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Selecting and prioritizing cost initiatives
Module 5 of a 5 part series on cost control
Background
Part 5 in this series on cost control addresses how to select and prioritize cost control initiatives for your business. The first tutorial in the series introduced a framework for addressing call center operations. The second, third and fourth tutorials examined the three main components of cost: handle time, resource cost and contact volume. This tutorial examines methods and techniques for reducing your operational costs. All of the tutorials come from the Cost Control Toolkit. The Cost Control Toolkit includes complete checklists for examining all of the cost components and includes six worksheets on CD-ROM for analyzing your call center opportunities.
Initiative selection considerations
The table below can be used to capture the key considerations for a particular cost initiative. This helps call center leaders, managers and consultants think about all of the implications (both positive and negative) of a particular initiative. In other words, reducing the cost of call center operations does not come without a price in many cases, and understanding the tradeoffs is important for call center managers. A separate worksheet like the one shown below would be used for each potential cost reduction initiative.
Initiative: __________________________________________ Consideration Assessment Notes Accountability Applicable to your business Complexity of solution Time to implement Impact on service quality Cost savings impact Cost of solution Return on investment Ability to measure success Other effects
Accountability: Does the contact center have the sole authority for this improvement idea or are other organizations involved? For example, offering self-service on the web would require working with the department that manages the website, if it is not the call center. What other groups or organizations need to be involved?
Applicable to your business: Is this initiative applicable to your business strategy, business model, contact center strategy, contact center model, etc.? For example, efforts to reduce handle time with universal agents may not be applicable to a contact center that delivers very specialized and highly specific technical support.
Complexity of solution: How complex is the solution? How many different groups and systems are impacted? Will implementation be easy or difficult? How much change will the solution introduce into the organization?
Time to implement: How long will the solution take to implement (week, month, quarter, year, etc.)?
Impact on service quality: Will the initiative hurt service quality? Will the initiative improve service quality? How will the change impact customers?
Cost savings impact: What are the bottom-line cost savings from this change?
Cost of solution: What are the initial costs and ongoing costs to implement this solution?
Return on investment: What is the ROI? Does it meet the financial threshold for new investments?
Ability to measure success: Can we measure the impact of this change?
Other effects: What other benefits will be derived from this change?
Go / no-go criteria
Once you have documented the implications of each initiative, you will need to narrow your long list of potential projects down to a short list. In most cases you can narrow the field by setting threshold criteria.
Example criteria could be:
ROI - initiatives must have a ROI of more than 15%
Time - initiatives must have a payback period less than 12 months
Cost - initiatives must be less than $500K in the implementation cost in the first year
Strategy - initiatives must be directly aligned with a given business or call center strategy
Customer - initiatives must result in positive impact on customer relationships
These examples and others that may be unique to your situation can be used as a "GO" or "NO GO" decision that will result in a shorter list of initiatives to consider.
Prioritizing and moving forward
Given a final short list of initiatives, you can rank these initiatives with a simple scoring process. Begin by creating a spreadsheet like the table below. Your potential projects will be listed in the first column, with your selection criteria in the first row. For each project, rank on a scale of 1 to 5 each criteria (1 being the worst score, 5 being the best). Note that each criteria item also has a separate weighting factor (1 is lowest, 3 is highest). In some cases it is useful to use a non-linear weighting approach. For example, 1, 3 or 10. This non-linear weighting scale allows some criteria to play a dominating role in the final scoring.
In the spreadsheet model you have created, you can add up the total score for each potential project, and the result is a ranking of the best projects for your call center.
Example:
Time to implement Cost to implement Total cost savings Return on investment Customer impact Total
(sum of score * weighting factor)Criteria weight
1 2 3 3 2 New email system 2 3 1 5 2 31 Update IVR 1 1 2 1 1 14 Use part-time agents 2 1 1 4 2 23 New desktop software 3 4 5 5 5 51 In this example, the "new desktop software" project ranks the highest, and the updated IVR ranks the lowest. You can use this technique for just a few projects or for ranking 50 projects.
The most important aspects of this type of process are:
get agreement on the criteria early in the process
decide for each criteria what results in a score of 1, 2, 3, 4 or 5 and be consistent across all projects
agree in advance what the relative weighting of criteria will be
With the completion of this ranking exercise, based on all 5 modules in this series you should have a starting point for reducing the cost of your call center operations. For more detailed information and pre-made templates, see the new toolkit, Controlling the Cost of Call Center Operations.
Related Resources
About the toolkit:
Controlling the Cost of Call Center Operations provides a systematic approach to reducing your call center costs. With this toolkit, you will critically examine multiple channels for reducing expense. The outcome is a set of identified and prioritized cost saving initiatives that are most suited for your contact center. The toolkit includes worksheets and templates for reducing your costs and prioritizing your initiatives."A truly comprehensive guide for reducing call center costs.
A resource with this perspective is long overdue."Gerald Tschikof, Founder of Center Partners
Other resources:
Call center bookstore and reference library
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