It s easy to find stories, often apocryphal, about horrible telephone customer service. Promises made and not kept.

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1 Q THE uality forum December 2012 Volume 7, Issue 4 From Call Center to Contact Center Part II Leveraging Technology to Create a Modernized Hub of Communication By David Driskill, Founding Partner, NQR and NQR Institute What about the Customer? It s easy to find stories, often apocryphal, about horrible telephone customer service. Promises made and not kept. Rude representatives. Inaccurate information provided. It s a little harder to find stories of extraordinary service a truly empathetic representative or the representative who went above and beyond the call of duty. The call center that, no matter with whom you speak, provides a superior experience. Callers call for a reason. They want information. They want help. They want to conduct a transaction. They want to resolve a problem. In every one of these circumstances the caller has an expectation as they make the call. Some contact centers are literally legendary for providing superior service. L. L. Bean, in the retail space, is known for its friendly and knowledgeable staff. Apple is renowned for its customer service standards and its available help teams. In financial services, Vanguard has a strong reputation and recently led other major investment call centers in a 2012 Investment Call Center Survey. It s a mistake to believe that the caller s expectation is positive. In fact, the caller to the local Department of Motor Vehicles a popular call center whipping boy may be dreading the prospect of the call, and if his or her call is handled even remotely well, the caller may be delighted. Other organizations, such as the cable companies, the credit card companies, and, ironically, the phone companies, also often have a less-than-stellar reputation. Part of this is simply poor service, and part of this reputational problem is the fact that a dissatisfied caller will tell many more people about their experience than will a satisfied caller. In the age of the Internet and YouTube, many can turn into thousands and hundreds of thousands of people hearing about one person s terrible service experience. Continued on page 2 I n T h i s I s s u e From Call Center to Contact Center Cost of Living Adjustment Chart... 3 News Clips Compliance Calendar

2 Leveraging Technology to Create a Modernized Hub of Communication Continued from page 1 Part II Revisiting Offshore Outsourcing Some call centers have begun using overseas agents for all calls. However, feedback indicates that phones outsourced outside the U.S. often raise the ire of callers. The inability to understand colloquialisms, the accents, and the irritating propensity to say Yes to almost anything irritate callers. They often know they are talking to someone in India or the Philippines, but the agent, equally often, is vague about his or her location. (At some call centers, it has been reported that representatives are actually told to lie about their location.) As a result of problems with offshoring calls, many providers have brought their calls back: for example, Dell, DIRECTV, Santander Bank, and many others have shifted calls back to the U.S. In 2010, the CFI Group uncovered a number of interesting findings concerning offshored call centers: Caller satisfaction with calls perceived to be handled in the U.S. is more than 20% higher than with calls perceived to be handled outside the U.S. Callers themselves perceive that fewer calls are being handled offshore 9% in 2010 versus 11% in 2009 Callers report that the biggest difference between U.S. versus offshore call handling was ease/difficulty in understanding the phone representative A Positive Call Experience: A Satisfied Customer Since we are all customers and there has been an enormous amount of relevant research, it s not hard to specify the desires of someone calling for service. A few key points are: They want to get to a live person, especially in problem situations. Alternatively, they want to pick the means of communication (e.g., , live chat, social media). They desperately want someone who listens. (They do not want someone to say, I understand, or, even worse, I know how you feel ; they want someone to prove he or she has understood through language and action.) They want their inquiry or problem resolved and quickly. They want genuinely courteous behavior not obligatory politeness. They want the person they speak with to have positive tone and moderate pace, and to be easily understood. They want their call or contact to be handled in one interaction. They want to state their question, concern or problem once (according to the National Customer Rage Study, having to repeat the problem is a rage-inducing faux pas). If they run into an IVR system, they want it simple, and they want the ability to pound out at any point to reach a live person. Yet, in an era of expense management, when many firms are using more automated tools and fewer agents, are these realistic objectives? The answer is a resounding yes. Continued on page 3 2

