I just read an interesting post written by Bruce Tempkin. Mr Tempkin has it dead on, we need to stop spending all of our time and energy on how to reduce costs and increasing efficiency. While this is still an important component to managing your call center operations, we need to also be focusing on increasing the lifetime value of our customers.
It is the balance that enables companies to be profitable and continue to grow.
http://bit.ly/bBgwXY
Thursday, September 30, 2010
Tuesday, September 21, 2010
Initial Thoughts on Social Media ROI
Customer care professionals, marketers and PR firms are facing a new challenge. How do you quantify the impact of responding and monitoring social media driven conversations? What is the ROI?
Most in the customer care arena are familiar with a Net Promoter score. Net Promoter score was highlighted and shared in the book by Fred Reichheld, The Ultimate Question. In his book Reichheld shared the concept developed by Satmetrix, Bain & Company that provides companies with a means for measuring customer loyalty which in turn helps to build profitable growth.
Check out http://www.netpromoter.com/netpromoter_community/index.jspa
The main premise is that a company has three main groups of customers,
Promoters - Loyal customers who are vocal in the support of your brand
Passives - Happy customers who like your brand but could be swayed to other brands with the right offer
Detractors - Dissatisified customers who are not afraid to share their perception of your brand
The book goes on to talk about the financial impact to your brand when you calculate the balance of your customers and where they fall into each category. This is your Net Promoter score.
With the increased usage of social media does Net Promoter score become an even bigger factor for a company? What impact does a person with a extremely large social media following have on your brand if they are a promoter or a detractor?
More to come...
Most in the customer care arena are familiar with a Net Promoter score. Net Promoter score was highlighted and shared in the book by Fred Reichheld, The Ultimate Question. In his book Reichheld shared the concept developed by Satmetrix, Bain & Company that provides companies with a means for measuring customer loyalty which in turn helps to build profitable growth.
Check out http://www.netpromoter.com/netpromoter_community/index.jspa
The main premise is that a company has three main groups of customers,
Promoters - Loyal customers who are vocal in the support of your brand
Passives - Happy customers who like your brand but could be swayed to other brands with the right offer
Detractors - Dissatisified customers who are not afraid to share their perception of your brand
The book goes on to talk about the financial impact to your brand when you calculate the balance of your customers and where they fall into each category. This is your Net Promoter score.
With the increased usage of social media does Net Promoter score become an even bigger factor for a company? What impact does a person with a extremely large social media following have on your brand if they are a promoter or a detractor?
More to come...
Monday, August 9, 2010
Part 3 - The Other Stuff
In the last of the 3 part series on the real cost of your insourcing customer care we want to make sure all of the other expense related items are taken into consideration that eventually add to the overall cost. We have already walked through that the real cost of agent wages is closer to $20 and that once you account for off phone activity and other unproductive time the real cost comes closer to $30.
Additional items to consider when trying to compare internal costs to external costs include the following:
- Supervision expense - depending on ratios this can be anywhere from $3.50 - $7.00 per productive hour
- Operating Expenses such as rent, utilities, supplies, etc. all need to be included when comparing internal and external rates. Depending upon the location of the operation this could be an additional $5-7 per production hour.
When all is said and done the cost of insourcing can be around $40-50 range compared to most domestic outsources that will charge a base rate ranging between $25-$30 depending upon volume and program complexity.
Now the key is finding the right outsourcer.
Additional items to consider when trying to compare internal costs to external costs include the following:
- Supervision expense - depending on ratios this can be anywhere from $3.50 - $7.00 per productive hour
- Operating Expenses such as rent, utilities, supplies, etc. all need to be included when comparing internal and external rates. Depending upon the location of the operation this could be an additional $5-7 per production hour.
When all is said and done the cost of insourcing can be around $40-50 range compared to most domestic outsources that will charge a base rate ranging between $25-$30 depending upon volume and program complexity.
Now the key is finding the right outsourcer.
Monday, July 12, 2010
Part 2 - Agent Efficiency
What is agent efficiency? For the sake of this posting it is the difference between agent productive time and agent paid time. Different companies use different definitions and different terms to describe the same thing. It can sometimes be referred to as utilization, or production quotient. Agent productive time is the time an agent is logged into a call queque ready to take a call or is actually handling a call.
