Measuring call center costs
Tutorial Series

Module 2 - Benchmarking your call center's cost metrics

The Call Center Learning Center is proud to present a tutorial series focused on measuring the cost of customer contacts in a call center. This three-part tutorial series will pull from Prosci's research-based toolkits and best practices reports.  Module 1 addressed how to determine the cost of providing customer service.  This module identifies principles for benchmarking your center's cost metrics.  Module 3 will conclude the series with methods to improve your cost metrics.

Issues to consider when benchmarking cost metrics

In order to benchmark with other customer service centers, and to maintain consistent measurements, you'll need to identify specifically what costs are included in your calculations.  You will also want to be sure that your benchmarking partners use the same budget items.  Before benchmarking, ask specifically what cost items are included and what cost items are excluded.  In addition, make sure that your benchmarking partners are using the same methodology for call volume measurements.

Two principles for cost per call benchmarking

When benchmarking with other call centers, cost per call comparisons should be made with companies that have similar handle time and labor costs.  Keep in mind the following two principles to ensure meaningful comparisons between centers:

• Ensure that the comparison is done within the same industry.

OR

• Ensure that the comparison is between centers with similar handle times.

Consider a software support company that averages $10.00 per call with an average handle time of 10 minutes.  Then consider a utilities center that averages $3.00 per call with an average handle time of 4 minutes.  Both the labor costs (technical support cost vs. customer service support cost) and handle time differences make this benchmark of little use.  Comparisons between these two call centers are not helpful for identifying possible cost reduction or even as a basic benchmark of performance.

Cost allocation and multi-media contact

The main issue associated with cost measurement is determining how to allocate budget costs between contact channels.  Calculating cost per call is straightforward when the entire budget can be associated with customer calls.  However, when customer service centers incorporate email, fax, VRU/IVR and other contact options, allocating budget costs becomes a more complicated process.  Consider the contact volume illustrated in Figure 1.
 

Figure 1 - Contact volume
 

A customer service center that offers only telephone communications can safely state that all its budget costs are used for cost per call calculations.  In contrast, a customer service center that offers phone, email and fax communication options needs to decide what portion of costs belong with each communication channel.

Call blending and media blending play a central role in cost allocation.  In call blending, agents handle both inbound and outbound calls, depending on call volume.  In media blending, agents handle calls, emails, faxes and voice mail.  Cost allocation becomes extremely complicated as more blending and skill-based routing is introduced.  For example, in a blended environment, payroll costs for agents need to be divided between inbound and outbound tasks, email work, fax work, etc.

Finally, allocating budget costs is complicated if there are costs specific to a contact channel, such as Web system support and costs that are shared across contact channels, such as facility expenses (See Figure 2).

Figure 2 - Sample budget allocation between contact channels

One option when allocating budget costs between contact channels is to determine the percent of customers using each channel, such as 70% phone, 15% email and 15% fax.  Then apply these percentages to the total operating costs, or to the portion of operating costs that are shared across contact channels.

Another option is to operate communication channels as separate business processes and establish budgets independently from each other.

Impact of call volume

The method used to determine call volume will impact cost per call and cost per minute calculations.  As shown in Figure 3, you can see that there are several ways of measuring call volume.  Each point in this diagram illustrates a different point in the call process in which call volume can be tracked.  As callers choose to abandon, select VRU/IVR automated services, or use an alternate contact channel, call volume measurements are decreased.

For cost per minute measurements, only those calls that are received by an agent should be counted.  If multiple contact options are available to the customer, then the cost per contact should use the volume for each contact channel.  Most importantly, when benchmarking you should ensure that your partners are computing call volume the same way you do such that your comparisons are valid. Figure 3 shows examples of where call centers may begin to measure call volume.

Figure 3 - Call volume measurement examples

Still to come

Benchmarking is an important step in the process of improving call center efficiency.  The next tutorial will examine methods you can use to improve your call center's cost metrics.  If you would like to begin measuring, benchmarking or improving your costs immediately, take a look at the recommended resources below to help you get started or email an analyst with your questions.