Showing posts with label Call Center Metrics. Show all posts
Showing posts with label Call Center Metrics. Show all posts
Friday, August 17, 2012
Call Center Zen - Everything is Connected
Call Center Zen- Everything is Connected
By Colin Taylor
We have all heard that when a butterfly flaps its wings in the Amazon rain forest it can cause an avalanche in the Swiss Alps. This story reflects a belief and understanding that everything is connected to everything else. This is certainly true in a contact center environment. In continuing to assess call and contact centers it constantly amazes me the level of inter-connectedness that exists. Each and every process, procedure, technology or methodology impacts not only on the area of its focus, but on numerous other processes and procedures operating in the contact center.
In this article we examine some off this inter-connectedness. When establishing a contact center hiring and recruiting are among the first activities you plan and map. Now as illustrated by the ‘Poll of the Month’ question most organizations still employ a direct approach to sourcing staff as apposed to employing an agency.
How are you to know how many staff to recruit? Most center managers tell you that they base this number on the volume of calls/interactions expected, the average handle time (AHT) and the grade of service (GOS) desired. All of these key elements are input into an Erlang calculation and voila, how many staff is needed.
While this is correct, it fails to examine a number of interconnected aspects of the center operation such as: what is your desired staff compliment or mix between Full Time, Part Time and temporary/casual, what are the hours of operation of the center, what level of staff turnover and Churnover do you expect, what is your forecast for year and have you included time for vacations, sick days, on-going training, what is your budget based on…is it headcount or FTE etc.
Each of these points and processes are interconnected and interrelated. You cannot identify the number of staff until you know what the hours of operation will be. You cannot determine the number of staff required to meet your hours of operation until you determine the mix of staff. Similarly creating a staff base that doesn’t provide for vacation and sick days (which agents will take) leaves you short staffed or over budget. A staff plan that doesn’t allow for on-going training (this is a very common problem in most centers today) ensures the staff do not develop skills. This then manifests itself as poor morale and higher turnover.
It is essential that all of these issues are addressed in concert as you plan and assess your staffing needs. Now lets say that having done all of this; you know your operating hours, you have determined your staff compliment, you have estimated turnover and Churnover, set GOS and ASA targets and have made allowances for all of this plus sick days and vacations in your rolling 18 month forecast. From this you can extrapolate the Full Time Equivalents (FTE’s) required to meet the GOS and ASA through your Erlang calculator. The resulting FTE or total hours required number can then be broken down across you staff compliment to determine how many staff you need to meet service standards and when or how this staff count changes throughout the year.
Recognize the interconnectedness, interrelationships and inter-dependencies of a contact center environment. If you act with these in mind you create a foundation for an effective contact center that is significantly ahead of where the majority of contact centers are today.
Thursday, October 28, 2010
Financial Metrics in your call center
Post by Turaj Seyrafiaan
In this post, we will look at some of the financial indicators and metrics that are a part of call and contact center operations.
As more and more contact centres are treated as a separate business unit, it becomes necessary for contact centre management to deliver expected services while improving their bottom line financial results. Failing to provide services within a given budgets or financial targets puts pressure on the management team to reduce services, offer lower quality service or both! Even without such financial pressure, providing services at a high cost creates opportunities for other centres (outsourcers) to offer better financial results (i.e. profit) to the organization and as a result, make the internal contact centre redundant. As contact centres evolve, it is the responsibility of the contact centre management to understand their financial results (cost of providing services) and continuously improve it.
While overall financial requirements and results are indicated and discussed as either Capital or Operating Expenditure, a more granular, detailed and specific indicators are required to understand and measure the improvement in the efficiency of the contact centre. The most common indicators are Cost per Call and Cost per Minute.
Cost per Call
This is an overall indicator representing an average cost for each call (this indicator can be expanded to Cost per Contact to include all types of contacts including emails and chat). This indicator can be calculated based on historical data or for the current year. What is included in the cost varies from centre to centre depending on what items have been included in the Operating Expenditures (We will talk more about Operating vs. Capital Expenditure later in this article). In majority of cases, the costs include salaries (Agents, Supervisory, Management and support staff), technology (software licensing and maintenance) and telecommunications. Other organizations may include less evident costs such as benefits, Real Estate/rent and utilities to provide the total (and more complete) cost of delivering / receiving a contact.
