How should I calculate ROI for our call center?
Calculating ROI involves two parts: knowing what to measure and understanding how to quantify the value of those measurements into actual dollars.
Posted Mar 3, 2003
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ROI is a critical concern for many call centers, and with the multitude of possible metrics it is often hard to know where to turn. Calculating ROI involves two parts: knowing what to measure and understanding how to quantify the value of those measurements into actual dollars. (1) Knowing what to measure There is a number of metrics that when improved through reductions or increases can result in real quantitative value for a call center. Figure 1 lists 11 measures that provide value by reducing their rates. The greatest impact comes from reducing the last two items on the list: the percentage of tickets resolved by levels 2 and 3 (i.e., escalations) and the average time per ticket.
Conversely, Figure 2 lists five items that provide value by increasing their rates. The greatest benefit comes from success with the last two items on the list: percentage of tickets resolved at level 1 (i.e., first call resolution rate) and issues resolved through self-service.
If you consider the four high-value factors from the above two charts you see that increasing level 1 resolutions is the mirror image of reducing the percentage of escalations, leaving three critical areas to focus on: increasing both level 1 and self-service resolutions and reducing the average time per ticket.
(2) How to Calculate Value Focusing on these three key measurements allows you to calculate the value of your ROI--the true dollar savings. Let's take them one by one. Reducing average time per ticket: For this measurement it is best to think in terms of average time to relief (TTR) for tickets, rather than close time. TTR is defined as the time from which the ticket was opened to when a probable answer was provided, somewhat different that the actual close time. Ticket closure is often delayed for various reasons, such as waiting for the customer confirmation of a satisfactory resolution. All tickets go through three stages of TTR: gathering information, assessing the data, and fixing/answering the issue. The amount of time required for each stage is related to the complexity of the issue. Since agents are already working as fast as they can, reaching TTR sooner is a reflection of improved processes and technology, which in turn improves your capacity (i.e., how many tickets your call center can handle). If new processes and/or technology allow you to reduce the average TTR by 20 percent, for example, your capacity will have increased by 25 percent. old TTR of 100% = old capacity new TTR of 80% = improved capacity Change in capacity = old TTR of 100% = 1.25 old capacity = 125% new TTR of 80% Improved TTR of 80% results in a net capacity increase of 25% Improving your capacity by 25 percent means that you can handle 25 percent more tickets than you currently do. Put another way, to take on greater capacity, you would need 25 percent more staff. Thus, the value you achieve is equal to the cost of increasing your organization by 25 percent. Conversely, if your current ticket volume remains stable, reducing TTR by 20 percent (i.e., tickets are completed 20 percent faster) suggests that the current volume of work could be done in 20 percent less time. In this case the maximum value achieved is equal to reducing the size/cost of your staff by 20 percent. Increasing the number of calls resolved at level 1: To approximate the ROI value here, you take the difference in the cost of an escalated call and a nonescalated call, then multiply that figure by the number of tickets no longer being escalated. So, for example, your call center is showing that 1,313 more tickets a month are being handled by level 1 agents following improvements in processes and/or technologies. Figuring that an escalated call costs $80 and a nonescalated call $20, you've saved $78,780 per month. Call center of 50 level 1 agents resolving 3 tickets/hour for 7 hr/day, 20 days/month = 50*3*7*20 = 21,000 resolved tickets/month Before improvements: level 1 resolves 80% of all tickets Call center has 50 escalation agents handling 20% of the tickets, or 5,250/month Total tickets resolved per month = 21,000 + 5,250 = 26,250 After improved % calls resolved at level 1: Level 1 staff resolves 85% of total tickets and only escalates 15%. Total tickets escalated = 0.15* 26,250 = 3,937 # of tickets not escalated due to improvement = 5,250 originally -- 3,937after = 1,313 Average cost of level 1 resolution = $20 Average cost of escalated resolution = $80 Savings from 'not escalating a ticket' = $80 - $20 = $60 per ticket Value of improved level 1 resolution = 1,313 tickets not escalated * $60/ ticket = $78,780 /month This is arguably an overly simplified way of figuring the ROI value for escalations. A more thorough calculation employs a model that looks at not only the above information, but also your current operating budget. The results show you how to optimize your staffing requirements, which of course has a direct impact on your budget. Increasing the number of issues resolved through self-service: Measuring the ROI value for this one is fairly straightforward. You simply calculate what percentage of level 1 staff's current workload self-service represents. For example, if self-service is equal to 10 percent of the level 1 workload, the value achieved is equal to 10 percent of your level 1 staff costs, which, for this example, we'll set at five people at a total monthly salary/benefit cost of $20,000, or $4,000 each. Total tickets resolved / month by level 1 organization: 21,000 Number of issues resolved / month via self-service: 2,100 Self-service resolutions = 2,100 = 0.10= 10% of work being resolved by level 1 21,000 If self-service were not available and the extra 10 percent of work load had to be handled by level 1 staff, you would need a 10 percent increase in your staff budget, or $20,000 a month (5 staff at $4,000/month). The value of self-service, therefore, is just that: $20,000 a month. The Total ROI Value Measuring improvements in increased level 1 and self-service resolutions, plus reducing the average time per ticket, allow you to calculate a very good approximation of your overall ROI. Once the calculations are done, you simply add the sum of all three for the total estimated impact on your call center budget.
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