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The cost control quandary

All call center managers are faced with the challenge of managing costs.  With ever-increasing pressure to do more with less (less money, less people, less time), reducing the operating costs of customer contact becomes an important focus.  Prosci's latest benchmarking report of 240 companies from around the world showed that the number one challenge participants will face over the next two years is "dealing with budget constraints."

Despite the commonality of this problem, cutting costs proves elusive for many call centers.  Why?  Knowing there is a problem is the first step, but it is the ability to see the big picture when developing a cost reduction plan that increases the potential of success.  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. 

The cost control model explored in Prosci's Controlling the Cost of Call Center Operations toolkit provides a framework for effectively reducing many of the areas that impact a call center's bottom line.  This tutorial series will look at what call center managers can do to improve their operating expenses.

Controlling costs

Controlling or reducing the cost of call center operations requires addressing three cost components of handling contacts:

1. Handle time (e.g., talk time plus after call work time for a phone call)
2. Resource costs for handling contacts (fully loaded cost per unit time – e.g. cost per minute)
3. Total volume of contacts (volume of contacts for all media)

Reducing any one of these three variables will reduce the cost of operating a contact center. This framework is critical to a systematic analysis of your contact center costs. In the following summary, we will build on this framework to begin the process of analyzing the potential areas for cost reduction.

Area 1: Reducing the handle time

Reducing the contact handle time can be accomplished by improving one of the following three areas:

 

• Improve agent capability

• Improve systems support

• Improve or redesign contact  processes

Area 3: Reducing the volume of contacts

Reducing the volume of contacts can be achieved by one of the following methods:

• Eliminate reason to contact

• Minimize misdirected calls

• Reduce repeat calls

Note that redistributing volume to alternate media (i.e., moving phone calls to IVR or web self-service) does not appear on this diagram. That type of cost reduction initiative is addressed in the category of “Reducing the Cost of Resources” under the area "Drive volume to lower cost channel."

Putting the framework together

By taking each component and putting them together, you can create a master framework for identifying cost reduction initiatives for your call center as shown in the cost reduction diagram below.

(Click on the diagram for a printable image.)

 Cost reduction diagram