Cost per Call provides a valuable piece of information as well as providing a reality check about the operation. As this indicator provides the average cost for each and every call, it brings the focus not only to how that money is spent and how to improve the service delivered (combination of AHT and service level), but also how many contacts are being made and if they can be reduced. Analyzing the numbers could also point to a less costly method or channel that can provide the same (or similar) level of service with the same customer satisfaction. As an example it is widely accepted that Self Serve contacts (automated) are less costly than a live contact and hence typical push to provide more and more automated services. (When doing such comparisons, one must consider the potential negative impact on customer satisfaction and eventually on customer loyalty).
Cost per Minute
As mentioned before, Cost per Call provides an average cost for each and every call or contact. This number can be broken down for different channels (if present) to provide a more accurate data, but what about different types of contacts within the same channel? For example one call might be a simple update of address while the next call has to do with obtaining a mortgage or car insurance! In these cases, calculating and presenting the average cost may not offer meaningful data as average handle time for each call will be greatly different. In these situations Cost per Minute would be a much better indicator as it provides a common base for comparison and operational improvement. By definition, Cost per Minute is not dependant on AHT and only provides data with regard to cost structure of the centre (people, technology and telecommunication) and the impact of the occupancy rate (the higher the rate, the lower the cost per minute).
Which one of these two indicators should be calculated, reported and used? The answer depends on the variety of the calls at the centre and the desired details and accuracy. If AHT is consistent across different call types (minimum variance), then Cost per Call can provide complete information while easier to calculate. On the other hand, for centres with a full range of call types (simple to complex) and call lengths (short to long) it is better to use Cost per Minute. (One can always calculate costs for each specific type of calls based on its AHT).
The issue of the Cost per Call vs. Cost per Minute becomes more important when dealing with outsourcers as it may become the main cost parameter in the contract. It has been said that Outsourcers typically prefer Cost per Call, as this framework allows them to concentrate their improvements on AHT, and as a result increase their profit margin. Cost per minute (along with an agreed Service Level) does not provide the same framework for outsourcers to improve on the profit margins by reducing the AHT. However a Cost per Minute model could encourage the unscrupulous outsourcers to increase Handle time to increase profit margins.
Operating vs. Capital Expenditures
Traditionally, in any organization, a business unit must handle two different set of expenses. The larger and infrequent items such as purchase of Real Estate, furniture, desktop computers and major software are treated differently both in terms of P&L (Profit and Loss) reporting and for taxation purposes. These expenses are considered and reported as Capital Expenditure. The ongoing and recurring expenses such as salary and benefits, utilities and smaller infrequent items are categorized and reported as Operating Expenses. What is the difference between the two? Well, the answer lies at how each of these is treated. By default, majority of the larger items are one time or perhaps infrequent expenses and are for physical items that have an expected life longer than a year (such as a desktop computer). In effect, even though an organization may have incurred the total cost at the beginning (incurring the cost should not be mistaken with payment options), the benefit from the item lasts much longer. For that reason, such costs are amortized or spread over the expected life of the item and only certain portion of the cost (depreciation) is included in the Profit and Loss statement.
Operating Expenditures, on the other hand are those expenses that occur on a regular basis (on-going) for the services (and products) that are consumed regularly (such as agents salary). These types of expenses do not have an expected life and are directly related to the operation of the business unit.
In simple term, Capital Expenditures, are the money that is invested in creating a business entity (be it a contact centre or a manufacturing unit), while Operating Expenditures are the cost of operating that entity day in and day out. The overall cost used in calculating the Cost per Call or Cost per Minute is usually based on the Operating Expenditures and does not include the Capital Expenditures, the exception to this treatment would be where outsourcing or a ‘carve out’ where assets would be purchased by the outsourcer.
In today’s call center environment there is less clarity between Capital and Operating Expenses due to the rise of cloud computing, SaaS and hosted solutions. All of these developments allow companies and call centers to forgo capital expenditures to secure and employ a vendor’s solution and instead pay a fixed monthly rate per user. Heretofore these costs would have been Capital purchases, but today become Operating Expenses.
