Measuring call center costs
Tutorial Series

Module 3 - Improving 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.  Module 2 identified principles for benchmarking your center's cost metrics.  This module will conclude the series with methods to improve your cost metrics.

How can costs be decreased?

Upon measuring and benchmarking your call center's cost metrics, you may identify a need or opportunity to decrease costs in your center. The main strategies for decreasing call center costs include:

• Reducing contact volume
   
• Reducing handle time
   
• Reducing workforce costs
   
• Reducing overhead costs

Each of these strategies will be described in the tutorial, along with some specific methods and tactics to apply in your call center. (Please note that not all tactics are appropriate for all call centers.)

Reducing contact volume

Decreasing the number of contacts will reduce overall costs in your center. There are several mechanisms that can be used to reduce call volume.  The following are just a few of the tactics your call center can adopt to reduce costs by reducing contact volume. 

1. 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 ways to close the sale without the contact taking place.) Examples of methods to eliminate the reason to contact include making products easier to install and use, reducing product defects and making bills and statements easy to read.
    
2. 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.
    
3. Reduce repeat contacts.  You can do this by focusing on the improvement of first contact resolution rates, improve contact closings or using proactive follow-up responses.
    
4. Outsource calls during peak calling periods to a service bureau.  Calls can be redirected when wait time exceeds time thresholds or when call volumes exceed scheduled resources.
    
5. Automate routine requests.  New technology can be used to automate customer inquiries, such as VRU or Web self-service.  By automating routine requests, customer service centers can dedicate their staff to more complex calls and callers can take care of simple requests quickly.
    
6. Inform customers about the best times to call in order to redistribute peak call volume to non-peak times.

Reducing handle time

Another way to reduce call center costs is to reduce the total time that agents spend on calls and any wrap-up work related to a call, also known as handle time.  Handle times for similar call types can be negatively impacted by many factors, including inefficient use of technology, data entry requirements, or insufficient agent skills.  Some methods for reducing handle time include:

1. Increase agent skills.  As a general rule, the more capable and experienced the agent, the lower the handle time.  Quality monitoring is an excellent method for identifying skill gaps and developing corrective action programs.  To learn more about quality monitoring, take a look at Prosci's Call Center Quality Monitoring Toolkit.
    
2. Improve desktop systems.  The desktop tools available to agents and the routing methods for contact have a direct impact on handle time.  Consider adding or upgrading to more user-friendly software for agents to help decrease handle time.  Also, look at options for implementing new technology, such as CTI, knowledge databases or electronic documentation systems.
    
3. Improve contact processes.  Efficient contact processes can dramatically and immediately influence contact handle times.  Look at how you can reduce, move or reengineer activities for agents in your contact process.

Reducing workforce costs

Payroll costs typically comprise 70% to 80% of the total operating costs for the call center.  Labor costs are driven by the location of the center and the skill level requirements for an agent.  The following are some strategies for decreasing labor-related costs:

1. Location, location, location. Choose to locate a new center or re-locate an existing center in an area where there is a large labor pool and labor costs are low.
    
2. Skill-level requirements for agents can be affected by the work activities required and the types of tools provided to the agent.  In some cases, new systems and processes can lower the required skills and therefore make the position open to lower cost resources.
    
3. Reduce benefit offerings.  Offering less benefits to employees or requiring employees to pick from benefit options with the requirement to pay for improved coverage reduces the cost per employee.  This strategy has come to the forefront for many companies as the cost of health care continues to rise dramatically year after year. 
    
4. Reduce hours of operation.  While not a popular alternative from a customer service perspective, reducing the hours of call center operations directly reduces payroll costs.  The use of quality self-service options, including IVR, speech recognition technology and improved Web services, enable some call centers to reduce hours of operation for live agents.

Reducing overhead costs

Reducing overhead costs includes all cost elements other than direct agent cost.  This would include cost elements such as facilities, management, toll and network costs, training, IT, human resources and any other support function.  Methods to reduce overhead costs include, but are not limited to, the following:

1. Reduce network and toll costs.  Although only a fraction of a typical call center budget, reducing theses costs can have a significant impact over time.  Contracts with long-distance carriers and local telephone companies for leased lines should be reviewed on a regular basis to ensure the best possible prices.  Voice-over Internet Protocol (VoIP) solutions can also drive down network costs as well as network management costs.
    
2. Enable remote agents to reduce facility costs.  Reduce the required facility space and associated overhead costs for the facility by enabling remote agents.  This option is applicable to call centers that are reaching their space capacity and looking for expansion alternatives.
    
3. Consolidate call centers.  Redundant overhead costs can occur with multiple locations, and consolidating call center operations can decrease these costs.  This could include redundant HR, training, IT support, workforce scheduling and other support services for the call center.
    
4. Reduce turnover.  Reducing employee turnover has a direct impact on several overhead components for the contact center including training and HR support for recruiting and hiring.  For more information about how to decrease turnover and increase productivity, take a look at Prosci's Motivating Call Center Agents Toolkit.

Controlling the cost of call center operations

The main strategies for decreasing call center costs are detailed in Prosci's Controlling the Cost of Call Center Operations Toolkit.   A systematic approach to expense reduction, this toolkit provides over 50 initiatives to cut costs, including short-term quick-hits, mid-term tactics and long-term strategies.  The outcome is a set of identified and prioritized cost initiatives most suited for your situation.

If you would like to begin improving your costs immediately, take a look at the recommended resources below to help you get started or email an analyst with your questions.