA       Government Performance and Results Act
                       HHS        Department of Health and Human Services
                       IRS        Internal Revenue Service
                       NPR        National Performance Review
                       OMB        Office of Management and Budget
                       PEBES      Personal Earnings and Benefit Estimate Statement
                       SSA        Social Security Administration
                       SSI        Supplemental Security Income


                       Page 9                                    GAO/HEHS-97-79 800-Number Service
Chapter 1

Introduction


                       SSA administers programs that touch the lives of nearly every individual in
                       this country. SSA administers the nation’s largest federal program—Social
                       Security—as well as the largest cash welfare program, Supplemental
                       Security Income (SSI). Social Security1 provides benefits to retired and
                       disabled workers and their dependents and survivors; SSI provides
                       assistance to the needy, aged, blind, and disabled. SSA’s expenditures
                       totaled $386 billion in fiscal year 1996, almost one-fourth of this nation’s
                       $1.6 trillion federal budget. In 1996, over 50 million beneficiaries—nearly
                       one out of every five individuals in this country—received benefits from
                       SSA each month, and the numbers have been steadily growing. In
                       administering these programs, SSA records the wages of almost every U.S.
                       worker and issues new and replacement Social Security cards.

                       To better enable individuals to contact and conduct business with SSA, the
                       agency implemented a national, toll-free 800 telephone number in 1989.2
                       SSA provides this service through a nationwide network of 40 answering
                       sites, including 37 teleservice centers.3 Callers may use the 800 number to
                       conduct simple transactions, such as requesting information about SSA
                       programs. Rather than use the 800 number, individuals may also call or
                       visit one of SSA’s 1,300 field offices.

                       SSA’slong-standing focus on customer service has been reinforced recently
                       by two governmentwide performance improvement initiatives—the
                       Government Performance and Results Act of 1993 (GPRA) and the
                       administration’s National Performance Review (NPR). To be consistent
                       with these initiatives and help guide its activities, SSA established a goal of
                       providing world-class service to the public as well as several performance
                       measures to support this goal. In response to growing public demand and
                       preference for using the 800 number, SSA has been particularly focused on
                       improving this service.


                       SSA’sresponsibilities in managing the nation’s largest retirement, disability,
SSA’s 800 Number Is    and welfare programs require SSA staff to deal directly with the American
an Important Service   public. Each day, thousands of people contact SSA—to file claims for
Delivery Option        disability or retirement benefits, to ensure that their records are up to

                       1
                        The Social Security program administered under title II of the Social Security Act (42 U.S.C. 401 et
                       seq.) has two parts—Old Age and Survivors Insurance and Disability Insurance.
                       2
                        First established in 1988, SSA’s 800-number service was initially only available to 60 percent of the
                       population. SSA expanded the service to all callers nationwide in 1989.
                       3
                        SSA has three additional answering sites that are not dedicated teleservice centers but take
                       800-number calls on a part-time or provisional basis.



                       Page 10                                                        GAO/HEHS-97-79 800-Number Service
Chapter 1
Introduction




date, to obtain a Social Security card, or to ask questions about SSA’s
programs. Currently, about one-half of SSA’s 67,118 employees are frontline
workers who deal with the public. Traditionally, SSA staff have delivered
face-to-face services through a nationwide network of 1,300 field offices.
As the public began conducting more business by telephone, SSA
established local teleservice centers in large metropolitan areas to handle
general inquiries. By 1988, SSA was operating 34 teleservice centers
nationwide—each with its own telephone number for specific geographic
areas. These teleservice centers served about 50 percent of the population.

When SSA established the 800 number to improve its customer service, it
used the existing teleservice centers and opened three additional centers
to accommodate the increased call volume. In October 1989, SSA had about
3,100 employees, known as teleservice representatives, taking calls from
the public on the 800 number. The number of teleservice representatives
has since grown to about 4,000 located at 37 teleservice centers ranging in
size from 13 to 573 employees as of January 1997.

SSA’s 800-number service employees handle general inquiries and help
callers conduct simple transactions, such as reporting a change of address.
Individuals wishing to file claims for disability or retirement benefits—
which are more complex transactions—may make an appointment to do
so using the 800 number; currently, however, such individuals file their
claims either in person or by telephone with representatives at one of SSA’s
field offices.

SSA had originally intended for the 800 number to become its primary point
of telephone contact with the public. Public demand for the 800 number
quickly exceeded SSA’s expectations, however—call volumes were so high
that busy-signal rates reached 50 percent for several months. To help
reduce this volume of 800-number calls, SSA temporarily reestablished
direct telephone service for some field offices. Meanwhile, members of the
Congress grew concerned that the public would no longer have access to
local field office telephone service. As a result, in November 1990, the
Congress directed the Secretary of the Department of Health and Human
Services4 (HHS) to restore telephone access to local offices. Today,
individuals wishing to contact SSA by telephone may call the 800 number or
a local SSA field office.




4
At the time, SSA was part of HHS. The Congress enacted legislation making SSA independent of the
Department as of Mar. 31, 1995.



Page 11                                                   GAO/HEHS-97-79 800-Number Service
                      Chapter 1
                      Introduction




                      SSA’s800-number telephone service reflects its long-standing focus on
World-Class Service   customer service, and GPRA and NPR have reinforced this focus. A key
Goal Reflects SSA’s   purpose of GPRA, enacted by the Congress in 1993, is to improve federal
Customer Focus        program effectiveness and public accountability by promoting an
                      emphasis on results, service quality, and customer satisfaction. To help
                      accomplish this, the legislation requires federal agencies to establish
                      mission statements and goals, measure progress in accomplishing these
                      goals, and use the information obtained to adjust operations as needed to
                      accomplish these goals. GPRA required that the Office of Management and
                      Budget (OMB) select agencies to pilot test GPRA’s performance planning and
                      reporting requirements, and OMB chose SSA as a GPRA pilot agency.

                      The administration’s NPR also stresses the need for agencies to treat
                      members of the public like customers and improve customer service while
                      reducing costs. Begun in 1993 under the direction of Vice President Gore,
                      NPR has directed federal agencies to build a customer focus into their
                      operations to eliminate unnecessary bureaucracy, streamline processes,
                      and more cost-effectively serve the public. Also in 1993, President Clinton
                      issued Executive Order 12862, “Setting Customer Service Standards,”
                      which set a goal for the federal government to deliver service equal to the
                      best in business. The order directs federal agencies to survey their
                      customers, determine the kind of service they want and whether they are
                      getting it, and set and publish customer service standards.

                      Many of GPRA’s and NPR’s concepts are not new to SSA. Since 1984, for
                      example, SSA has routinely surveyed customers who recently contacted SSA
                      to ask about their experience and satisfaction with service provided. More
                      recently, SSA has been using focus groups to understand its customers’ and
                      employees’ views. Moreover, SSA’s strategic planning efforts predate GPRA
                      requirements. SSA published an agencywide strategic plan in 1991 that
                      established a goal of providing timely, accurate, and courteous service to
                      the public. The plan also established service delivery goals and objectives
                      for many aspects of SSA’s operations such as access to its 800-number
                      service and waiting times at field offices.

                      Bolstered by increased congressional and administration attention to
                      improving customer service, SSA has recently strengthened its focus on
                      customer service. SSA has, for example, established a set of customer
                      service standards and formulated a pledge describing what service
                      customers may expect when they contact SSA; field offices throughout the
                      country display this pledge. (See app. I for SSA’s current customer service




                      Page 12                                      GAO/HEHS-97-79 800-Number Service
                      Chapter 1
                      Introduction




                      pledge.) In addition, SSA has revised its agencywide customer service goals
                      to focus on providing world-class service to the American public.


                      SSA’s efforts to meet customers’ demand and expectations for 800-number
Customer Focus        service have led the agency to pay increased attention to improving this
Leads to 800-Number   service. Caller demand for the 800 number has grown steadily, with the
Improvement Efforts   number of calls growing from over 41 million in fiscal year 1989 to over
                      121 million in fiscal year 1995. Moreover, SSA’s customer surveys have
                      revealed that customers increasingly prefer to conduct their business with
                      SSA by telephone and customers who previously contacted SSA by
                      telephone said that they would rather call SSA’s 800 number than one of
                      SSA’s field offices. SSA’s surveys have also indicated that customers would
                      like better access to the 800 number and to use the 800 number to conduct
                      more complex transactions such as filing claims.

                      Reflecting customer demand and preference for 800-number service, in
                      1994 SSA established a goal of having callers get through to the 800
                      number—that is, not get a busy signal—within 5 minutes of their first try.
                      This goal represented a considerable shift in emphasis toward improving
                      callers’ access since 1991, when SSA’s goal was having 800-number callers
                      get through within 24 hours of their first try. SSA also plans to address
                      customer expectations for improved 800-number service by expanding the
                      range of transactions, such as filing claims, that callers may initiate or
                      complete using the 800 number. Some of SSA’s current initiatives, such as
                      its plan to improve callers’ ability to complete transactions with one call,
                      have been guided by private-sector practices. For example, SSA
                      participated, along with several other government agencies, in an
                      NPR-sponsored benchmarking study that identified the best telephone
                      service practices of eight private-sector companies considered leaders in
                      customer service.

