Big Decisions For The Small Call Center
Blue Pumpkin Software http://www.crmxchange.com/bluepumpkin
Small call centers encounter tremendous difficulties in
today's competitive markets. Larger call centers benefit from the same economies
of scale that place the small call center at a disadvantage.
If you have 35 call center agents or fewer, you face the
difficult task of providing a world-class center that exe-cutes its mission
statement in a cost-effective manner. Although small call centers vary in needs
and characteristics, they share common challenges: high capital expenditures,
low occupancies, shortage of technical knowledge and high training costs.
In this article, we examine some of the issues surrounding
the following strategic operational choices for the small call center.
Running your call center in-house,
Outsourcing your center's functions,
Hiring an insourcing firm to run your call center in-house.
To make the right decision for your center, you need to
understand the relative advantages and disadvantages of each approach. This
article will help you in that process.
We begin by looking at an important question many call
centers face: what are the implications of outsourcing? After discussing the
issues concerning outsourcing, we will focus on some important considerations
when running your small call center. Last, we will offer several tips to improve
operations in small call centers.
Big Picture: What Does Outsourcing Really Mean?
About 17 to 20 percent of all call center functions are
outsourced. Outsourcing involves purchasing a call center service where another
company, the teleservices agency, manages and runs your company's call center
off-site. In the outsourcing model, the third-party vendor uses its call center
expertise on your behalf.
An attractive feature of outsourcing can be the shift of
management and legal demands from your company to the teleservices agency. In a
high-turnover environment like the call center, the logistics of recruiting,
hiring and (sometimes) firing agents can be somewhat mind-boggling. Outsourcing
mitigates call center management demands, so a company is able to focus on its
business, not running the call center. At the same time, real investment in a
physical call center is compromised.
When evaluating the relative merits of outsourcing and the
do-it-yourself call center, it is crucial to look beyond simple cost estimates.
The following questions and discussion will help you begin the process of
examining how each operational model would work for you.
Work For You? - Some Diagnostic Questions To Consider
you have the most current call center technology and expertise, or are you
willing to invest in call center technology and expertise?
there a good labor pool in your area from which to hire agents?
much does each alternative cost?
much control do you need?
are the future plans for your call center? Do you anticipate a lot of growth
or changes in your organization?
Do you have the most
current call center technology and expertise, or are you willing to invest in
call center technology and expertise?
If your answer is
"no," you should think twice before embarking on establishing a call
center on your own. As a small call center, it is vitally important that you
have the most current technology. In many instances, you are trying to look like
a much larger center, and any breakdown in your systems would be detrimental to
your business. Although you are small, the demands on your hardware and software
are great, especially if your call center is open around the clock. If your
company is not willing to invest (or doesn't know how to invest) in developing a
sound infrastructure, you should consider outsourcing.
Is there a good labor pool
in your area from which to hire agents?
In a tight labor market, it is
extremely difficult to recruit and hire agents. Call centers are high-turnover
environments, and a small labor pool will make recruiting a time-consuming and
frustrating task. You also pay agents higher wages in a tighter market. If you
know that unemployment is very low in your neighborhood, you should consider
outsourcing. Outsourcers are typically located in areas where labor is more
available and less expensive.
How much does each
This question can only be
answered after careful research. A company with-out call center experience will
be unable to create an accurate estimate of costs alone, and the price of a call
center consultant can be well worth avoiding the danger of using a call center
operational model that is wrong for you.
The per-seat cost of outsourcing
varies widely, from as little as $25 per hour up to $60 per hour. Price
variation depends primarily on the "kind" of agents required to staff
a campaign. For example, if a software company decides to outsource overflow
from its software support center, it might require trained software engineers to
answer technical support questions. In this scenario, the per-agent cost would
be much greater than a campaign requiring agents to take routine customer
orders. This is because the teleservices agency pays trained software engineers
higher wages than customer service representatives.