Full Time Equivalent (FTE)
One last operational indicator, although not specifically financial, is the Full Time Equivalent or FTE for short. As discussed in previous issues, many contact centres hire part time employees to complement their full time work force. Although having part time employees provides flexibility in work force management, counting the number of agents directly as a head count does not provide an accurate picture (especially in terms of salary). For this reason, and for the purpose of planning and financial reporting, majority of centres use the working hours to convert the number of part-time staff into equivalent of a full-time employee (for example if two agents each work half the time, for the year, they would be considered as one Full Time Equivalent or FTE). In these cases, the operating budget is based on the total FTE for the year and the contact centre management can decide how and when to utilize the total budget. It should be noted that typically in a contact centre, staffing (salary, payroll expenses and benefits) can account for up to 75% of total operating expenses.
The Bottom Line
The overall operation of any business is dependant on its ability to successfully manage its limited financial resources. The above indicators are used to assist contact centre management to understand and improve the final financial results. It is important to understand the costs the center incurs and what choices and options the center and organization have in relation to reducing these costs. Poor service isn’t always less expensive than superior service. A best-in-class organization can provide excellent customer service while operating within reasonable and sustainable financial results.
In this post, we will look at some of the financial indicators and metrics that are a part of call and contact center operations.
As more and more contact centres are treated as a separate business unit, it becomes necessary for contact centre management to deliver expected services while improving their bottom line financial results. Failing to provide services within a given budgets or financial targets puts pressure on the management team to reduce services, offer lower quality service or both! Even without such financial pressure, providing services at a high cost creates opportunities for other centres (outsourcers) to offer better financial results (i.e. profit) to the organization and as a result, make the internal contact centre redundant. As contact centres evolve, it is the responsibility of the contact centre management to understand their financial results (cost of providing services) and continuously improve it.
While overall financial requirements and results are indicated and discussed as either Capital or Operating Expenditure, a more granular, detailed and specific indicators are required to understand and measure the improvement in the efficiency of the contact centre. The most common indicators are Cost per Call and Cost per Minute.
Cost per Call
This is an overall indicator representing an average cost for each call (this indicator can be expanded to Cost per Contact to include all types of contacts including emails and chat). This indicator can be calculated based on historical data or for the current year. What is included in the cost varies from centre to centre depending on what items have been included in the Operating Expenditures (We will talk more about Operating vs. Capital Expenditure later in this article). In majority of cases, the costs include salaries (Agents, Supervisory, Management and support staff), technology (software licensing and maintenance) and telecommunications. Other organizations may include less evident costs such as benefits, Real Estate/rent and utilities to provide the total (and more complete) cost of delivering / receiving a contact.
Cost per Call provides a valuable piece of information as well as providing a reality check about the operation. As this indicator provides the average cost for each and every call, it brings the focus not only to how that money is spent and how to improve the service delivered (combination of AHT and service level), but also how many contacts are being made and if they can be reduced. Analyzing the numbers could also point to a less costly method or channel that can provide the same (or similar) level of service with the same customer satisfaction. As an example it is widely accepted that Self Serve contacts (automated) are less costly than a live contact and hence typical push to provide more and more automated services. (When doing such comparisons, one must consider the potential negative impact on customer satisfaction and eventually on customer loyalty).
Cost per Minute
As mentioned before, Cost per Call provides an average cost for each and every call or contact. This number can be broken down for different channels (if present) to provide a more accurate data, but what about different types of contacts within the same channel? For example one call might be a simple update of address while the next call has to do with obtaining a mortgage or car insurance! In these cases, calculating and presenting the average cost may not offer meaningful data as average handle time for each call will be greatly different. In these situations Cost per Minute would be a much better indicator as it provides a common base for comparison and operational improvement. By definition, Cost per Minute is not dependant on AHT and only provides data with regard to cost structure of the centre (people, technology and telecommunication) and the impact of the occupancy rate (the higher the rate, the lower the cost per minute).
Which one of these two indicators should be calculated, reported and used? The answer depends on the variety of the calls at the centre and the desired details and accuracy. If AHT is consistent across different call types (minimum variance), then Cost per Call can provide complete information while easier to calculate. On the other hand, for centres with a full range of call types (simple to complex) and call lengths (short to long) it is better to use Cost per Minute. (One can always calculate costs for each specific type of calls based on its AHT).