                      SSA is seeking to improve its 800-number service while it faces increased
                      workloads and responsibilities due to demographic trends and legislative
                      changes. Increased responsibilities will, in turn, place demands on SSA’s
                      service delivery structure, including the 800-number service. For example,
                      as the baby boom generation ages, the number of applicants for and
                      recipients of retirement benefits will increase, placing demands on the 800
                      number and other service delivery methods. SSA estimates that, by the year
                      2015, 50.4 million individuals will be receiving benefits—one-third more
                      than the 37.4 million receiving Social Security retirement and survivors
                      benefits in 1995. In addition, because of recent congressional efforts to



                      Page 13                                      GAO/HEHS-97-79 800-Number Service
                     Chapter 1
                     Introduction




                     overhaul the nation’s welfare system, SSA will have to manage the large
                     influx of appeals and reapplications expected to result from changes in
                     benefit eligibility.5 Finally, call volume will probably increase when SSA
                     begins to send 123 million records of earnings and estimates of future
                     benefits known as the Personal Earnings and Benefit Estimate Statement
                     to individuals aged 25 and older, which the agency must begin doing by
                     fiscal year 2000.6 In the current fiscal environment, SSA is striving to
                     manage its growing workloads and responsibilities with fewer resources.


                     The Chairman of the Subcommittee on Social Security, Committee on
Objectives, Scope,   Ways and Means, House of Representatives, asked us to review SSA’s
and Methodology      efforts to improve its 800-number service. More specifically, in this report,
                     we address (1) how well SSA’s 800 number provides service to the public
                     and (2) what steps SSA needs to take to ensure that improvements to the
                     800 number are cost-effective. To develop information about SSA’s 800-
                     number performance and initiatives, we reviewed SSA studies,
                     performance data, and planning documents and interviewed responsible
                     officials at SSA headquarters. To better understand the impact on
                     workloads and operations of recent and future improvements to the
                     800-number service, we interviewed representatives at selected teleservice
                     centers in Baltimore, Maryland, and in Richmond and Salinas, California,
                     and at SSA’s Western Program Service Center in Richmond, California. We
                     also spoke with representatives of SSA’s employee groups, including the
                     American Federation of Government Employees, the National Council of
                     Social Security Management Associations, and a representative of the
                     Federal Managers’ Association.

                     We also examined 800-number trends and best practices in private-sector
                     companies and the Internal Revenue Service (IRS) to determine what
                     lessons SSA can draw from their experiences. We reviewed extensive
                     literature on 800-number trends and best practices and interviewed private
                     industry representatives and telecommunication experts and consultants.
                     We also interviewed IRS officials to discuss their 800-number operations
                     and efforts to automate 800-number transactions.




                     5
                      In 1996, the Congress enacted legislation that eliminates disability benefits for drug addicts and
                     alcoholics, restricts noncitizens’ SSI benefit eligibility, and tightens the SSA eligibility criteria for
                     disabled children.
                     6
                      These six-page statements supply workers with information about their yearly earnings on record at
                     SSA; information about their eligibility for Social Security retirement, survivor, and disability benefits;
                     and estimates of these benefits. See SSA Benefit Statements: Well Received by the Public but Difficult
                     to Comprehend (GAO/HEHS-97-19, Dec. 5, 1996).


                     Page 14                                                           GAO/HEHS-97-79 800-Number Service
Chapter 1
Introduction




Our audit work was conducted from April 1996 through May 1997 in
accordance with generally accepted government auditing standards.




Page 15                                   GAO/HEHS-97-79 800-Number Service
Chapter 2

SSA Takes Steps to Move Toward 5-Minute
Access Goal

              Through fiscal year 1995, SSA has had mixed results in providing world-
              class 800-number service. On the one hand, studies have found that SSA’s
              800-number teleservice representatives provide accurate and courteous
              service to callers. On the other hand, 800-number callers have often
              reached a busy signal instead of a teleservice representative or an
              automated message service. To improve customer access to its 800-
              number service, in early 1996 SSA greatly increased the number of
              employees trained to answer 800-number calls and installed a nationwide
              automated menu service that allowed callers to conduct transactions
              without speaking to an SSA representative. These initiatives moved SSA
              closer to its 5-minute access goal of having 85 percent of callers get
              through to the 800 number within 5 minutes of their first try. However,
              some callers SSA counted as getting through to the 800 number within 5
              minutes actually hung up or waited for some time to speak to a
              representative. Moreover, SSA’s strategy for improving access resulted in
              some setbacks and costs. For example, a proportion of the additional
              employees SSA trained to answer 800-number calls had been diverted from
              other duties, causing these employees’ usual work—maintaining
              beneficiary records—to accumulate.

              SSA’s future plans for the 800 number include maintaining high levels of
              accuracy and customer satisfaction, while further improving access to the
              800-number service. Consistent with rising customer expectations, SSA also
              plans to expand the number of transactions that customers may conduct
              using the 800 number. For example, SSA would like to conduct pilot tests to
              determine if callers want to file claims using the 800 number, rather than
              just make appointments to file claims with a field office. With workloads
              growing, reaching these goals will challenge SSA, especially since
              expanding services will make improving access more difficult for SSA. To
              help reach its goals, SSA plans to divert additional resources to the 800
              number—a strategy that with limited resources may prove neither
              sufficient nor sustainable for managing future 800-number improvements
              without jeopardizing other critical customer demands.




              Page 16                                     GAO/HEHS-97-79 800-Number Service
                        Chapter 2
                        SSA Takes Steps to Move Toward 5-Minute
                        Access Goal




                        Various ongoing surveys conducted by SSA and others have consistently
800-Number Service      shown that SSA’s 800-number teleservice representatives provide accurate
Has Historically Been   and courteous service to callers. Between April 1993 and September 1995,
Courteous and           internal monitoring of 800-number calls revealed that teleservice
                        representatives followed proper procedures for more than 81 percent of
Accurate but            calls; for those calls involving cash payments, teleservice representatives
Busy-Signal Rates       made no errors for more than 93 percent of calls. In addition, SSA surveys
                        of 800-number callers repeatedly found that over 88 percent of callers had
Were High               been satisfied with the way their calls were handled, and 97 percent
                        believed they had been treated courteously. Even an independent and
                        unsolicited study found that compared with world-class service
                        organizations, SSA’s 800 number provides courteous service from
                        knowledgeable representatives. In April 1995, DALBAR, Inc., compared
                        SSA’s 800-number service with those of eight private companies (including
                        Federal Express, AT&T Universal Card, and Nordstrom) in several
                        qualitative and quantitative areas.7 Although SSA did not perform well in
                        the quantitative areas (number of rings and time on hold), it rated high in
                        the qualitative areas (such as representatives’ attitude and knowledge),
                        giving SSA the highest overall score of all participating organizations.

                        Although some areas of SSA’s 800-number service got high marks, both the
                        DALBAR study and SSA recognized that many callers reached busy signals
                        instead of a teleservice representative or an automated service. Busy-
                        signal rates—which reflect the percentage of incoming calls that do not
                        get through to the 800 number—have been historically high, climbing from
                        under 33 percent in fiscal year 1990 to almost 50 percent in fiscal year
                        1995. SSA’s customers have had particular difficulty getting through to the
                        800 number during peak calling periods. These periods are generally
                        during the first 3 months of the year (when SSA typically sends
                        beneficiaries cost-of-living and tax-related documents), the first business
                        day of the month (when many beneficiaries are scheduled to receive their
                        checks from SSA), and the first workday of the week (typical for most
                        businesses). SSA is making some procedural changes to help reduce the
                        large volume of calls it gets at the beginning of each month.8 In addition,
                        SSA has increasingly diverted employees from other duties, specifically,
                        maintaining beneficiary records, to help answer phones during peak
                        calling periods. This was done, in part, to help counter the high attrition

                        7
                         World-Class Benchmarks: An Evaluation of Non-Financial Service Providers, DALBAR, Inc., (Boston:
                        1995). DALBAR, Inc., is a financial services, research, and publishing firm that conducts phone and
                        mail surveys to research customer service.
                        8
                         SSA recently published regulations allowing the agency to send checks to new beneficiaries during
                        the second, third, and fourth weeks of the month rather than the first week of the month. SSA expects
                        to begin sending benefit checks on a staggered basis in June 1997.



                        Page 17                                                     GAO/HEHS-97-79 800-Number Service
                         Chapter 2
                         SSA Takes Steps to Move Toward 5-Minute
                         Access Goal




                         rate among SSA’s teleservice representatives.9 Despite these efforts,
                         busy-signal rates continued to grow.