Many times when trying to determine the full cost of a production hour, efficiency is one of the most important facts NOT taken into consideration. Many insourcers attempt to equate a paid agent hour in their site to a billable production hour for an outsourcer. This can be a very costly miscalculation.
As demonstrated in my earlier post, we came to the conclusion that a fully loaded agent wages can be really running you close to $19.30 versus just the $12.00 hourly wage you are paying them. When an agent is paid 40 hours a week they are not actually on the phone ready to take calls that entire time. In general their 40 hours could be broken out as follows:
40.00 Hours Paid Time
7.50 Paid Breaks (2 paid 15 minute breaks each day)
2.50 Hours breakage (15 minutes lost time per day)
1.00 Hour coaching time each week
1.00 Hour team meeting each week
1.50 Hours of earned paid time off (assumes close to 2 weeks paid time off each year)
0.75 Hours of earned sick time (assumes 1 week paid sick time each year)
25.75 Average production hours per week
25.75 / 40.00 = 64.375% Efficiency
So now how does this translate to cost? For every production hour produced you have to pay an agent on average 1.55 hours (1 hour / 64.375%). If an agent is costing you $19.30 an hour and it takes 1.55 paid hours to produce 1 production hour each production hour is really costing you $19.30 x 1.55 = $29.98.
When you pay an outsourcer you generally ONLY pay for the production time, all unproductive time is on the outsourcer's dime. Wow, outsourcing may be a better deal after all.
Stay tuned, we still have not paid for supervisors or other overhead expense.
Many times when trying to determine the full cost of a production hour, efficiency is one of the most important facts NOT taken into consideration. Many insourcers attempt to equate a paid agent hour in their site to a billable production hour for an outsourcer. This can be a very costly miscalculation.
As demonstrated in my earlier post, we came to the conclusion that a fully loaded agent wages can be really running you close to $19.30 versus just the $12.00 hourly wage you are paying them. When an agent is paid 40 hours a week they are not actually on the phone ready to take calls that entire time. In general their 40 hours could be broken out as follows:
40.00 Hours Paid Time
7.50 Paid Breaks (2 paid 15 minute breaks each day)
2.50 Hours breakage (15 minutes lost time per day)
1.00 Hour coaching time each week
1.00 Hour team meeting each week
1.50 Hours of earned paid time off (assumes close to 2 weeks paid time off each year)
0.75 Hours of earned sick time (assumes 1 week paid sick time each year)
25.75 Average production hours per week
25.75 / 40.00 = 64.375% Efficiency
So now how does this translate to cost? For every production hour produced you have to pay an agent on average 1.55 hours (1 hour / 64.375%). If an agent is costing you $19.30 an hour and it takes 1.55 paid hours to produce 1 production hour each production hour is really costing you $19.30 x 1.55 = $29.98.
When you pay an outsourcer you generally ONLY pay for the production time, all unproductive time is on the outsourcer's dime. Wow, outsourcing may be a better deal after all.
Stay tuned, we still have not paid for supervisors or other overhead expense.
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Friday, July 2, 2010
Part 1 - What are you really paying your agents?
As an outsourcer, when discussing the possibility of transitioning work that is currently insourced to an outsourced model there are consistent arguments / challenges that you will always hear. One of the most common is around cost. "Why would we pay an outsourcer $26/hour when our current agents only cost us $12/hour?" In this scenario it appears as if the outsourced solution is 116% more expensive.
In this posting and in subsequent postings I will provide the building blocks to understanding that the $26/hour can actual result in significant savings against the $12 an hour you are paying your current agents.
Step 1 - What are you really paying your agents?
Lets first start with what is included in the $12/hour. The $12/hour in this example is the hourly rate being paid to the agent before taxes and benefits. Keep in mind that in many in-sourced environments the agents are actually making much more than this and in many cases could be making upward of $15-18/hour.
The first thing we have to do is add on the cost of benefits. For a full time agent working 40 hours per week, the average employer funded benefit cost can run $300-400 per month. Spreading that over the hours worked translates into roughly a $2.25-2.50 per hour for medical benefits.
