Cutting cost has its risks
In a cost-conscious environment, it would be very rare for an operations manager to not be asked to reduce call centre expenses.
To remain viable in a difficult economy, many call centres are in cost-cutting mode permanently. Some successfully trim fat from time-to-time, but many others are seeing efforts backfire in the form of new and/or hidden costs, frustrated employees and dissatisfied customers. Because of the nature of random call arrivals, "reducing costs across the board" usually does not work well for call centres.
So many apparent ‘efficiencies’ can quickly lead to insufficient staff and long customer queues which, sooner or later, leads to both staff and customers walking out the door.
Many contact centre specialists would say that a pervasive myth continues to influence investment in, and management of, contact centres. And what is that myth? Essentially, the myth is all about management’s attitude to call centres.
Despite great strides forward such as:
- Advancements in inbound calling capabilities,
- The growth in stature of contact centres, and
- The billions of dollars that have been spent on CRM and contact centre technologies,
the vast majority of contact centres are still viewed by corporate management as cost centres (read “necessary evil”).
During lean economic times these very same contact centres are considered perfect targets for cost cutting.
Traditional cost-cutting measures include staff reductions, workload alterations, technology applications, and process re-engineering.
Of course, everyone knows that possibly significant savings lie in each of these areas - but so do potential risks. In most situations, today’s call centre agents require instant access to more information at their desktops than even before, as they handle increasingly complex customer enquiries and a much broader range of issues. Where this is the case, cost cutting can severely limit agent efficiency.
Investing in new technology may not be an option in tight budgets, but most call centres can benefit from more effective use of the technology already in place.
In many call centres, customers abandon calls at an alarming rate because they are not prepared to continue waiting. Where this happens, the cause is almost always cost cutting that has gone too far.
Early in 2005, Dimension Data, a South African specialist IT services and solution provider, released survey findings relating to cost cutting, and there are some alarm bells for call centre managers.
The survey findings are from the Dimension Data seventh ‘Merchants Global Contact Centre Benchmarking Report’ which is a survey spanning 166 contact centres across 24 countries on five continents.
In general, the survey highlights a number of key trends that are of concern to the growth of contact centre businesses. Cutting costs, however, remains the overall constant, and most important, concern of respondees.
The national practice manager at Dimension Data, Mike Fairon, says that the survey indicates that customers are now prepared to wait only 65 seconds, compared with the 72 seconds that they were prepared to wait, twelve months earlier. The report states that call abandonment has risen for the third year in a row and now stands at a staggering 13.3% of calls.
This, says Fairon, is due to companies focusing on cost-cutting rather than service delivery to drive the contact centre's growth. The Dimension Data survey found that 48% of respondents say that cost reduction and increasing efficiency are their main commercial drivers.
"Companies and management need to realise that contact centres should not be regarded as cost centres anymore, but rather take note of the fact that cost centres can be profit drivers as part of the business and assist in revenue generation," Fairon explains.
The contact centre industry is very competitive. Finding ways to further reduce operating costs is extremely critical, in order to become more profitable and more competitive over the longer term.
Smart call centre managers are always on the lookout for effective ways to improve agent productivity and alleviate costs but they are also very conscious of the trade offs between getting costs down and seeing customer service standards fall to unacceptable levels. It is a balancing act that challenges managers everywhere.