                         Persistently troubled by high busy-signal rates, SSA took decisive steps in
SSA Takes Steps to       early 1996 toward reaching its goal of having 85 percent of callers get
Improve Access           through to the 800 number in 5 minutes. These steps included doubling the
                         800-number workforce, mainly by diverting a large number of employees
                         from other duties to help teleservice representatives on an as-needed basis
                         and establishing a nationwide automated menu allowing customers to
                         conduct certain transactions without speaking to a representative. Access
                         rates subsequently improved, largely due to increasing the number of
                         employees answering 800-number calls. SSA’s initiatives also experienced
                         setbacks and costs, however, such as paying the diverted employees
                         overtime to manage their usual workload.


SSA Doubles Trained      To help reach its 5-minute access goal, SSA nearly doubled its 800-number
800-Number Workforce     workforce. By January 1997, SSA had a total of about 7,400 employees
                         trained and available to handle 800-number calls. SSA managed this
                         increase in staff largely by training and diverting employees, referred to as
                         “Spikes,” from other SSA offices to help answer 800-number calls during
                         peak calling periods. SSA had already been diverting higher graded
                         employees from its program service centers as Spikes.10 Responsible for
                         handling complex changes to beneficiary records that can affect SSA
                         payments to beneficiaries, these employees required little additional
                         training to handle 800-number calls. SSA tripled the number of available,
                         trained Spikes—from just over 1,200 in fiscal year 1995 to 3,700 in early
                         1996—which included lower graded personnel from program service
                         centers.


SSA Implements a New     In addition to enlarging its 800-number workforce, SSA hoped to improve
Automated Menu Service   access by installing a new, nationwide automated menu. Before
                         establishing this menu, SSA offered an automated message service to about
                         60 percent of 800-number callers. Callers could request application forms
                         for a Social Security card or a Personal Earnings and Benefit Estimate

                         9
                          SSA has reported losing an average of one teleservice representative per day to attrition.
                         10
                           SSA has six program service centers that as of Sept. 1996 employed 6,807 technical and clerical
                         employees and are primarily responsible for maintaining the records of Social Security benefits
                         recipients. The work of the program service centers includes initiating payment of benefits,
                         establishing the master benefit record, handling changes that affect benefit eligibility or amount, and
                         reconsidering initial decisions on benefit eligibility that claimants have appealed.



                         Page 18                                                       GAO/HEHS-97-79 800-Number Service
Chapter 2
SSA Takes Steps to Move Toward 5-Minute
Access Goal




Statement (PEBES), order a statement verifying benefit payments received
from Social Security, or listen to recorded information on Social Security
programs. In early 1996, SSA implemented a new automated menu service
that gave all 800-number callers (with Touch-Tone telephones) access to
three of the previously automated transactions plus two additional
ones—information on the closest field office location and a Medicare
option allowing callers to obtain local numbers to call with questions
about their Medicare equipment coverage, hospital expenses, and doctor
services. SSA enhanced its automated service in August 1996 to allow
rotary dial callers to choose transactions from the automated menu. In
December 1996, SSA added another transaction under the Medicare option
allowing callers to order a replacement Medicare card. SSA did not offer
the recorded information on Social Security programs provided previously
because callers had been using it infrequently.

The new automated menu also allowed 800-number callers to select one of
several specific topics about which they wished to speak to an SSA
representative. These callers would then be transferred or “gated” to an
appropriate SSA employee; for example, callers with questions on their
PEBES would be gated to an SSA unit trained to handle those questions. The
automated menu service available to callers in January 1997, including the
new Medicare replacement card option, is shown in figure 2.1.




Page 19                                     GAO/HEHS-97-79 800-Number Service
                                   Chapter 2
                                   SSA Takes Steps to Move Toward 5-Minute
                                   Access Goal




Figure 2.1: 800-Number Automated
Menu




                                   Page 20                                   GAO/HEHS-97-79 800-Number Service
Chapter 2
SSA Takes Steps to Move Toward 5-Minute
Access Goal




Note: If the caller selects a default option or selects no option, the caller is automatically routed to
an SSA nonspecialist representative.



Page 21                                                        GAO/HEHS-97-79 800-Number Service
                         Chapter 2
                         SSA Takes Steps to Move Toward 5-Minute
                         Access Goal




SSA Moved Closer to      SSA’sinitiatives, particularly the use of additional Spikes, resulted in more
5-Minute Goal but Also   callers getting through to the 800 number within 5 minutes of their first try.
Had Setbacks             The percentage of callers getting through within 5 minutes rose to
                         83 percent in fiscal year 1996 from 74 percent in fiscal year 1995. Although
                         both the additional staff and new automated menu probably helped more
                         callers get through, the additional staff had the more profound impact. The
                         highest rates of callers getting through coincided with the period during
                         which SSA diverted the largest number of Spikes to answer telephones.

                         In assessing its progress in meeting this goal, SSA is measuring access to
                         the system, not access to service. Specifically, SSA is measuring the
                         percentage of callers connected to the 800-number service within 5
                         minutes of their first try but stops the clock when callers are connected to
                         either an automated service or a teleservice representative or placed on
                         hold. Therefore, SSA’s performance measure does not capture the
                         percentage of callers who actually speak to a representative or complete
                         their business using an automated service. For fiscal year 1996, although
                         SSA counted 83 percent of callers as getting through to the 800 number
                         within 5 minutes, a smaller percentage actually spoke to a representative
                         or completed an automated transaction: the rest hung up before speaking
                         to a representative or completing their automated transaction.11 Nor does
                         SSA include in the 5-minute goal the amount of time that callers spend on
                         hold waiting to speak to a representative. In fiscal year 1996, the average
                         amount of time per month that callers waited to speak to a representative
                         ranged from almost 2 minutes to just over 4 minutes.

                         The diversion of a large number of employees to answer 800-number calls
                         created problems in other areas. As SSA expected, the usual work of the
                         program service centers accumulated while Spikes were handling 800-
                         number calls. According to SSA officials, program service centers had
                         ended previous fiscal years with about 2 weeks of work in progress or
                         “pending” work. For fiscal year 1996, SSA officials said the program service
                         centers finished the year with 3.5 weeks of pending work, despite program
                         service center employees working 840,000 hours of overtime to manage
                         their telephone duties while keeping the pending workload down. The
                         pending workload was somewhat less than SSA originally expected but still
                         a significant amount. Some program service representatives told us that
                         delays in processing these workloads can affect SSA payments to
                         beneficiaries and have caused additional inquiries to the 800 number by

                         11
                          In fiscal year 1996, 21 percent of all callers who got through to the 800 number—including callers
                         who got through within 5 minutes—hung up before speaking to a representative or completing their
                         automated transaction. SSA does not track the percentage of callers who got through within 5 minutes
                         and who hung up before being served.



                         Page 22                                                    GAO/HEHS-97-79 800-Number Service
Chapter 2
SSA Takes Steps to Move Toward 5-Minute
Access Goal




affected customers; however, SSA does not track and therefore does not
know the extent to which callers call the 800 number because of delays in
processing transactions.

In addition, SSA’s efforts to gate callers with specific questions to special
units or employees did not work as well as planned. For example, SSA
planned to gate all calls about the PEBES to a special SSA unit with expertise
in handling those calls. The special unit was quickly overwhelmed with too
many calls, however, including calls unrelated to the PEBES, which the unit
was not trained to handle. Because the special unit lacked equipment to
transfer callers back to the main 800 number, when these staff received
questions beyond their expertise, they directed callers to the main 800
number again, which diminished service for those callers. To resolve these
issues, SSA took several steps, including limiting the number of calls gated
to the special unit; increasing the number of staff for that unit; and training
the unit to handle a few additional, simpler types of inquiries. SSA is also
considering purchasing equipment and technology necessary for
transferring callers to different SSA numbers.

Finally, some initial, technological setbacks hindered SSA’s efforts to
improve access. Most dramatically, the automated menu service lacked
sufficient capacity for SSA’s tremendous call volume and was overloaded
on its first day of implementation, resulting in only about 25 percent of
callers getting through to the 800 number on that day. The next day, SSA
switched to another, temporary system capable of handling SSA’s high call
volume; however, its automated features could not be used by Spanish-
speaking callers or callers with rotary dial telephones. SSA began providing
automated service to rotary dial callers in August 1996. Later in 1997, SSA
plans to phase in a Spanish version of the automated menu as well as
change the type of telephone switching centers12 that support its 800-
number service.