The issue of the Cost per Call vs. Cost per Minute becomes more important when dealing with outsourcers as it may become the main cost parameter in the contract. It has been said that Outsourcers typically prefer Cost per Call, as this framework allows them to concentrate their improvements on AHT, and as a result increase their profit margin. Cost per minute (along with an agreed Service Level) does not provide the same framework for outsourcers to improve on the profit margins by reducing the AHT. However a Cost per Minute model could encourage the unscrupulous outsourcers to increase Handle time to increase profit margins.
Operating vs. Capital Expenditures
Traditionally, in any organization, a business unit must handle two different set of expenses. The larger and infrequent items such as purchase of Real Estate, furniture, desktop computers and major software are treated differently both in terms of P&L (Profit and Loss) reporting and for taxation purposes. These expenses are considered and reported as Capital Expenditure. The ongoing and recurring expenses such as salary and benefits, utilities and smaller infrequent items are categorized and reported as Operating Expenses. What is the difference between the two? Well, the answer lies at how each of these is treated. By default, majority of the larger items are one time or perhaps infrequent expenses and are for physical items that have an expected life longer than a year (such as a desktop computer). In effect, even though an organization may have incurred the total cost at the beginning (incurring the cost should not be mistaken with payment options), the benefit from the item lasts much longer. For that reason, such costs are amortized or spread over the expected life of the item and only certain portion of the cost (depreciation) is included in the Profit and Loss statement.
Operating Expenditures, on the other hand are those expenses that occur on a regular basis (on-going) for the services (and products) that are consumed regularly (such as agents salary). These types of expenses do not have an expected life and are directly related to the operation of the business unit.
In simple term, Capital Expenditures, are the money that is invested in creating a business entity (be it a contact centre or a manufacturing unit), while Operating Expenditures are the cost of operating that entity day in and day out. The overall cost used in calculating the Cost per Call or Cost per Minute is usually based on the Operating Expenditures and does not include the Capital Expenditures, the exception to this treatment would be where outsourcing or a ‘carve out’ where assets would be purchased by the outsourcer.
In today’s call center environment there is less clarity between Capital and Operating Expenses due to the rise of cloud computing, SaaS and hosted solutions. All of these developments allow companies and call centers to forgo capital expenditures to secure and employ a vendor’s solution and instead pay a fixed monthly rate per user. Heretofore these costs would have been Capital purchases, but today become Operating Expenses.
Full Time Equivalent (FTE)
One last operational indicator, although not specifically financial, is the Full Time Equivalent or FTE for short. As discussed in previous issues, many contact centres hire part time employees to complement their full time work force. Although having part time employees provides flexibility in work force management, counting the number of agents directly as a head count does not provide an accurate picture (especially in terms of salary). For this reason, and for the purpose of planning and financial reporting, majority of centres use the working hours to convert the number of part-time staff into equivalent of a full-time employee (for example if two agents each work half the time, for the year, they would be considered as one Full Time Equivalent or FTE). In these cases, the operating budget is based on the total FTE for the year and the contact centre management can decide how and when to utilize the total budget. It should be noted that typically in a contact centre, staffing (salary, payroll expenses and benefits) can account for up to 75% of total operating expenses.
The Bottom Line
The overall operation of any business is dependant on its ability to successfully manage its limited financial resources. The above indicators are used to assist contact centre management to understand and improve the final financial results. It is important to understand the costs the center incurs and what choices and options the center and organization have in relation to reducing these costs. Poor service isn’t always less expensive than superior service. A best-in-class organization can provide excellent customer service while operating within reasonable and sustainable financial results.
Thursday, July 8, 2010
Measuring FCR in your Call Center
FCR is a popular topic we see on our call center consulting engagements.
Yesterday’s post dealt with the cost of ineffective call or contact resolution, citing an 80% First Contact Resolution (FCR) rate will add 25% to your average cost per contact and the importance of budgeting accurately to reflect the actual costs. In today’s post I wanted to examine a number of ways that FCR is measured in call centers and risks, benefits and various ‘gremlins’ that can influence the accuracy of your FCR statistics and present some ideas to help address or mitigate these issues.