In most customer care operations there will be a bonus or pay for performance program that will be additional pay for the front line management that could range anywhere from $1-$5 per hour. For this example we will contend that the average bonus is $2 per hour.
Taxes will add another 10-15% to your wage rate. If you are company that has encountered a significant layout this % could be much higher and be closer to 20%. For this example we will be conservative and say that taxes run around 12% which for a $12/hour plus bonus of $2 is equal to an additional $2.80.
Current Tally:
$12,00 base wage rate
$ 2.50 benefits
$ 2.00 bonus
$ 2.80 for taxes
$19.30 total agent wage
Stayed tuned for my next update and I will share with you why this $19.30 an hour could be costing your internal organization closer to $30-35 an hour.
In this posting and in subsequent postings I will provide the building blocks to understanding that the $26/hour can actual result in significant savings against the $12 an hour you are paying your current agents.
Step 1 - What are you really paying your agents?
Lets first start with what is included in the $12/hour. The $12/hour in this example is the hourly rate being paid to the agent before taxes and benefits. Keep in mind that in many in-sourced environments the agents are actually making much more than this and in many cases could be making upward of $15-18/hour.
The first thing we have to do is add on the cost of benefits. For a full time agent working 40 hours per week, the average employer funded benefit cost can run $300-400 per month. Spreading that over the hours worked translates into roughly a $2.25-2.50 per hour for medical benefits.
In most customer care operations there will be a bonus or pay for performance program that will be additional pay for the front line management that could range anywhere from $1-$5 per hour. For this example we will contend that the average bonus is $2 per hour.
Taxes will add another 10-15% to your wage rate. If you are company that has encountered a significant layout this % could be much higher and be closer to 20%. For this example we will be conservative and say that taxes run around 12% which for a $12/hour plus bonus of $2 is equal to an additional $2.80.
Current Tally:
$12,00 base wage rate
$ 2.50 benefits
$ 2.00 bonus
$ 2.80 for taxes
$19.30 total agent wage
Stayed tuned for my next update and I will share with you why this $19.30 an hour could be costing your internal organization closer to $30-35 an hour.
Tuesday, June 29, 2010
Introduction of Customer Care ROI
This is my first post on my new blog Customer Care ROI. The focus of this blog will be on how the customer care organization can impact the bottomline of any company. I have been in the contact center industry for over 20 years. The majority of the time I have been responsible for managing the actual contact center operations and delivering quality customer interactions. I have partnered with several Fortune 500 companies to develop their customer care strategy.
During my career at a major outsourcer I also served as the CFO. In this role I was responsible for insuring we maximized the profitability of our business as well as partnered with clients on to develop an ROI for outsourcing all or portion of their customer care business. This insider look at the different components that can influence a company's bottom line has provided me with a unique perspective on Customer Care and maximizing the ROI.
My intent of this blog is to share with you my thoughts on how both insourced and outsourced customer care operations can maximize their profitability and move away from being a cost center to a profit center. Below are some of the topics I plan on covering in upcoming blog posts.
If there is a question or thought you would like for me to cover please feel free to send me a message.
- Outsourcing VS Insourcing, Which is the Better Deal?
- The 3 most Important Variables to Manage as an Outsourcer
- Are you getting the Value out of your Outsourcing partner?
- What is the Real Cost of Turnover?
- Ideas from the Frontline on How to Reduce Turnover
During my career at a major outsourcer I also served as the CFO. In this role I was responsible for insuring we maximized the profitability of our business as well as partnered with clients on to develop an ROI for outsourcing all or portion of their customer care business. This insider look at the different components that can influence a company's bottom line has provided me with a unique perspective on Customer Care and maximizing the ROI.
My intent of this blog is to share with you my thoughts on how both insourced and outsourced customer care operations can maximize their profitability and move away from being a cost center to a profit center. Below are some of the topics I plan on covering in upcoming blog posts.
If there is a question or thought you would like for me to cover please feel free to send me a message.
- Outsourcing VS Insourcing, Which is the Better Deal?
- The 3 most Important Variables to Manage as an Outsourcer
- Are you getting the Value out of your Outsourcing partner?
- What is the Real Cost of Turnover?
- Ideas from the Frontline on How to Reduce Turnover
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