In addition, SSA had problems with the technology that allows callers to
record their requests for information. This technology sporadically
malfunctioned during attempts to transcribe the recorded information,
which resulted in, among other things, callers occasionally receiving
multiple PEBES applications. In addition, the technology did not provide an
accurate count of the number of callers using this technology—data that
SSA needs to evaluate the use and effectiveness of this feature. SSA
subsequently fixed the transcription problem but, as of February 1997, was

12
  SSA’s 800 number currently uses telephone switching centers or computers that serve only Federal
Telephone System 2000 customers. SSA plans to move the 800-number service to switching centers
that serve other customers and offer more technological features.



Page 23                                                    GAO/HEHS-97-79 800-Number Service
                                     Chapter 2
                                     SSA Takes Steps to Move Toward 5-Minute
                                     Access Goal




                                     still trying to resolve problems with obtaining an accurate count of callers
                                     using this technology.


                                     SSA  has established more ambitious goals and added performance
Improving                            measures for both its 800-number service and overall customer service for
800-Number Service                   fiscal year 1997. For example, SSA raised its access goal for the 800 number
With Limited                         to having 95 percent of callers get through within 5 minutes from its
                                     previous goal of 85 percent, although this goal continues to reflect access
Resources Will                       to the 800-number system and not to service. SSA knows that this measure
Challenge SSA                        is incomplete and is considering revising its 800-number goals and
                                     measures as part of a broader effort to reassess its customer service
                                     standards. For fiscal year 1997, SSA has already added a new goal for
                                     accuracy of 800-number service as well as two new goals for overall
                                     customer service performance. Table 2.1 shows SSA’s performance
                                     measures and goals for fiscal year 1997 for the 800 number and for
                                     customer service in general.

Table 2.1: SSA’s Performance
Measures and Goals for Fiscal Year                                                                                 Goal
1997                                 Measure                                                                   (percent)
                                     Overall service
                                       Percent of people who rate SSA service as courteous or very courteous         90
                                       Percent of people who rate SSA service as good or very good                   82
                                     800-number service
                                       Percent of callers who reach 800 number within 5 minutes                      95
                                       Percent of calls handled accurately                                          97.2

                                     In addition to establishing goals for access and accuracy, SSA plans to
                                     increase the number of transactions that customers may conduct and
                                     complete with one call to the 800 number. As discussed in chapter 1, SSA
                                     has learned that its customers want to transact more business using the
                                     800 number and do so with one call. SSA’s future plans include exploring
                                     technology and system changes that will enable callers to conduct
                                     complex transactions, such as filing benefit claims, and to complete
                                     transactions with one call to the 800 number.

                                     SSA officials recognize that improving access while expanding services will
                                     be challenging. Improving access alone will be difficult because the
                                     volume of 800-number calls is expected to grow as a result of several
                                     demographic, legislative, and program changes. Expanding the number of
                                     transactions conducted and completed over the 800 number, combined



                                     Page 24                                           GAO/HEHS-97-79 800-Number Service
Chapter 2
SSA Takes Steps to Move Toward 5-Minute
Access Goal




with increasing call volume, will make it even more difficult for SSA to
reach its ambitious access goals. Increasing the number or length of
transactions conducted over the 800 number will occupy 800-number
lines, further exacerbating busy-signal rates. SSA officials concede that
even with its current policy of conducting only simple business
transactions over the 800 number, the agency has had difficulty keeping
pace with customer demand.

To help reach its access goals, SSA plans to add 1,000 additional, lower
graded Spikes to the trained 800-number workforce to help out during
peak calling periods. Moreover, SSA has already taken steps to counter its
historically high attrition rate of one teleservice representative per day by
hiring additional teleservice representatives at the beginning of fiscal year
1997 to replace those expected to leave by the end of the fiscal year. SSA
also began installing a network of personal computers in April 1997 that
will have expert system software intended to provide guidance to
teleservice representatives.13 SSA expects that this software will improve
the consistency and accuracy—and possibly the cost-effectiveness—of
800-number service.

These steps, however, might not help SSA meet its immediate and
long-term goals. SSA’s 95-percent access rate will be hard to reach because
training the new Spikes and installing the new computer equipment only
began in April 1997 but will not be completed until December 1997.
Moreover, shutting down teleservice centers for at least a week while
computers are being installed and teleservice representatives are being
trained to use them might degrade service. Finally, although SSA has
increased the size of the trained 800-number workforce by 1,000 Spikes,
the agency plans to increase the amount of help that Spikes provide during
fiscal year 1997 by only 170 work-years over that of fiscal year 1996. On
the other hand, diverting more employees might result in a further
accumulation of their usual work, considerable amounts of overtime paid
to do this, or both. As SSA seeks to handle growing agencywide workloads
and responsibilities with fewer resources, its strategy of paying these
employees overtime does not appear to be a sustainable, long-term
solution for improving 800-number service.




13
 SSA’s Automation Investment Fund of $1.1 billion supports its 5-year plan, from fiscal years 1994 to
1998, of moving from reliance on mainframe computers toward a nationwide network of personal
computers.



Page 25                                                      GAO/HEHS-97-79 800-Number Service
Chapter 3

Steps Needed to Cost-Effectively Improve
SSA’s 800 Number

                             SSA faces many challenges in trying to meet rising customer demand and
                             expectations for its 800-number service. The experiences of the private
                             sector and IRS in meeting similar challenges could help SSA cost-effectively
                             improve its 800 number. While SSA knows about many of these cost-
                             effective practices, it needs to take deliberate steps to successfully
                             implement them. For example, more and more private companies have
                             made greater use of automated services to both satisfy growing customer
                             demand and expectations as well as reduce the cost of their 800-number
                             operations. To move in this direction, SSA would first need to
                             systematically identify transactions suitable for automation, then develop
                             and test an expanded menu of automated transactions. For those
                             transactions considered too complex to automate, leading private-sector
                             companies reduce the operating and administrative costs of providing live
                             assistance by locating their call agents in a few large centers. Likewise, SSA
                             could reduce the cost of providing live assistance by consolidating its
                             network of 37 teleservice centers.

                             In contrast to some businesses that rely primarily on their 800 numbers to
                             provide customer service, SSA continues to provide service through an
                             extensive field office network as well as over the 800 number. Therefore,
                             before adding to the number of transactions available over the 800
                             number, SSA needs to determine whether the 800 number is the most
                             cost-effective way to deliver those services. Currently, however, SSA does
                             not systematically collect the cost and performance data necessary to
                             make such a determination. (See app. II for additional information on
                             private-sector trends and best practices in 800-number service.)


                             Following private-sector practices, SSA could save money and improve
Steps Needed to              access by expanding the use of the automated menu to provide routine
Expand Automated             services; however, SSA has not taken concrete steps to do this. Until SSA
Services                     develops automated methods for verifying callers’ identities, it cannot
                             automate transactions involving sensitive information. SSA set up a work
                             group to study this issue, but the group has no results to date. In contrast,
                             IRS—a public agency also concerned with protecting the privacy and
                             integrity of the business it conducts with the public—has successfully
                             implemented automated security measures, such as customer service
                             numbers, to establish callers’ identities for several sensitive transactions.


SSA Does Not Have            As in the private sector, SSA could save money while improving access by
Concrete Plans to Increase   increasing the number of services provided through the automated menu.
Automated Transactions       Private-sector companies have dramatically reduced per call costs by


                             Page 26                                       GAO/HEHS-97-79 800-Number Service
                                        Chapter 3
                                        Steps Needed to Cost-Effectively Improve
                                        SSA’s 800 Number




                                        relying on automated response systems to reduce the number of simple
                                        and routine calls handled by call agents. Companies have used these
                                        systems in the past to handle routine transactions that do not require an
                                        explanation but are increasingly using them to handle a wider and more
                                        complex range of transactions such as the making of bill or loan payments
                                        by customers. As of February 1997, SSA has limited the automated menu to
                                        five of SSA’s simpler, most frequent transactions.14 SSA’s Office of Inspector
                                        General recommended in 1995, before SSA established the nationwide
                                        automated menu, that the proposed menu be expanded to include, for
                                        example, 11 of SSA’s simpler, more repetitive transactions to reduce the
                                        number of staff-years needed to handle 800-number calls. Table 3.1 shows
                                        these 11 transactions, including the percentage of 800-number calls they
                                        represent and whether they are currently automated.

Table 3.1: Transaction Types Suitable
for Automation                                                                                    Percent of calls          Currently
                                        800-number services                                         (8/92 to 7/93)a         automated
                                        Requests for new or replacement Social                                  12.9        Request for
                                        Security cards                                                                      application
                                        Benefit verification                                                     5.1        Yes
                                        Personal Earnings and Benefit Statement                                  3.8        Request for
                                                                                                                            application
                                        Field office location                                                    4.1        Yes
                                        Nonreceipt of check                                                      3.8        No
                                        Status of claim                                                          5.0        No
                                        Change of address                                                        6.4        No
                                        Scheduling of appointment to file retirement                             2.4        No
                                        claim
                                        Other forms/literature                                                   1.0        Nob
                                        Inquiries about direct deposit                                           6.4        No
                                        Application for Medicare card                                            1.6        Yesc
                                        Total                                                                   52.5
                                        a
                                         According to Inspector General representatives involved in this audit, the data on percent of
                                        calls were collected as part of a special study conducted by SSA’s Office of Program Integrity
                                        Review.
                                        b
                                         Automated options for requesting pamphlets or listening to informational messages are only
                                        available to callers after hours.
                                        c
                                         The automated menu also allows callers to get information on Medicare coverage of medical
                                        equipment or supplies, inpatient hospital expenses, or doctors’ services.

