Sof Optics
Sof-Optics, Inc.
1. See attached slide on final page
2. There are a number of problems facing Sof-Optics (detailed below). The most severe problems are in the CSR department:
a. Major problems:
i. Going forward, Sof-Optics will be under pressure to lower prices since B&L (the industry leader) just slashed prices by 25%. This is especially troubling, given the point that follows… ii. Loss of customers (and sales) due to long customer service wait times or lack of phone lines available (i.e., getting a busy signal). Given that this is a high fixed cost industry, volume is especially important so that Sof-Optics can remain competitive on price and cover their high fixed costs of production. iii. The company had higher than expected start-up costs and, as a result of that, as well as their inability to scale more quickly, they did not show a profit in their first three years of operation.
b. Other problems:
i. Low (but quickly improving) yields on turning “buttons” into lenses – which prevents their variable production costs from being lower. ii. Cost of returns are high, primarily due to misfits of lenses. A full 16% of standard lenses were returned and 74% of those were due to misfits. iii. High CSR staff turnover due to increasing volume and stress. This is a driver of the high wait times issue noted above. iv. Customer dissatisfaction with delivery times due to the Postal Service not meeting expectations.
3. There are a number of ways that Sof-Optics could improve the system – specifically the CSR department. These ideas generally fall into four categories: Improve CSR speed, reduce call volume or call requirements, better balance volume with capacity, and other customer experience ideas:
a. Improve CSR speed
i. Specialization: Have CSRs specialize in specific types of calls (for example, a
“order taking” rep or “new account” rep). Given the high turnover that is typical of a call center, this specialization will allow new reps to
1. See attached slide on final page
2. There are a number of problems facing Sof-Optics (detailed below). The most severe problems are in the CSR department:
a. Major problems:
i. Going forward, Sof-Optics will be under pressure to lower prices since B&L (the industry leader) just slashed prices by 25%. This is especially troubling, given the point that follows… ii. Loss of customers (and sales) due to long customer service wait times or lack of phone lines available (i.e., getting a busy signal). Given that this is a high fixed cost industry, volume is especially important so that Sof-Optics can remain competitive on price and cover their high fixed costs of production. iii. The company had higher than expected start-up costs and, as a result of that, as well as their inability to scale more quickly, they did not show a profit in their first three years of operation.
b. Other problems:
i. Low (but quickly improving) yields on turning “buttons” into lenses – which prevents their variable production costs from being lower. ii. Cost of returns are high, primarily due to misfits of lenses. A full 16% of standard lenses were returned and 74% of those were due to misfits. iii. High CSR staff turnover due to increasing volume and stress. This is a driver of the high wait times issue noted above. iv. Customer dissatisfaction with delivery times due to the Postal Service not meeting expectations.
3. There are a number of ways that Sof-Optics could improve the system – specifically the CSR department. These ideas generally fall into four categories: Improve CSR speed, reduce call volume or call requirements, better balance volume with capacity, and other customer experience ideas:
a. Improve CSR speed
i. Specialization: Have CSRs specialize in specific types of calls (for example, a
“order taking” rep or “new account” rep). Given the high turnover that is typical of a call center, this specialization will allow new reps to