When was the last time you walked into your boss’s office and, rather than ask for more money, asked to please cut costs? Maybe never? Well, let’s face it, strange times call for strange actions and it’s no longer business as usual. Whether you are running a work-from-home call center or simply operating with essential workers with extreme caution, one thing is certain – your carefully constructed budgets are no longer relevant, and your once predictable operating costs have suddenly blown up. But here we are and now it’s time to pick up the pieces and go forward. Which brings us back to what no one ever says, but which we must now consider doing – cutting costs. But where?
Cut costs, not corners
Its important to be purposeful when cutting costs. Using benchmarks can help. Use internal benchmarks to make cuts relative to past performance. Use industry benchmarks to make cuts that will put you in line with other contact centers like yours. Using both sets of benchmarks in combination may yield the best results.
External benchmarking can show where low-hanging opportunities exist. For example, if your first call resolution rate is lower than industry average, improving that metric will produce efficiency savings. You may be able to reach your cost cutting targets just by bringing your contact center metrics in line with industry averages. Here are a few of our favorites.
KPI: Cost of Operations
Cost of operations measures all the activity costs directly associated with a contact center. These costs typically include variable costs like:
- salaries
- communications charges
- software usage fees
- any other cost that vary according to use
Operating costs also include fixed costs like:
- hardware amortization
- allocated overhead
- contract costs
- costs that do not vary with use
KPI: Total Number of Interactions and Total Number of Available Interactions
Total number of interactions is a primary measure of contact center activity. It should measure how many interactions were handled by the contact center during a period. Total number of interactions measurements should be measured across all interaction methods like voice or email and then rolled up into a total. Total number of interactions is a lagging KPI.
Total number of interactions is an activity measure that can be benchmarked against forecasts and used to improve forecast accuracy. Furthermore, it is needed to calculate other measures. For example, Cost of operations can be divided by total number of interactions to determine cost per interaction.
A closely related KPI is Total Number of Interactions Available. This metric establishes a capacity baseline by talking the number of forecast agent available minutes and dividing this by the average interaction length. Dividing Total Number of Interactions by Total Number of Interactions Available will give you a utilization measure.
KPI: Agent Occupancy Rate
Agent occupancy rate is the time an agent is available and expected to deliver service. This is typically measured by the time they are logged in the contact center system and are not expected to work on any other tasks (like training). Agent Occupancy is a leading or “influencing” KPI.
Agent occupancy is an important KPI because contact center labor is a significant cost. Agent occupancy rates help balance labor costs against contact center demand. If occupancy rates are high during periods of low interaction volume, then labor costs will unnecessarily high. Conversely, if occupancy is too low during periods of high contact center demand, then service levels and resulting CSAT may decline. It can also be used to determine whether your home-based call center agents are spending too much, or too little time logged in and in state of readiness.
KPI: Quality Evaluation Scores
Quality evaluation (QE) scores reflect workforce proficiency in executing work processes and achieving desired service level outcomes. QE scores measure individual as well as workforce performance and are used as a leading KPI.
QE scores are a predictor of productivity, efficiency and customer satisfaction. When service outcomes are achieved in less time, and with greater consistency and accuracy then this can have the effect of lowering operating costs and improving customer satisfaction.
For example, subject matter expertise will improve first call resolution rates. Proficiency in workflows, tools and systems can speed information discovery and reduce after call work. Improved inter-personal skills can reduce conflict. Training, measuring and continually improving proficiency in targeted areas will ultimately lead to better outcomes.
KPI: First Call Resolution
We’ve saved on the most powerful for last. First call resolution (FCR) measures the percentage of interactions that were completely resolved in the first attempt and which require no subsequent contact. FCR is a leading indicator.
While there are many KPIs which measure service levels, perhaps FCR is the most telling. FCR is influenced by workforce proficiency (as measured by QE) and adequate staffing (as measured by agent occupancy) and is a leading indicator for CSAT and cost of operations. First call resolution is one of the most influential metrics for not only determine customer satisfaction, but also for reducing contact center costs. Here is a quick primer on the power of first call resolution.
If further cost reductions are needed, then you may want to consider using a pro-rated approach. For example, if call center volume is down 30% you could apply this discount ratio to your variable costs like staffing, call center software licenses and similar. While there are potentially many variable costs you could cut, its still highly advisable to consider whether a cut is the right cut to make.
For example, you may have variable expenses associated with agent training and proficiency assessment. This may seem like an easy cost to eliminate. But while you are cutting costs, you may also be indivertibly cutting corners. Chances are your home call center agents are operating under new circumstances supporting customers with new kinds of requests. Agent training and proficiency assessment may be something that you call center especially needs at this time.
Summary
Using benchmarked KPIs as the basis for making informed operating cuts will not only help you trim costs it will also help you to keep contact center activities and costs aligned with customer and business needs as we enter our new normal. For more information on KPI benchmarking and how to align them with your business strategies, view this presentation.