                                        Sources: Improving Service on Social Security Administration’s 800 Telephone Number Network,
                                        SSA, Office of Inspector General, Dec. 1995 and SSA’s Office of Telephone Services.


                                        14
                                         During evenings and holidays, when SSA representatives are not working, SSA offers callers two
                                        additional automated transactions—to request pamphlets or listen to informational messages.



                                        Page 27                                                    GAO/HEHS-97-79 800-Number Service
                             Chapter 3
                             Steps Needed to Cost-Effectively Improve
                             SSA’s 800 Number




                             As of February 1997, SSA did not have concrete plans to expand its current
                             selection of automated transactions. According to SSA officials, SSA is
                             postponing development of such plans until it has completely phased in an
                             automated menu that can be used by Spanish-speaking callers.

                             In addition, SSA officials are concerned that providing too many automated
                             transaction options and submenus might confuse customers and increase
                             the length (and thus cost) of each call. SSA’s current automated menu
                             offers seven initial options (including a live assistance and repeat option).
                             Some of these options lead to other submenus with additional, more
                             specific options. Experience in the private sector has shown, however,
                             that, if carefully scripted and tested, automated systems of two to three
                             submenus with up to four transaction choices each can produce high
                             customer use and satisfaction.

                             To systematically identify the most cost-effective transactions for
                             automation, SSA needs ready access to detailed data on the frequency of
                             specific types of calls. Using these data, SSA could determine which
                             transaction types, if automated, would most likely decrease time spent by
                             SSA representatives, for example, providing routine information. SSA does
                             not now track reasons for each incoming call because it would require
                             teleservice representatives to remember and accurately record the
                             information. Instead, SSA relies on data acquired from (1) routine call
                             monitoring conducted for quality assurance purposes and (2) surveys of
                             recent 800-number callers. Due to the small sample size of calls monitored
                             for quality assurance purposes, however, “reason-for-call” categories are
                             combined to get representational data. Although combined categories
                             might create more representational information for quality assurance
                             purposes, they become less useful for identifying specific call types that
                             could be transactions suitable for automation.15 Data acquired from
                             surveys of 800-number callers are based on callers’ recollection of their
                             reason for calling and therefore are not very reliable.


SSA Must Resolve How to      Some types of routine SSA transactions might be suitable for automation
Verify Callers’ Identities   but, due to their sensitivity, cannot be automated until SSA develops
Using Automated              methods for verifying callers’ identities without using teleservice
                             representatives. To reduce the risk of program fraud or inappropriate
Transactions                 access to personal records, SSA service representatives handle many
                             routine but sensitive transactions either in person or by telephone to verify

                             15
                              To illustrate this, all calls concerning claims are combined into one category. For purposes of
                             automation, SSA might be interested in, for example, the number of callers who want to schedule an
                             appointment to file a claim.



                             Page 28                                                    GAO/HEHS-97-79 800-Number Service
                          Chapter 3
                          Steps Needed to Cost-Effectively Improve
                          SSA’s 800 Number




                          customers’ identities. For example, a beneficiary may change the address
                          on record only after establishing his or her identity with an SSA
                          representative by correctly answering a series of questions that only that
                          individual could answer (such as place of birth or mother’s maiden name).

                          SSA is in the early stages of examining how to verify callers’ identities using
                          the automated features of an 800-number service. SSA created the
                          Electronic Service Delivery project to identify cross-component,
                          cross-program approaches for providing convenient, cost-effective, secure,
                          and user-friendly service options to customers. Under this effort, SSA work
                          groups are studying the problem of protecting individual privacy and
                          program integrity for sensitive transactions conducted using electronic
                          media. While the work groups are largely focusing on the problem of
                          providing customer service over the Internet, one work group is
                          developing the first set of agency standards for determining the level of
                          security required for different types and methods of transactions,
                          including telephone transactions. As of February 1997, this work group
                          had not yet completed a broad set of standards for authentication.


IRS’ 800-Number Service   IRS provides a useful example of a public agency’s conducting sensitive
Offers Secure Automated   transactions that require verifying callers’ identities without the help of
Transactions              agency representatives. IRS operates an 800-number service that had
                          historically experienced even higher busy-signal rates than SSA’s. To
                          improve access, IRS has increased the use of automated services to allow
                          telephone agents to take more complex calls. As with SSA, many of the
                          transactions that IRS conducts with the public require security measures to
                          prevent fraud or improper disclosure of information.

                          As of January 1997, IRS had successfully automated several of its 800-
                          number transactions that require verification of callers’ identities. For
                          example, taxpayers may learn the status of their refund or the amount of
                          payment due without speaking to an IRS representative. To learn about the
                          status of a refund, callers first establish their identity by keying in their
                          Social Security number, filing status, and refund amount using their
                          Touch-Tone telephone. Using more stringent security measures, certain
                          taxpayers may also file an income tax return over the 800 number. IRS
                          provides taxpayers who have a history of filing the simplified tax form
                          (1040EZ) a customer service number in the tax documents mailed to them.
                          These preidentified taxpayers may now file their 1040EZ forms using IRS’
                          automated 800-number service by first keying in their personal




                          Page 29                                       GAO/HEHS-97-79 800-Number Service
                         Chapter 3
                         Steps Needed to Cost-Effectively Improve
                         SSA’s 800 Number




                         identification number along with their Social Security number and date of
                         birth.


                         SSA also needs to pursue cost-effective approaches for delivering those
SSA Needs a              services that it determines are too complex to automate and therefore
Cost-Effective           require the SSA representatives’ help. SSA is moving in this direction, for
Strategy for Providing   example, by providing its teleservice representatives with new personal
                         computers and software to improve the consistency and accuracy of
Live Assistance          service and linking call centers electronically to improve call routing.
                         Although these new workstations might improve the consistency and
                         accuracy of service, SSA’s plan to electronically link centers falls short of
                         private-sector trends to save money and improve service by reducing the
                         number of call centers.

                         Consistent with private-sector practices, SSA has plans for improving the
                         way its teleservice representatives provide customer service. Private-
                         sector leaders recognize the importance of providing call agents with
                         state-of-the-art technology and tools to provide fast and effective service.
                         For example, expert systems that provide immediate access to technical
                         guidance are common tools for many 800-number agents. In addition,
                         companies are successfully reducing service time by linking
                         telecommunication and computer technology to access customer records
                         even before the call agent takes a call. As noted earlier, SSA plans to install
                         new personal computers with expert system software at each teleservice
                         center, which it expects will improve the consistency and accuracy of
                         service provided by teleservice representatives and Spikes.

                         SSA also has plans to expand previous efforts to link more teleservice
                         centers together electronically. SSA recognizes that 37 teleservice centers
                         are too many and that consolidating them would reduce costs. SSA is
                         reluctant to reduce the number of centers, however, because of the impact
                         that closures will have on employees and surrounding communities. SSA’s
                         plan to electronically link centers achieves some of the benefits of
                         consolidation, such as increased operational efficiency and telephone
                         access, without closing centers. While closing offices would be difficult,
                         locating its teleservice representatives in fewer call centers would most
                         likely result in even lower operating and administrative costs for SSA and
                         improve the quality of the 800-number service. Private-sector best
                         practices have demonstrated that reducing the number of call centers
                         provides many benefits, including lower rent and utilities, lower operating
                         and equipment costs, increased managerial control and flexibility in



                         Page 30                                        GAO/HEHS-97-79 800-Number Service
                      Chapter 3
                      Steps Needed to Cost-Effectively Improve
                      SSA’s 800 Number




                      staffing, centralized training and support, and increased consistency in
                      processes and services. Similarly, the benchmarking effort sponsored by
                      the National Performance Review found that 800-number services operate
                      most efficiently with few centers with as many as 600 employees each. As
                      far back as 1990, HHS’ Office of Inspector General16 recommended that SSA
                      consolidate the 800-number network into fewer call centers to lower
                      operating and equipment costs, as well as to increase flexibility in using
                      telephone agents, the public’s telephone access, and opportunities to use
                      new technology. SSA continues to study this issue but does not have
                      concrete plans to significantly reduce or consolidate its current teleservice
                      centers.