Increasingly pundits and call center consultants like ourselves are promoting the use of FCR as the most valuable metrics for call center operations. It is difficult to argue against FCR as the perfect measure. On the surface it looks easy. We know customers and prospects are calling us to do something (pay a bill, order a product, get technical help etc.). Studies have consistently shown that when people get what they want, they are happier than when they do not.
For the time being let’s put aside the fact that successfully resolving an inquiry may not give the customer what they want: I want a refund says the customer and we quote David Spade in those old Capital One TV ads and say ‘No’. But FCR should be measuring whether the contact; call, inquiry was resolved, not whether the customer liked the resolution.
It can be challenging to measure FCR in a contact center environment. If you ask ten people how they do it you will hear a number of different responses. Some of the measurement approaches we have heard of include:
• Telephone Call Detail based – If the customer calls back within ‘X’ hours/days (48 hours, 72 hours 1 week), so the theory goes then we did not resolve the customers issue.
• IVR Survey based – What could be better than offering customers the ability to tell us how we did by offering them a post call survey.
• Agent based – The agent asks the customer if they have resolved the customers issue and this is then entered into the CRM or similar system.
Each of these approaches has benefits and potential risks or shortcomings. For example the Telephone Call Detail approach has the benefit of presenting a black and white picture of FCR. Once you have accepted the time window associated and accept the premise that the customer could have no other reason for calling again then the results have a good level of consistency.
Of course there may be reasons for the customer to call back: they ordered the wrong size, provided the wrong ship to address, received a new bill in the mail, have a second account with different issues etc. In the absence of robust analytics to provide a high level of data interrogation most centers will end up with a level of ‘false negatives’. That is to say that they will identify calls as not resolved when in fact the subsequent contact could be unrelated. This will mean a lower FCR score than they may actually be the case.
In contrast the Agent based approach of asking the customer if their inquiry was resolved before ending the original call, can also result in “false positives’. All of us who have worked as agents or with agents knows that there is a different perspective when speaking with a customer versus listening to the call or being the customer. The agents may ask the customer the question “Have I fully resolved your Inquiry” or something similar or they may not. The agent may simply check the box thinking that they asked the question or because they provided the appropriate response from the knowledgebase, so it must be resolved, right? Of course if the customer sounds unhappy or rushed the agent may choose to answer on the customers behalf etc. All of these scenarios will result in ‘false positives’ that is to say reporting that will indicate a higher FCR rate than likely exists.
One of the most prevalent solutions these days is the IVR survey, which in most cases 3 to 5 questions dealing with the call, as well as with overall satisfaction or net promoter etc. On the surface it appears to be a valid approach. What could be better than asking the customer? But depending on how it is deployed: by the agent seeking consent or before the agent answers the call by the IVR, you can have significant problems.
First as we looked at above the agents will not always offer the survey…in short they will or could play a triage role in limiting who gets into the IVR. Second if the caller agrees to participate before the call is directed to an agent, they may change their mind based on what happens with the call. Consumers and customers will ‘self-select’ whether or not to participate in any survey. If they believe it will help them they often participate, if there is little perceived value then they often will not participate. In consulting projects we have seen customers who ‘believe’ that their problem was resolved and are satisfied with the resolution they participate at a far lower rate than those who feel it was not resolved or who did not like the resolution. This illustration of ‘vested self interest’ can skew the results and reflect a lower FCR than actually exists.
Regardless of which of the above solutions is employed there are some other relevant issues that will influence the FCR reported. For example the customer believes or is promised that they will receive a credit, but that doesn’t appear on their next bill. In this case the customer and even the agent may believe the original contact was fully resolved, but it wasn’t. The same will be true if the product doesn’t arrive when expected (consumers hear 4 to 6 weeks and will expect it in exactly 4 weeks). The service isn’t restored when expected (told it would be back by 5 pm and at 5:01 they will call again); or the tech support routine they are told to run, doesn’t solve the problem. These are all examples of the customer not receiving what they expected, when they expected it. Of course the customers also contribute to FCR failures by not executing what they were to do (not following instructions) or providing inaccurate information of the original call (wrong size, incorrect address, an over limit credit card etc.) which will require a subsequent call.