3 Leveraging Technology to Create a Modernized Hub of Communication Part II Continued from page 2 Just as technology plays a key role in routing calls, it also simplifies representative call interaction and offers fingertip access to needed responses and information. The most established outsource centers will generate caller-specific account data and bring it up on a representative s screen as they answer the call. In such cases, where the caller has already entered in an identifier like an account number or a Social Security Number, workflow platforms use the data to retrieve the account information. Having it already in front of the representative saves time and the aggravation of repeating the identifying data over and over again. Even scripting can be a useful and positive tool when done right with properly trained staff. Training is key. Ongoing education for both call content and service delivery can make the contact center experience a determining factor in product or firm selection. The larger contact centers offer regular on-line tutorials and instruction to staff not just classroom based training that can be accessed in off-peak periods or down times. As a result, representative improvement is a continual process. n In the Next Issue This is Part II of a multi-part article. The final part of this article will appear in the March issue of this publication. Part III will discuss practices and approaches to customer service that some financial service institutions are pursuing to improve the performance and quality of their contact centers, as well as how companies are incorporating new technologies to expand service options for their customers Cost-of-Living Adjustments to Contribution Limits for Retirement Plans TYPE OF LIMITATION Elective Deferrals 401(k), 403(b), and 457(b) $17,500 $17,000 Simplified Employee Pension $17,500 $17,000 SIMPLE Retirement Accounts $12,000 $11,500 Catch-Up Deferrals (Age 50) 401(k), 403(b), and 457(b) $5,500 $5,500 Simplified Employee Pension $5,500 $5,500 SIMPLE Retirement Accounts $2,500 $2,500 Defined Contribution Maximum Annual Addition Simplified Employee Pension Maximum Annual Addition Lesser of 100% of Compensation or $51,000 $50,000 Lesser of 25% of Compensation or $51,000 $50,000 IRA Contribution Limits Traditional and Roth $5,500 $5,000 IRA Catch-Up Contributions (Age 50) Traditional and Roth $1,000 $1,

4 News Clips Relief for Hurricane Sandy Victims via Retirement Plan Hardship Withdrawals and Loans The IRS has released information in Announcements and as to how plan sponsors can provide relief to victims of Hurricane Sandy through hardship withdrawals and loans from retirement plans. The notices apply primarily to 401(k) plans, 403(b) plans, and 457(b) plans, which usually already provide for in-service distributions via hardship withdrawals and loans. In addition, a profit sharing plan that does not already provide for hardship or other in-service withdrawals may be amended to provide for these withdrawals; amendments must be completed no later than the end of the first plan year beginning after December 31, However, a plan does not need to wait until it is formally amended in order to make these withdrawals available for eligible victims of Hurricane Sandy. Defined benefit plans and money purchase plans, which usually do not provide for in-service distributions are not impacted by the information in these IRS announcements. Although the IRS is relaxing procedural and administrative rules that normally apply to hardship withdrawals and participant loans, taxpayers are also reminded that normal spousal consent rules will still apply to these withdrawals. Hardship withdrawals can be made for any hardship resulting from Hurricane Sandy, not just the types of hardships spelled out in the hardship regulations. In addition, there are no post-distribution contribution restrictions imposed on recipients of these hardship withdrawals; so, participants do not have to wait until 6 months after the date of distribution before they can start making deferral contributions to the plan again. A hardship withdrawal resulting from Hurricane Sandy must be distributed on or after October 26, 2012, and no later than February 1, Hardship withdrawals may be made to victims whose principal residence or place of employment (or those of a spouse, dependent, or lineal ascendant or descendant) was located in one of the following covered disaster areas: Connecticut Counties: Fairfield, Middlesex, New Haven, and New London; New Jersey Counties: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union, and Warren; New York Counties: Bronx, Kings, Nassau, New York, Orange, Putnam, Queens, Richmond, Rockland, Sullivan, Suffolk, Ulster, and Westchester; Rhode Island Counties: Newport and Washington. This means that plan participants who live outside one of the disaster areas may still use a hardship withdrawal or loan under the relaxed and somewhat accelerated procedures to assist a child, parent, grandparent, or other dependent who lived or worked in one of the disaster areas. News Clips continued on page 5 4