                      Consistent with private-sector practices, SSA is responding to customers’
Expanding Services    demands to conduct a greater range of transactions by phone and to
Requires Carefully    complete their business with one call. Unlike some private-sector leaders
Assessing Costs and   in 800-number service, however, SSA provides services through an
                      extensive field office network in addition to its 800 number. SSA recognizes
Benefits              that before increasing the range of transactions provided by its 800-
                      number service, it should first assess such changes’ effect on other service
                      delivery methods and whether they are the most cost-effective approach
                      for providing service. For example, SSA would like to allow callers to file
                      claims for benefits using the 800-number service without having made an
                      appointment. Individuals must now file claims by calling or visiting one of
                      SSA’s field offices, typically by appointment. Because filing a claim requires
                      30 or more minutes to complete, adding this service to the 800 number
                      might negatively affect access to the 800 number without providing a
                      commensurate reduction in field offices’ workload and thus not contribute
                      to the overall cost-effectiveness of service delivery.

                      Knowing whether filing claims or conducting other complex transactions
                      over the 800 number is cost-effective compared with other methods would
                      help SSA justify 800-number improvements to internal and external
                      stakeholders, including employee groups and the Congress. At this time,
                      however, SSA does not know how the cost of conducting transactions over
                      the 800 number compares with the cost of conducting transactions using
                      other service delivery methods such as field office telephones. Due to
                      differences in local phone systems, SSA does not know how many calls
                      field offices receive. In addition, SSA does not track the resources devoted
                      to answering field office telephones. In general, the cost of 800-number

                      16
                        Before SSA became an independent agency, HHS’ Office of Inspector General had responsibility for
                      internal audits of SSA. After gaining independence from HHS, SSA established its own Office of
                      Inspector General.



                      Page 31                                                    GAO/HEHS-97-79 800-Number Service
Chapter 3
Steps Needed to Cost-Effectively Improve
SSA’s 800 Number




workloads is basically easier to evaluate than that of field office workloads
because the 800 number is supported by a centralized telephone network
that routinely and automatically tracks all calls.

As SSA expands the range of transactions available through the 800
number, the agency also needs to develop better performance measures of
how well or completely callers are being served. As discussed in chapter 2,
SSA is currently measuring access to the system, not to service, in assessing
progress toward its access goal. This is inconsistent with common
private-sector practices, which typically establish performance goals
based on access to service. SSA already collects data on the average
amount of time callers spend waiting on hold to speak to a representative.
SSA also collects data on the length of time each caller speaks with a
teleservice representative and the number of callers who hang up either
while waiting to speak to a teleservice representative or before completing
an automated transaction. With this data, SSA could establish performance
goals and measures on the extent to which callers actually completed their
automated transaction or were assisted by a teleservice representative, the
amount of time spent on hold, and the total length of calls.

Although SSA can establish additional performance goals based on data
that it already collects, it does not collect other data that would allow it to
more fully measure access to service. For example, SSA does not track the
reason for each call and therefore cannot establish a performance measure
for whether callers successfully complete specific types of transactions
and the length of time required to do so. In addition, according to research
and consulting organizations specializing in customer service, customers
consider time spent waiting on hold to be less important than what they
experience once the phone is answered. A wait of 1 minute is usually
acceptable, for example, if customers then reach someone who can handle
their call to completion on first contact.17 SSA does not now track
information on the extent to which it transfers callers to other units,
however, or refers them to another office to complete the callers’
business. SSA is currently reassessing its customer service performance
goals and measures. As it does so, SSA will need additional information on
the extent to which callers can successfully complete various types of
transactions and the length of time or number of steps required to do so.




17
 Jay Marwaha and Jeff Tommerdahl, “Outsourcing Your Customer Service,” Telemarketing, Vol. 14,
No. 2 (1995), p. 84.



Page 32                                                  GAO/HEHS-97-79 800-Number Service
Chapter 4

Conclusions, Recommendations, and
Agency Comments and Our Evaluation

              Since its inception in 1989, SSA’s nationwide 800 number has received
Conclusions   increasing numbers of calls, reflecting growing customer preference for
              using this service. Meanwhile, SSA has had trouble keeping up with caller
              demand as indicated by persistently high busy-signal rates. Recent
              initiatives, including adding more people to handle 800-number calls and
              installing a nationwide automated menu, have increased the percentage of
              callers getting through to the 800 number within 5 minutes of their initial
              try. SSA accomplished this, however, mainly by diverting SSA employees
              from other work areas, causing these employees’ usual work—maintaining
              beneficiary records—to accumulate.

              SSA’s 800 number will remain an important service delivery method, for
              which demand is expected to grow. SSA will need to determine how to
              most cost-effectively meet this growing demand in the current fiscal
              environment. In addition to improving access, SSA’s future plans include
              expanding the number of transactions callers may conduct and complete
              using the 800 number. With limited resources, however, SSA will have
              difficulty reaching its competing goals: expanding the range of and
              increasing access to 800-number services.

              SSA knows that private-sector companies are expanding 800-number
              services and increasingly relying on technology to cost-effectively meet
              customer demand and has adopted some of these approaches to meet its
              growing demand. We support these efforts, but SSA needs to take the
              additional steps that IRS and the private sector have used to cost-
              effectively meet their customers’ expectations. For example, to improve
              cost-effectiveness, SSA should develop concrete plans to automate more
              transactions, systematically reviewing data to identify those best suited for
              automation. As it seeks to increase the number of automated transactions,
              SSA will also need to ensure that it protects against fraud and improper
              disclosure of private information.

              To provide cost-effective service when live assistance is necessary,
              private-sector companies tend to locate their call agents in a few large
              centers and provide them with the technology and tools to quickly and
              efficiently serve their customers. SSA has taken some steps to provide its
              call agents with additional tools but should have a more comprehensive
              strategy for providing cost-effective live assistance. For example, SSA
              needs to develop a concrete plan for locating its teleservice
              representatives into fewer, larger call centers. Office closures involve
              sensitive human resource issues and may have a negative impact on local
              communities. For these reasons, SSA will need to work with employee



              Page 33                                      GAO/HEHS-97-79 800-Number Service
                         Chapter 4
                         Conclusions, Recommendations, and
                         Agency Comments and Our Evaluation




                         groups, and with the Congress, to successfully implement any
                         consolidations.

                         Before expanding the 800-number service to include additional
                         transactions, such as filing of claims, SSA should determine the impact of
                         such an expansion on overall service delivery, including its cost-
                         effectiveness. To do this, SSA will need additional cost data on alternative
                         service delivery methods. In addition, SSA needs additional information on
                         the 800 number’s performance, including the extent to which customers
                         may complete their business with SSA in one call and the length of time or
                         number of steps required for SSA to completely serve a customer. With this
                         data, SSA would have a more complete picture of how effectively it is
                         serving callers.


                         To serve the public’s growing demand for SSA’s 800-number services with
Recommendations          limited resources, SSA needs to take additional steps toward improving the
                         800 number in a cost-effective manner. These steps should include

                     •   developing a plan for expanding automated services that both
                         systematically identifies additional transactions for automation and, for
                         sensitive transactions, protects against fraud and inappropriate disclosure
                         of private information and ensures program integrity and customer
                         privacy;
                     •   developing and implementing a plan for reducing the number of call
                         centers to save money and enhance service provided by SSA
                         representatives;
                     •   comparing the cost-effectiveness of expanding the 800-number service
                         with that of other service delivery methods, such as face-to-face service;
                         and
                     •   establishing additional performance measures to more fully assess the
                         consequences of expanding 800-number services, including measures for
                         the promptness and completeness of 800-number customer service.


                         SSA officials generally agreed with the conclusions and recommendations
Agency Comments          in this report and stated that the report would be useful to SSA as it further
and Our Evaluation       refines its 800-number service. In response to our recommendation that
                         automated services be expanded, SSA commented that recent internal
                         surveys suggest that callers may not readily accept automated services to
                         conduct their business. Because of the cost-effectiveness of this approach,
                         however, SSA needs to continue to seek ways, we believe, to expand



                         Page 34                                       GAO/HEHS-97-79 800-Number Service
Chapter 4
Conclusions, Recommendations, and
Agency Comments and Our Evaluation




800-number automated services. Furthermore, public acceptance of
automated services has been growing as indicated by private-sector
trends. In response to our recommendation that SSA develop and
implement a plan for reducing the number of call centers, SSA said that it
continues to explore all potential efficiencies and take appropriate action,
including the consolidation and collocation of teleservice centers. While
SSA has consolidated or collocated some teleservice centers, it has also
continued to add call answering sites to its teleservice center network. SSA
needs a more comprehensive and far-reaching plan, we believe, for
providing cost-effective live assistance that, consistent with private-sector
practices, includes organizing its teleservice representatives into a smaller
network of large call centers. Trends in the private sector amply
demonstrate that fewer, large centers yield operational and cost
efficiencies.

