Nearly 400 participants in the Call Center Learning Center online poll identified their top three management challenges for 2006.  Over 1150 votes were cast in the recent online poll conducted by the Call Center Learning Center to reveal the top management challenges for call centers in preparing for 2006.  This series will focus on the top five challenges identified by participants.  The complete results of the online poll are also available.

The cost control challenge

This "cost control challenge" is something that all call center managers face.  According to Prosci's latest best practices study with 240 companies from around the world, participants reported that the number one challenge they will face over the next two years is "dealing with budget constraints."  This includes handling an increased call volume with the same staff (hiring freezes), the closing and consolidation of call center locations, or meeting a greater demand for services with the same resources.

Despite the commonality of this problem, cutting costs proves elusive for many call centers.  Why?  There are two common mistakes that call centers often make that contribute to the challenge of controlling costs of call center operations.  They include:

1. Call centers are not using a comprehensive model for cost reduction.
   "Band-aid" approaches, or makeshift efforts intended to be quick fixes for an expense or budget problem, are not the key to long-lasting and effective cost control in your call center.
    
2. Call centers are taking only a short-term approach to controlling costs.
   Although some cost control initiatives will be short-term operations and process changes, call center managers should also consider the mid-term and long-term changes and strategies that can result in future cost savings and more efficient call center operations. 

Cost reduction planning

The solution to these common mistakes is cost reduction planning.  Cost reduction planning is a systematic approach that provides a comprehensive framework for reducing the cost of your call center operations over time. The outcome of this planning is a set of identified and prioritized cost saving initiatives that are most suited for your situation.

The cost reduction planning process has two primary activities:

Step 1 - Identify potential cost reduction activities.
Controlling or reducing the cost of call center operations requires addressing three cost components of handling inbound contacts, as listed below and illustrated in Figure 1.

• Handle time (e.g. talk time plus after call work time for a phone call)
   
• Resource costs for handling contacts (fully-loaded costs per unit time - e.g. cost per minute)
   
• Total volume of contacts (volume of inbound contacts for all media)

Figure 1 - Drivers to reducing call center costs

Reducing any one of these three variables will reduce the cost of operating a contact center.  This framework is critical to systematically analyze your contact center needs.  To get started on cost reduction planning in your call center immediately, a complete set of more than 50 proven cost reduction initiatives are listed and explained in the toolkit Controlling the Cost of Call Center Operations, including checklists for examining all cost components. 

Step 2 - Prioritize and select the activities for your call center.
After you have brainstormed the cost reduction initiatives for your call center, this list can be broken down into three categories:

1. Short-term (less than 3 months)
    
2. Mid-term (3 to 6 months)
    
3. Long-term (6 to 18 months)

Each type of initiative will have a different timeframe for implementation and realization of cost savings.  However, a systematic strategy for controlling call center costs will include both long-term initiatives and quick-hits.  As you work through each area, consider how you can create a comprehensive improvement strategy that slots improvements into each of the timeframes illustrated in Figure 2.

Figure 2 - Three categories of cost control initiatives

For complete information, including  six worksheets on CD-ROM to facilitate the prioritization and selection processes, see the Controlling the Cost of Call Center Operations toolkit.