As you can see effectively managing FCR is not easy and whatever approach you choose to employ, you will need to expect that it will take time for you to work out all of the exceptions, bugs and kinks. Remember that at the end of the day even if your model drives false positive or false negatives if you employ it consistently you will be able to chart improvement and declines period over period.
Let me know if you would like more information on this topic please email me directly at ctaylor@thetaylorreachgroup.com or visit our website at http://thetaylorreachgroup.com as we have a number of resources which may assist you in the process of implementing effective FCR measurement and reporting in your call center.
Yesterday’s post dealt with the cost of ineffective call or contact resolution, citing an 80% First Contact Resolution (FCR) rate will add 25% to your average cost per contact and the importance of budgeting accurately to reflect the actual costs. In today’s post I wanted to examine a number of ways that FCR is measured in call centers and risks, benefits and various ‘gremlins’ that can influence the accuracy of your FCR statistics and present some ideas to help address or mitigate these issues.
Increasingly pundits and call center consultants like ourselves are promoting the use of FCR as the most valuable metrics for call center operations. It is difficult to argue against FCR as the perfect measure. On the surface it looks easy. We know customers and prospects are calling us to do something (pay a bill, order a product, get technical help etc.). Studies have consistently shown that when people get what they want, they are happier than when they do not.
For the time being let’s put aside the fact that successfully resolving an inquiry may not give the customer what they want: I want a refund says the customer and we quote David Spade in those old Capital One TV ads and say ‘No’. But FCR should be measuring whether the contact; call, inquiry was resolved, not whether the customer liked the resolution.
It can be challenging to measure FCR in a contact center environment. If you ask ten people how they do it you will hear a number of different responses. Some of the measurement approaches we have heard of include:
• Telephone Call Detail based – If the customer calls back within ‘X’ hours/days (48 hours, 72 hours 1 week), so the theory goes then we did not resolve the customers issue.
• IVR Survey based – What could be better than offering customers the ability to tell us how we did by offering them a post call survey.
• Agent based – The agent asks the customer if they have resolved the customers issue and this is then entered into the CRM or similar system.
Each of these approaches has benefits and potential risks or shortcomings. For example the Telephone Call Detail approach has the benefit of presenting a black and white picture of FCR. Once you have accepted the time window associated and accept the premise that the customer could have no other reason for calling again then the results have a good level of consistency.
Of course there may be reasons for the customer to call back: they ordered the wrong size, provided the wrong ship to address, received a new bill in the mail, have a second account with different issues etc. In the absence of robust analytics to provide a high level of data interrogation most centers will end up with a level of ‘false negatives’. That is to say that they will identify calls as not resolved when in fact the subsequent contact could be unrelated. This will mean a lower FCR score than they may actually be the case.
In contrast the Agent based approach of asking the customer if their inquiry was resolved before ending the original call, can also result in “false positives’. All of us who have worked as agents or with agents knows that there is a different perspective when speaking with a customer versus listening to the call or being the customer. The agents may ask the customer the question “Have I fully resolved your Inquiry” or something similar or they may not. The agent may simply check the box thinking that they asked the question or because they provided the appropriate response from the knowledgebase, so it must be resolved, right? Of course if the customer sounds unhappy or rushed the agent may choose to answer on the customers behalf etc. All of these scenarios will result in ‘false positives’ that is to say reporting that will indicate a higher FCR rate than likely exists.
One of the most prevalent solutions these days is the IVR survey, which in most cases 3 to 5 questions dealing with the call, as well as with overall satisfaction or net promoter etc. On the surface it appears to be a valid approach. What could be better than asking the customer? But depending on how it is deployed: by the agent seeking consent or before the agent answers the call by the IVR, you can have significant problems.
First as we looked at above the agents will not always offer the survey…in short they will or could play a triage role in limiting who gets into the IVR. Second if the caller agrees to participate before the call is directed to an agent, they may change their mind based on what happens with the call. Consumers and customers will ‘self-select’ whether or not to participate in any survey. If they believe it will help them they often participate, if there is little perceived value then they often will not participate. In consulting projects we have seen customers who ‘believe’ that their problem was resolved and are satisfied with the resolution they participate at a far lower rate than those who feel it was not resolved or who did not like the resolution. This illustration of ‘vested self interest’ can skew the results and reflect a lower FCR than actually exists.