Finally, SSA stated that it has taken steps consistent with our
recommendations that it compare the cost-effectiveness of 800-number
service with other service delivery methods and that it establish additional
performance measures. In establishing more complete performance
measures, SSA should ensure that such measures involve the entire
800-number service and that information collected is not limited to pilot
projects. SSA also provided technical comments, which we have
incorporated in this report as appropriate. The full text of SSA’s comments
appears in appendix III.




Page 35                                       GAO/HEHS-97-79 800-Number Service
Appendix I

SSA Customer Service Pledge


                 We will administer our program effectively and efficiently to protect and
                 maintain the Social Security trust fund and to ensure public confidence in
                 the value of Social Security. We are committed to fair and equitable
                 service to our customers. We promise to respect your privacy and
                 safeguard the information in your Social Security record.

                 We are equally committed to providing you with world-class public
                 service. When you conduct business with us, you can expect:

             •   We will provide service through knowledgeable employees who will treat
                 you with courtesy, dignity, and respect every time you do business with us.
             •   We will provide you with our best estimate of the time needed to complete
                 your request and fully explain any delays.
             •   We will clearly explain our decisions so you can understand why and how
                 we made them and what to do if you disagree.
             •   We will make sure our offices are safe, pleasant, and our services are
                 accessible.
             •   When you make an appointment, we will serve you within 10 minutes of
                 the scheduled time.
             •   If you request a new or replacement Social Security card from one of our
                 offices, we will mail it to you within 5 working days of receiving all the
                 information we need. If you have an urgent need for the Social Security
                 number, we will tell you the number within 1 working day.
             •   When you call our 800 number, you will get through to it within 5 minutes
                 of your first try.

                 We know that you expect world-class service in all of your dealings with
                 us. In 1994, when we set these standards, we were unable to meet your
                 expectations in some areas, but we have worked to change that. We are
                 revising all our critical work processes to make them simpler, quicker, and
                 more customer-friendly. When we redesign our processes, you can expect:

             •   When you first apply for disability benefits, you will get a decision within
                 60 days.




                 Page 36                                       GAO/HEHS-97-79 800-Number Service
Appendix II

Private-Sector Trends and Best Practices in
800-Number Service

                     The private sector is facing many of the same customer demands and
                     challenges faced by SSA. Customers are continually demanding more
                     convenient ways to conduct business. Recognizing these demands, private
                     companies are increasingly relying on 800-number telephone service to
                     conduct business with their customers because 800 numbers are
                     convenient and free to the customer. In addition, once private-sector
                     companies establish 800-number service, customer preferences have had
                     an important influence on what and how services are delivered.

                     More and more companies are using automated menus, known as
                     automated response systems, to cost-effectively handle the increasing
                     volume of incoming calls while meeting customer preferences for a wide
                     range of 800-number services. Telecommunications experts we contacted
                     unanimously viewed this technology as more cost-effective than using live
                     assistance. Automated response systems have been used mainly when
                     callers have a frequently asked question or wish to complete a routine
                     transaction that does not require live assistance. Companies are
                     increasingly seeking ways to automate more complex transactions,
                     however, that require customers to interact with the system to a greater
                     degree than, for example, simply obtaining information.

                     Although the private sector continues to emphasize finding 800-number
                     services that can be automated, live assistance remains a necessary part of
                     service for handling unusual or complex transactions or for customers
                     with some special need or question. To lessen the cost of live assistance
                     and enhance service, private-sector companies provide their call agents
                     with state-of-the-art telephones, computers, and software applications and
                     tend to organize them in a few large centers. Although opinions vary on
                     the ideal number and size of call centers, a few sites with large numbers of
                     call agents has become the norm for high-performance call centers.


                     To meet consumer expectations for fast and convenient service, some
Customers Want       companies have been moving toward telephone-based service and away
Comprehensive,       from other service delivery approaches such as face-to-face service or
Complete, and Fast   mail. For example, banks have been setting up telephone-based services to
                     meet the competitive challenge from nonbank financial competitors, such
Service              as mutual fund companies, which are leaders in providing telephone-based
                     service. Given this trend, the percentage of retail transactions conducted
                     over the telephone in the banking sector is expected to increase by
                     88 percent by the year 2000; in-person transactions are expected to
                     decrease by 38 percent during the same time period.



                     Page 37                                      GAO/HEHS-97-79 800-Number Service
Appendix II
Private-Sector Trends and Best Practices in
800-Number Service




Other industries are also increasing telephone-based service. For example,
one large insurance company has expanded its 800-number service so that
about 90 percent of its business is currently conducted over its 800
number. Before expanding its 800 number, this company conducted about
30 percent of its business by telephone, with the remaining 70 percent
conducted primarily by mail. According to a company representative,
customers are now very satisfied with the more convenient and faster
service.

In the private sector, once an 800 number is established, customer
preferences have a major impact on how and what services are delivered.
Customers soon expect to be able to conduct an increasingly larger
number of transactions by telephone and to complete transactions or have
questions answered with their first call and in a minimal amount of time.
According to telecommunications experts, customers are continually
seeking a greater range of services to be conducted by telephone, often
basing their expectations on the positive experiences they may have had
with another company.

To guarantee quick and responsive service, private-sector firms often
establish expected performance levels for providing access to customer
service—not just to their system. One expert told us that firms, by
analyzing incoming calls, have a precise idea of how long customers will
wait on hold before hanging up. On the basis of this knowledge and the
service responsiveness of their competitors, companies arrive at their
planned level of responsiveness. For example, one company has
established performance measures and goals for the percentage of calls
answered without the caller spending time on hold (84 percent or higher)
and the percentage of callers abandoning their calls (no more than 2 to
3 percent).

Companies also recognize that customers expect to complete transactions
with one call. According to one expert, firms need improvement if they
completely serve callers on initial contact in 80 percent or less of cases. A
research and consulting organization specializing in customer service has
found that customers will tolerate being transferred during their first call
only if they then actually reach someone who can address their concerns.
Multiple transfers caused 10 to 25 percent of customer dissatisfaction,
according to this organization’s findings.

Directly related to consumers’ expectations that transactions be
completed with one call are that cycle time (the time it takes to complete a



Page 38                                       GAO/HEHS-97-79 800-Number Service
                        Appendix II
                        Private-Sector Trends and Best Practices in
                        800-Number Service




                        customer’s transaction or business) be kept to a minimum. Having
                        immediate access to a service representative is not the same as getting a
                        prompt answer to a question. The time customers spend waiting on hold is
                        not as important as what they experience after the phone is answered,
                        according to research findings. A wait of 1 minute is usually acceptable if
                        customers then reach someone who can handle their call to completion on
                        first contact. To help their frontline workers assist customers quickly and
                        effectively, industry leaders use computer information systems that allow
                        workers to quickly retrieve online information and procedures manuals.


                        Companies are increasingly using technology, such as automated response
Automation Is Crucial   systems, to help them meet consumer preferences and handle growing
to Reducing Costs and   volumes of incoming calls. Reflecting the increased demand for this
Improving Service       technology, the market for automated response products and services is
                        expected to more than double from $1.1 billion in 1994 to $2.3 billion in
                        2000. By installing an automated response system, most companies seek to
                        both improve customer service and reduce the number of routine calls
                        handled by service representatives.

                        According to one expert, installing an automated response system can
                        improve service responsiveness. By answering callers’ questions from
                        preprogrammed menu options, an automated system can curb routine,
                        tedious transactions that detract from employee productivity, such as
                        customer requests for bank account balances. This allows employees to
                        respond to more complex and nonroutine calls more effectively and
                        provides callers with round-the-clock availability and faster transaction
                        processing. To illustrate this, before a state medical bureau installed an
                        automated response system, the bureau’s three teleservice agents could
                        answer only about 8 percent of calls from doctors and other health care
                        providers to verify Medicaid claims. Since the bureau installed the
                        automated system, which handles 12 calls simultaneously, 100 percent of
                        its calls are answered. In addition to improving service, the system may
                        save the state over $1.3 million a year by eliminating claims with errors.

                        This and other private-sector experiences indicate that automated
                        response systems can dramatically affect the cost of service delivery. Calls
                        would cost $12 per call if answered by a call agent, according to one
                        financial services firm, compared with $.20 per call if answered by an
                        automated response system. This firm, with a daily call volume of 250,000,
                        could potentially reduce costs from $3 million to $50,000 a day with a fully
                        automated system. In another example, over a 4-year period, one company



                        Page 39                                       GAO/HEHS-97-79 800-Number Service
                       Appendix II
                       Private-Sector Trends and Best Practices in
                       800-Number Service




                       reduced staff by 50 percent and increased its account base by the same
                       percentage by promoting the use of automated response systems. One
                       brokerage firm has passed on some of the savings to its customers by
                       offering discounts of as much as 10 percent for trades conducted over its
                       automated telephone system.

