Case Study:
Feedback and Incentives Improve Performance at 1-800-Contacts
The company 1-800-Contacts transformed and disrupted the way to buy contact lenses and became the world’s largest contact lens store. Their business model is to make millions of customers happy with convenient ordering, great value, fast delivery, 100 percent satisfaction guarantee, and the best customer service. The company stocks more than 20 million contact lenses, and delivers over 150,000 replacement contact lenses every day directly to customers. As a result of its extensive inventory, the company is able to ship 95 percent of its orders within one business day. High volume, cost-efficient operations enable 1-800 CONTACTS to offer products at competitive prices while delivering a high level of customer service. New Reporting Systems Needed by Call Centers Managers and Operators The company grew to the point where its ISs could not provide the call center managers and business analysts with quick and easy access to real-time (up-to-date) sales data. For example, when business analysts wanted to review the average number of contact lens boxes shipped per order, they had to get the data from the IT department. Response time was several days. Managers faced an information bottleneck that created blind spots (a blind spot means not knowing what’s going on as it’s going on) about sales and inventory levels until IT provided the reports. Dashboard Reporting Tools Information dashboard—easy-to-understand reporting tools as shown in Figure 2.11—were implemented in the call centers. Each call center operator could monitor his performance by looking at the on-screen dashboards. Operators’ and Business Performance Increased Dashboards are updated every 15 minutes. At a glance, operators know their closing ratio, average sales, calls-per-hour—and how their performance compares to other operators. They are also evaluated in terms of customer satisfaction, which is critical to customer loyalty, sales growth, and profitability. At month’s end, operators are ranked; and those in the top 80 percent receive bonuses. Top-ranked operators earn monthly bonuses of $1,000 or more, which is a motivating-sized bonus.
By linking operators’ pay to performance, sales increased by $50,000 per month. Once operators could see that their performance tied into their bonus, their overall quality has improved.
Q1. What were the information and reporting problems the company faced?
Q2. How did business analysts get the data they needed?
Q3. What was the effect of linking operators’ pay to business performance? That is, how did feedback at the operator’s level lead to improved performance at the organizational level?
Q4. Why do you think the dashboards updated frequently (every 15 minutes) instead only at the end of the operator’s workday?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.