Call Center Cost vs. Revenue (sales)

[nicoleb]

Many call centers today are turning their cost centers into revenue generating environments. In doing so, it is expected that handle time will increase because of sale offers. What are the dangers of focusing more energy on decreasing handle time versus thereby impacting sales results? Are there any lessons learned around this issue?

[John Cockerill]

This is a matter that confuses a lot of people when they approach is as a problem of reducing the call time. A better approach is to consider this issue as one of cost per revenue dollar. Plus do not compare the revenue performance of a csr with the service performance. They are two different things completely.

When you compare the cost per revenue dollar look at your organizations other sources as the comparisions. Is it higher or lower? This is the important issue.

Also for this matter about turning your centre into a cost centre you might also consider that most customer service centres are already generating revenue although it is often unseen. For example see Dr. Jon Antons book about call centres titled "Call Center Management by the numbers". He show clearly the relationship between good service and revenue that is missed by most in our field.

all the best.

[nicoleb]

Thanks for responding. Your insight was very helpful. I just have a few questions.

When you say cost per revenue dollar, do you mean how much it cost us to make a sale? The ratio between operational cost and revenue made? This sounds like determining your gross profit margin which is sales - cost of sales divided by sales. This basically lets us know the extent to which revenues exceed direct cost associated with sales. It also looks at the value of the sale an the efficiency by which we were able to make it. Did I interpret your response correctly?

Further, you mentioned not to compare the revenue performance of an csr with the service performance. If we don't compare these two, how does one know the value each csr brings to the business?

Lastly, you mentioned comparing the cost per revenue dollar with other organizational sources of comparison. Can you explain this a little more?

[John Cockerill]

I know terms are slippery, lets see if I can be clear.

Sales are units, individual items, or a collection of items. Revenue is the total dollars associated with each sale. At some point someone must calculate: total number of sales, total revenue, total cost and therefore the following is what you might see.

Total Sales/Units 100

Total Revenue $100,000

Total Cost $20,000

Cost per Sale ($20,000/100) =$200

Cost per Revenue Dollar (CRD) ($20,000/$100,000) =$0.20
Or to state it another way it costs $0.20 to earn a $1 of revenue.

If the Cost per Revenue Dollar increases then the operation is becoming less efficient and if it is decreasing then it is becoming more efficient. All factors are taken into account with this one number, labour, marketing, offer, teleco, lists, call rates, staffing, scheduling management etc.

When considering your operation it is this number that determines whether or not the efficiency is increasing or decreasing for the overall program/operation. Individual CSRs are not part of the consideration for this judgement.

I hope that helps somewhat on the efficiency measure question. Now to address the CSR issue and the differences between the two.

When people speak about decreasing handle time of individual CSRs they are often doing themselves and the CSR a disservice. Lets consider the following. If a CSR is well trained and functioning normally for the operation and is adhering to the script that marketing has set. There is little the CSR is allowed or can do. (Becareful of my use of the word normally. It is use from a statistical frame of reference) For more on this read Demings, Out of the Crisis.

If you or management want to decrease call times, management must change the script, process, offer on a systemic basis for it to have an effect on the overall call times.

Otherwise all that is achieved is to fustrate the CSR, Supervisor because they are getting conflicting messages.

Hope that helps
John