Regardless of which of the above solutions is employed there are some other relevant issues that will influence the FCR reported. For example the customer believes or is promised that they will receive a credit, but that doesn’t appear on their next bill. In this case the customer and even the agent may believe the original contact was fully resolved, but it wasn’t. The same will be true if the product doesn’t arrive when expected (consumers hear 4 to 6 weeks and will expect it in exactly 4 weeks). The service isn’t restored when expected (told it would be back by 5 pm and at 5:01 they will call again); or the tech support routine they are told to run, doesn’t solve the problem. These are all examples of the customer not receiving what they expected, when they expected it. Of course the customers also contribute to FCR failures by not executing what they were to do (not following instructions) or providing inaccurate information of the original call (wrong size, incorrect address, an over limit credit card etc.) which will require a subsequent call.
As you can see effectively managing FCR is not easy and whatever approach you choose to employ, you will need to expect that it will take time for you to work out all of the exceptions, bugs and kinks. Remember that at the end of the day even if your model drives false positive or false negatives if you employ it consistently you will be able to chart improvement and declines period over period.
Let me know if you would like more information on this topic please email me directly at ctaylor@thetaylorreachgroup.com or visit our website at http://thetaylorreachgroup.com as we have a number of resources which may assist you in the process of implementing effective FCR measurement and reporting in your call center.
Wednesday, July 7, 2010
Calculating the Cost of FCR
As a Call Center Consulting firm we have access to numerous studies and interesting research articles. A recent study by the CFI Group suggested that one in five customers come away from a contact centre interaction with unresolved issues. This would suggest to me that the issues in question were not resolved and the First Contact Resolution (FCR) can be no higher than 80%. This will lead to additional contacts and additional cost to the call center operator. But what will this cost really be?
I like to walk through the following process to help clients gain some insight into this hidden cost. I say hidden because most centers do not effectively track resolution. Instead they ask customers through the agent of an IVR survey or worse based upon the agents judgment if the issue was resolved. Of course the customer may not even know if the issue is truly resolved...will the billing credit appear on the next bill? Will the promised gift card be received? Will their service be restored by 5 pm today? None of these issues can be truly labelled as resolved until the required processes and activities are completed. But that is fodder for another post.
Back to the financial costs for an 80% FCR rate: if your average call (or contact) is $5 at an 80% FCR your average resolved contact on first call will cost you $6.25 or 25% more than your cost per contact. Of course those whose issues were not resolved will call back and once again they will receive an 80% FCR and those callers will only receive at best an 80% FCR and so on and so on. After the second call your overall cumulative FCR will be 96% and after three cumulative calls over 99%. But your costs for resolved calls will be $6.25 each and not the $5.00 that is likely in the budget. If you had 10,000 calls/month the annualized savings associated with just a 5% improvement in FCR would be more than $44,000.
This calculation does not factor in the likelihood that the call types that go unresolved are often the more complicated or difficult ones, that will by virtue of their nature represent a significantly larger percentage of Wave 2 and beyond calls than they represented in Wave 1. Nor have we factored in the fact that when the unresolved calls are received they will increase the volumes and adversely affect the scheduled agent hours and by extension the ability of the center to meet its service level and other KPI's such as schedule adherence.
So the costs are far greater than just the cost of repeat callers. Keep this in mind when you are setting your goals and targets and when you establishing you budgets.
I like to walk through the following process to help clients gain some insight into this hidden cost. I say hidden because most centers do not effectively track resolution. Instead they ask customers through the agent of an IVR survey or worse based upon the agents judgment if the issue was resolved. Of course the customer may not even know if the issue is truly resolved...will the billing credit appear on the next bill? Will the promised gift card be received? Will their service be restored by 5 pm today? None of these issues can be truly labelled as resolved until the required processes and activities are completed. But that is fodder for another post.
