Call Center Cost Reduction Planning Tutorial Series

Module 3 - Prioritizing and selecting cost reduction activities for your call center

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.  Module 2 discussed how to identify potential cost reduction activities.  This module will focus on prioritizing and selecting cost reduction activities for your call center.
 

See Module 2 for details on how to complete Step 1 of the process.  This module will address Step 2.
 

Categories of cost initiatives

The cost reduction initiatives you brainstormed in step one of the process and those that you actually develop for your own organization 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 1.

Figure 1 - Three categories of cost control initiatives

Initiative selection considerations

It is important to specifically address the impact that the improvement initiative will have on service quality, agent productivity and motivation, customer satisfaction, and other performance measures.  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.

Only certain initiatives will apply to your situation or the selected initiatives.  Examples of selection criteria include:

• Accountability
  Does the contact center have the sole authority for this improvement idea or are there other organizations involved?  For example, offering self-service on the Web would require working with the department that manages the Web site, 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 to the organization?
   
• Cost savings impact
  What are the bottom-line cost savings from this change?
   
• Time to implement
  How long will the solution take to implement (week, month, quarter, year, etc.)?
   
• Cost of solution
  What are the initial costs and ongoing costs to implement this solution?
   
• Ability to measure success
  Can we measure the impact of this change?
   
• Impact on service quality
  How will this affect customers and their perception of our service?
   
• Return on investment
  What is the ROI?  Does it meet the financial threshold for new investments?
   
• Other effects
  What other benefits can be derived from this change?

Capture the key considerations for each potential cost reduction.  You can use a table like the example shown in Figure 2 to record your thoughts and observations for each potential cost reduction initiative. The Controlling the Cost of Call Center Operations toolkit provides templates and specific considerations for each of the 52 cost reduction initiatives identified by the Cost Reduction Framework.

Figure 2 - Example selection criteria table

Threshold 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 by setting threshold criteria.  These are also called "go/no go criteria" or "show stoppers."  Show stoppers are characteristics that will make or break an initiative. 

Example criteria could be:

• ROI - Initiatives must have ROI of more than 15%.
   
• Time - Initiatives must have a payback period of 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 activities that have survived the threshold criteria, you can rank these initiatives with a simple scoring process.  Begin by creating a spreadsheet like the table in Figure 3.  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.  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 (multiply the rank for each criteria by the weighting factor) for each potential project, and the result is a ranking of the best projects for your call center.  The Controlling the Cost of Call Center Operations toolkit includes spreadsheets to assist in the ranking and prioritization of your selected initiatives.

Figure 3 - Example prioritization matrix

In this example, the "new desktop software" ranks the highest, and "update 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 the ranking exercise, Module 1, and Module 2 of this tutorial series, you should have a strong starting point for reducing the cost of your call center operations.  For complete information, including checklists for examining all cost components and six worksheets on CD-ROM to facilitate the prioritization and selection processes, see the Controlling the Cost of Call Center Operations toolkit.