5 Continued from page 4 News Clips Change in the Kiddie Tax for 2013 The IRS has announced the first change since 2009 in how federal income tax applies to unearned income for dependent children under UTMA/UGMAs. IRS Revenue Procedure states that the unearned income for a dependent child under age 19 (or under age 24, if a full-time student) would be treated as follows: First $1,000 is tax-exempt; Next $1,000 is taxed at the child s rate (generally 10%); Excess over $2,000 is taxed at the parents rate. FATCA Update The IRS issued Announcement on October 24, 2012, amending a number of provisions contained in the original proposed Foreign Account Tax Compliance Act (FATCA) regulations that were published in the Federal Register on February 15, These revisions were made in response to a number of practical concerns raised by industry since the promulgation of the original proposed regulations. From the perspective of US withholding agents, the primary changes include: (i) Deferred compliance dates by which US withholding agents are required to implement new account opening procedures and conduct due diligence on preexisting accounts: January 1, 2014 New account opening procedures for individual and entity accounts must be implemented June 30, 2014 Due diligence must be completed for all preexisting accounts of prima facie FFIs December 31, 2015 Due diligence must be completed for all preexisting accounts Note: While the announcement extends the deadlines by which withholding agents must review and document the status of accounts, once the status of an account has been documented, withholding and reporting must begin with respect to that account. (ii) The compliance date by which withholding must be imposed on payments of gross proceeds from sales of property capable of producing US-source dividends or interest has been deferred to January 1, Final FATCA regulations are expected to be issued toward the end of Relief for Plan Sponsors in Hurricane Sandy Disaster Areas On November 21, the Department of Labor (DOL) announced some relief for sponsors of plans covered by Title I of ERISA who are located in one of the covered disaster areas devastated by Hurricane Sandy. Normally, amounts that a participant has withheld from his/her wages by an employer to be contributed as salary deferrals to the plan or amounts intended as participant loan repayments must be forwarded to the plan on the earliest date on which such amounts can reasonably be segregated from the employer s general assets, but in no event later than the 15th day of the month following the month in which the amounts were withheld by the employer. However, the DOL recognizes that some employers and service providers (acting on employers behalf) located in covered disaster areas will not be able to forward participant payments and withholdings to retirement plans within the prescribed time frame. In such instances, the DOL will not seek to enforce penalties with respect to a temporary delay. News Clips continued on page 6 5

6 Continued from page 5 News Clips 2013 Gift Tax Exclusion 529 Plans The IRS recently announced an increase in the Gift Tax Exclusion for the first time since For 529 Plan purposes, this means that the annual contribution limit for 2013 per individual taxpayer to the account of a single beneficiary will be $14,000. This amount can be increased to $28,000 per beneficiary in 2013 for married couples filing a joint federal income tax return. In addition, there are some special rules: $70,000 (5 times $14,000) can be contributed to the account of a beneficiary in one tax year by an individual taxpayer as an accelerated gift with no other gifts from this taxpayer to the account of the beneficiary during that year or the next four calendar years. This accelerated gift limit increases to $140,000 in one year for married couples filing jointly. These accelerated gift contributions need to be reported to the IRS by the taxpayer(s) as a series of five equal payments on Form 709, United States Gift and Generation Skipping Transfer Tax Form. In addition to the IRS contribution limits, please keep in mind that many 529 programs also have maximum investment limits per beneficiary. Many of these cap out at around $250,000. n Compliance Calendar Q January 31 February 15 February 28 March 15 March 15 March 15 March 31 Date by which Form 1099-R needs to be furnished to participants reporting 2012 distributions. Date by which 2012 Form 1099-B needs to be furnished to recipients. Date by which 2012 Form 1099-R is due to the IRS, if not filed electronically. Date by which ADP/ACP corrective distributions of excess contributions and earnings are due to participants. Date by which Employer Profit Sharing and Match Contributions are due for plans with 12/31 fiscal year-ends in order to take deductions. Date by which Forms 1042S and 1042 are due to the IRS to report retirement plan distributions made to non-resident aliens and income tax withheld from the distributions made to nonresident aliens in Date by which electronic filings of 2012 Form 1099-R are due to the IRS. n Editor: Patricia D. Jones, Director of Compliance Published by: National Quality Review Summer Exchange Building, Suite 50, 101 Arch Street, Boston, MA This publication is designed to provide accurate, but general, information in regard to the subject matter. This publication should not be construed as legal, tax, or other business advice. 6