Back to the financial costs for an 80% FCR rate: if your average call (or contact) is $5 at an 80% FCR your average resolved contact on first call will cost you $6.25 or 25% more than your cost per contact. Of course those whose issues were not resolved will call back and once again they will receive an 80% FCR and those callers will only receive at best an 80% FCR and so on and so on. After the second call your overall cumulative FCR will be 96% and after three cumulative calls over 99%. But your costs for resolved calls will be $6.25 each and not the $5.00 that is likely in the budget. If you had 10,000 calls/month the annualized savings associated with just a 5% improvement in FCR would be more than $44,000.
This calculation does not factor in the likelihood that the call types that go unresolved are often the more complicated or difficult ones, that will by virtue of their nature represent a significantly larger percentage of Wave 2 and beyond calls than they represented in Wave 1. Nor have we factored in the fact that when the unresolved calls are received they will increase the volumes and adversely affect the scheduled agent hours and by extension the ability of the center to meet its service level and other KPI's such as schedule adherence.
So the costs are far greater than just the cost of repeat callers. Keep this in mind when you are setting your goals and targets and when you establishing you budgets.
Monday, January 19, 2009
FCR adpotion and utilization
First Call Resolution or FCR as it is known is arguably the most significant and important metric in use in contact centers today. Yet this metric is infrequently used and when employed internal approximations or 'stand-ins' often have to be employed. A recent study completed by at Ascent Group ( http://www.ascentgroup.com/) of more than 100 companies in 14 industries found that in companies that are measuring FCR only 44% are competing this measurement based on customer feedback, the balance or 56% employ approximations or 'stand-ins' such Call Monitoring (20%), Agent assessments (8%) and internal calculation (27%).
It is critical to all contact centers to not only know why customers are calling (call types), but also whether and how well the call/contact center performs at resolving the inquiry. Without measuring FCR an organization cannot know how well they are meeting their customers' expectations. In addition at The Taylor Reach Group ( http://www.thetaylorreachgroup.com/) we have encountered numerous organizations that have been able to reduce operational expense while increasing customer satisfaction by implementing FCR in conjunction with Root Cause Analysis (RCA) and process review to increase resolution rates significantly.
If you are not measuring FCR today, you need to start immediately. The most accurate measure is to ask your customers at the end of each call if you have resolved their 'issue' or reason for their call. (Of course if they say no, you must be prepared to revisit the issue.) After all the customer knows why they called and what their expectations were regarding resolution. If you ask your customers you must be prepared to track the results in your CRM or CIS system. In addition you must validate the results periodically through recorded call verification...this will stop/reduce agents improving their own scores by answering the question for the customer. If you don't have a CRM or CIS then most likely you will employ a stand in such as a second call from the same customer within 48 hours as an indication of FCR not being met on the original call. Depending on the nature of the call and the type of center you operate the time metric of 48 hours may not be appropriate and 24 or 72 may be better. This may also take some fine-tuning to improve the comfort with the result.
If you would like additional information on FCR or other critical metrics in contact center operation please drop me a note at ctaylor@thetaylorreachgroup.com.
It is critical to all contact centers to not only know why customers are calling (call types), but also whether and how well the call/contact center performs at resolving the inquiry. Without measuring FCR an organization cannot know how well they are meeting their customers' expectations. In addition at The Taylor Reach Group ( http://www.thetaylorreachgroup.com/) we have encountered numerous organizations that have been able to reduce operational expense while increasing customer satisfaction by implementing FCR in conjunction with Root Cause Analysis (RCA) and process review to increase resolution rates significantly.
If you are not measuring FCR today, you need to start immediately. The most accurate measure is to ask your customers at the end of each call if you have resolved their 'issue' or reason for their call. (Of course if they say no, you must be prepared to revisit the issue.) After all the customer knows why they called and what their expectations were regarding resolution. If you ask your customers you must be prepared to track the results in your CRM or CIS system. In addition you must validate the results periodically through recorded call verification...this will stop/reduce agents improving their own scores by answering the question for the customer. If you don't have a CRM or CIS then most likely you will employ a stand in such as a second call from the same customer within 48 hours as an indication of FCR not being met on the original call. Depending on the nature of the call and the type of center you operate the time metric of 48 hours may not be appropriate and 24 or 72 may be better. This may also take some fine-tuning to improve the comfort with the result.
If you would like additional information on FCR or other critical metrics in contact center operation please drop me a note at ctaylor@thetaylorreachgroup.com.
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