                       Although companies have historically used automated response systems in
                       situations where customers make many repetitive calls requiring no
                       explanation, such as balance and check-clearing inquiries in the banking
                       sector, they are also increasingly using such systems for a wider and more
                       complex variety of transactions. For example, one bank official we
                       contacted said customers may use an automated interactive service to
                       transfer funds between various bank accounts, make loan payments, and
                       pay bills to previously identified merchants. The bank wants to expand its
                       automated services and is setting up an automated feature to stop
                       payment on checks and a merchant-verification procedure (whereby
                       merchants can check to see if customers have sufficient funds to cover a
                       personal check).

                       To be effective, automated systems should have no more than two to three
                       submenus, with each menu offering a maximum of four options, according
                       to research studies. For more complicated menus, however, companies
                       have found that providing information ahead of time on the features and
                       proper use of an automated system reduces the number of calls ultimately
                       handled by a service representative. Companies generally mail such
                       guidance to customers.


                       Private-sector companies have found that live assistance remains a
Live Assistance        necessary part of 800-number service for handling unusual or complex
Option Important for   transactions or for customers with a special need or question. To provide
Effective Service      cost-effective service, private-sector companies recognize the importance
                       of providing their call agents with state-of-the-art technology. Such
                       technology allows call agents to quickly and efficiently serve their
                       customers. For example, expert systems are widely used to enable
                       frontline workers to answer customer inquiries quickly and effectively.
                       Expert systems include databases to quickly retrieve information and
                       online procedures manuals that are easy to use.

                       Companies are increasingly linking telecommunication and computer
                       technology to retrieve customer records as soon as a call is received.
                       Using automatic number identification technology, a company’s computer



                       Page 40                                       GAO/HEHS-97-79 800-Number Service
Appendix II
Private-Sector Trends and Best Practices in
800-Number Service




matches the caller’s phone number to company records to identify and
retrieve the record on file for that phone number. Such a quick retrieval of
information can reduce call length by 20 to 30 seconds, according to one
expert, and, if a business has many of its callers using their phone number
on file, the savings can be substantial. The benefits of this technology
surpass cost savings, according to one representative of a major vendor,
because it is a proactive service saving the customers’ time and increasing
customer satisfaction. Most of this vendor’s largest customers have moved
to this technology.

Companies are also increasingly using sophisticated imaging technology
that allows them to electronically share copies of documents officewide.
In the past, call agents would have to rely on sharing paper documents to
provide customer service—an inefficient and time-consuming process.
Imaging technology allows a document to be scanned into the electronic
database and be made immediately available to all agents on their
computer screens anytime they need it. Document scanning and on-screen
retrieval have helped one major company answer 80 percent of inquiries
on the first call, compared with 40 percent in prescanning days.

Companies are also moving toward fewer and larger centers for organizing
their call agents. While opinions vary on the ideal number and size of call
centers, experts agree that site consolidation is important for effective
800-number service. A recent example of call center consolidation
includes a regional power company that served its customers in the late
1980s through 98 offices in two contiguous states. While service was
personal, it was also inconsistent and inefficient, so the company
consolidated its 98 offices into a single, state-of-the-art megacenter.

Sometimes companies consolidate operations to achieve purposes other
than economies of scale. For example, when one company consolidated 57
branch offices into three regional centers, the primary criterion in site
selection was an adequate supply of high-quality labor at competitive labor
rates. Other potential benefits of physical consolidation include reduced
rent and utilities; lower operating and equipment costs; increased
managerial span of control requiring fewer managers; increased flexibility
in staffing, centralized training, and support functions; and increased
consistency in processes and service. Beyond these benefits, according to
one expert, fewer call centers allow easier database management,
particularly because teleservice agents often have to share data among
centers.




Page 41                                       GAO/HEHS-97-79 800-Number Service
Appendix II
Private-Sector Trends and Best Practices in
800-Number Service




Opinions vary on optimal call center size, but the centers in many large
corporations range from between 200 to 600 positions. The National
Performance Review-sponsored benchmarking study of 800-number
services reported that the number of operating locations needed to handle
even the largest call volumes is typically one to three call centers, with a
maximum of 600 frontline workers per center. Some larger companies,
however, have as many as 2,000 to 3,000 teleservice agents at one call
center, according to one 800-number vendor we contacted.




Page 42                                       GAO/HEHS-97-79 800-Number Service
Appendix III

Comments From the Social Security
Administration




               Page 43        GAO/HEHS-97-79 800-Number Service
Appendix III
Comments From the Social Security
Administration




Page 44                             GAO/HEHS-97-79 800-Number Service
Appendix IV

GAO Contacts and Staff Acknowledgments


                  Cynthia M. Fagnoni, Assistant Director, (202) 512-7202
GAO Contacts      Michele Grgich, Evaluator-in-Charge, (415) 904-2183


                  In addition to those named above, Robert R. Tomco was an important
Staff             contributor to all aspects of this review, including data gathering, analysis,
Acknowledgments   and report writing; and James P. Wright contributed significantly to the
                  writing of this report.




                  Page 45                                       GAO/HEHS-97-79 800-Number Service
Bibliography


               American Bankers Association. Call Centers: Moving Beyond Call Centers
               to Full Service Delivery. A Quarterly Monograph on Retail Delivery, Issue
               5. Washington, D.C.: American Bankers Association, 1995.

               DALBAR Automated Voice Response Analysis. DALBAR, Inc. Boston:
               1995.

               DePalma, David E., and John A. Goodman. Key Factors to Successful
               Implementation and Acceptance of Automated Response Systems.
               Technical Assistance Research Programs, Inc. Arlington, Va.: 1995.

               Gable, Robert A. “Enhancing Call Centers With Advanced 800 Services:
               Benefits and Risks.” Telecommunications (Feb. 1995), pp. 31-34.

               Gorman, James. “Maine Bureau Climbs Up From Sick 8 Percent Call
               Handling.” Communications News, Vol. 32, No. 8 (1995), pp. 20-21.

               Improving Service on Social Security Administration’s 800 Telephone
               Number Network, SSA Office of Inspector General. Washington, D.C.: 1995.

               Marwaha, Jay, and Jeff Tommerdahl. “Outsourcing Your Customer
               Service.” Telemarketing, Vol. 14, No. 2 (1995), p. 84.

               “Serving the American Public: Best Practices in Telephone Service.”
               National Performance Review Benchmarking Study Report, National
               Performance Review. Washington, D.C.: 1995.

               Sewell, Richard. “Reengineering the Call Center.” Business
               Communication Review, Vol. 24, No. 11 (1994), p. 33.

               The Voice Processing Market Outlook. Yankee Group Research, Inc.
               Boston: 1995.

               Walters, Kevin. “A Marriage of Convenience.” PC Week, Vol. 13, No. 12
               (1996), p. 13.




               Page 46                                    GAO/HEHS-97-79 800-Number Service
Bibliography




Page 47        GAO/HEHS-97-79 800-Number Service
Related GAO Products


              Social Security Administration: Significant Challenges Await New
              Commissioner (GAO/HEHS-97-53, Feb. 20, 1997).

                Benefit Statements: Well Received by the Public but Difficult to
              SSA
              Comprehend (GAO/HEHS-97-19, Dec. 5, 1996).

              Tax Administration: Making IRS’ Telephone Systems Easier to Use Should
              Help Taxpayers (GAO/GGD-96-74, Mar. 11, 1996).

              Social Security: Telephone Access Enhanced at Field Offices Under
              Demonstration Project (GAO/HEHS-96-70, Feb. 23, 1996).

              Tax Administration: IRS Faces Challenges in Reorganizing for Customer
              Service (GAO/GGD-96-3, Oct. 10, 1995).




(105936)      Page 48                                    GAO/HEHS-97-79 800-Number Service
Ordering Information

The first copy of each GAO report and testimony is free.
Additional copies are $2 each. Orders should be sent to the
following address, accompanied by a check or money order
made out to the Superintendent of Documents, when
necessary. VISA and MasterCard credit cards are accepted, also.
Orders for 100 or more copies to be mailed to a single address
are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office
P.O. Box 6015
Gaithersburg, MD 20884-6015

or visit:

Room 1100
700 4th St. NW (corner of 4th and G Sts. NW)
U.S. General Accounting Office
Washington, DC

Orders may also be placed by calling (202) 512-6000
or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and
testimony. To receive facsimile copies of the daily list or any
list from the past 30 days, please call (202) 512-6000 using a
touchtone phone. A recorded menu will provide information on
how to obtain these lists.

For information on how to access GAO reports on the INTERNET,
send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov




PRINTED ON    RECYCLED PAPER
United States                       Bulk Rate
General Accounting Office      Postage & Fees Paid
Washington, D.C. 20548-0001           GAO
                                 Permit No. G100
Official Business
Penalty for Private Use $300

Address Correction Requested