Call Center Cost Reduction Planning Tutorial Series

Module 2 - Identifying potential cost reduction activities

The Call Center Learning Center is proud to present a tutorial series focused on cost reduction planning in your call center. This tutorial series will pull from Prosci's research-based toolkits and best practices reports. Module 1 addressed the cost control challenge that all call center managers face.  This module discusses how to identify potential cost reduction activities.  Module 3 will focus on prioritizing and selecting activities for your call center.
 

What is the solution to this common cost control challenge?  Cost reduction planning is a systematic approach that provides a comprehensive framework for reducing the cost of your call center operations over time.

The cost reduction planning process has two primary activities:

Step 1 - Identify potential cost reduction activities.

Step 2 - Prioritize and select the activities for your call center.

This tutorial will cover Step 1.  Step 2 will be covered in the next module of this tutorial series.
 

Cost components of handling contacts

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 handle time

Handle time refers to both talk time and after-call work time for telephone contacts and the handle time for other media including fax, email and mail.  Reducing the contact handle time includes three primary areas.  The major branches include:

• Improve agent capability
  As a general rule, the more capable and experienced the agent, the lower the handle time.  This is why turnover is so costly to call centers.  However, agent capability is not just a matter of length of service.  Remember to also consider training, incentives and feedback from quality monitoring as factors in this strategy.
   
• Improve systems support
  This branch has proven to be an effective way to reduce handle time (and improve first time resolution rates at the same time).  The desktop tools available to agents and the routing methods for contacts have a direct impact on handle time.
   
• Improve contact processes
  This area can dramatically reduce contact handle times.  The call process and required activities immediately impact handle time.

In other words, you can reduce handle time by addressing the people, the processes or the systems.

Reducing the cost of resources

Reducing the cost of resources also includes three primary areas.  Cost of resources includes the cost of people, equipment or facilities necessary to handle customer contacts.  The major branches include:

• Drive volume to lower cost channels
  Whether it involves changing customer behavior, updating technology or outsourcing, this is one of the most effective ways of reducing the cost of resources.
   
• Reduce agent payroll costs
  This is a more problematic area for cost reduction but should not be overlooked given that payroll costs make up 70% to 80%  of the total costs for a majority of contact centers.  In some cases, reducing payroll costs can be achieved without adverse affects on service quality or turnover.  In other cases, there is a clear trade-off between cost and service quality.
   
• Reduce overhead costs
  Overhead costs include all cost elements other than direct agent cost, such as facilities, management, tool and network costs, training, IT, human resources and any other support functions.

Reducing the volume of contacts

Reducing the volume of contacts has three primary areas.  The major branches include:

• Eliminate reason to contact
  The best way to reduce contact volume is to remove or eliminate the root cause of the contact.  This strategy does not necessarily apply to contact centers oriented toward sales unless they can identify a way to close the sale without the contact taking place.
   
• Minimize misdirected contacts
  Some fraction of your contacts are most likely misdirected contacts intended for some other part of the organization.  These contacts not only add to the queue, but they also take time away from handling other contacts.
   
• Reduce repeat contacts
  Call volume can be reduced by minimizing the number of repeat contacts (referred to as call-backs for phone calls).
   

Identifying potential cost reduction initiatives

The three main drivers for reducing the cost of call center operations and their strategies combine to form a cost reduction diagram, as illustrated in Figure 2.

Figure 2 - Prosci's Cost Control Roadmap

Given this framework, you will need to brainstorm ideas to reduce costs within each area that are applicable to your call center.  A suggested process for completing this task is:

1. Form a project team from your organization of open-minded and creative individuals including front-line agents, supervisors or managers from other areas.
    
2. Begin by selecting an area of focus from the cost reduction diagram.
    
3. Brainstorm ideas to impact that area.
    
4. Organize these ideas into categories (group common suggestions).
    
5. Identify the root causes whenever possible - look beyond the symptoms.
    
6. Repeat for the next area from the cost reduction diagram.
    
7. Create a master list.

After completing your master list, you will need to prioritize and select specific cost reduction initiatives for your call center.  This step will be covered in-depth in the next module of this tutorial series.  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.