When outsourcing costs are
compared to do-it-yourself costs, a difference in price is likely. This price
differential is frequently due to economies of scale (refer
to Table 1: Erlang Can Equal Trouble For The Small Call Center). Whereas an
in-house call center must provide a complete solution for just a single call
center, an outsourced center is part of a much larger, blended call center
operation, where several separate companies' calls are handled. Such a model
means fewer idle agents and the overall efficiency of the call center increases.
In addition, a third-party teleservices center's capital investments are
amortized over long periods of time and over a number of campaigns, further
mitigating the per-seat cost.
How much control do you
Outsourcing involves very little
control or management over the call center by the contracting company. This may
seem like a good thing: after all, your company can concentrate on the business
However, companies sometimes
need a high level of control over their call center, for the good of the
business. From this control perspective, there is an attractive alternative to
both the out-sourced and do-it-yourself call centers: insourcing. Insourcing
means that an outside firm comes to your location and operates your call center
for you. Insourcing releases the company from a great deal of responsibility -
the insourcer becomes the legal employer of the agents. This means that the
insourcer recruits, hires, trains and (sometimes) fires the agents. Another
attractive feature of the insourcing model is that the insourcer provides MIS
support, which is crucial for the small center.
With insourcing, your company
buys more than a service: it buys technical expertise and infrastructure.
Insourcing gives your company the option of exerting as much control as needed
to keep the call center coupled tightly to business practices.
Of course, the advantages of
insourcing come with a penalty: cost. Because insourcing requires investing in
call center infrastructure and purchasing the services of an experienced call
center management company, it may be as costly as both in-house and outsourcing
What are future plans for
your call center and your company? Do you anticipate a lot of growth or changes
in your organization?
If you are looking to implement
new technology in your call center, like e-mail, you might want to think twice
about doing it yourself if you don't have the infrastructure. Many small call
centers have found outsourcing to be particularly beneficial when bringing new
technology into the mix. The latest technologies typically exist at teleservices
agencies, and agents are already up to speed on how to use it.
If your company is going through
a merger or another dynamic change, it might be best to have the call center
off-site. This leaves the company time to focus on other operational activities
outside of the call center.
After conducting the appropriate
research and running your numbers, you may decide that your company should have
its own, in-house call center. The following tips will help you set up and run
your call center smoothly. Of course, there are many more keys to success that
will only be discovered through your particular experiences. However, the
following will help you start out on the right foot.
Design Flexibility Into
The Call Center Model
Inefficiency is the most
dangerous enemy of a small call center. Because of its small size, a drop in the
incoming call rate can cause a low-occupancy, low-efficiency situation extremely
quickly (recall the Erlang table). To guard against this type of inefficiency,
maintain as much flexibility as possible. You will need a fixed number of
full-time agents, but a flexible group of full-time agents, part-time agents
with movable hours, and on-call agents for particularly heavy times. Another
option is to make arrangements with a teleservices agency to take overflow calls
during particularly busy times. This brand of outsourcing enables your call
center to scale in size without making a commitment to managing a larger call
Take advantage of the fact that
agents are in-house. Design additional responsibilities (answering e-mail,
filling out paperwork) for agents to fulfill during idle time so that overall
productivity can be sustained even if call volumes are variable.
MIS Expertise Is
The technical expertise to
correct call center failures in software and hard-ware must be in-house or
instantly available. As a small call center, you often wish to give the
appearance of a much larger center. Therefore, you need to make sure you have
the support you need so your call center can be online quickly after any
plausible failure. The need for solid MIS is often underestimated because it may
appear to have a prohibitively high cost. It is, however, well worth the price
when you consider the alternative of a nonoperational call center.
Choose The Right Hardware
A large call center needs
effective software support to manage its plentiful resources effectively. A
small call center also needs effective software - not because its resources are
plentiful, but because its resources are so limited that efficient management
has a significant impact on overall productivity.
Critical software ingredients
include scripting, workforce management and database management software.
Software integration with the rest of the company may be desirable as well. A
small call center definitely needs to invest in a quality ACD, but may not
necessarily need an IVR.
While making these hardware and
software investments, small call centers should always keep in mind the
possibility of purchasing high-quality, previously- owned call center equipment.
Used equipment keeps costs down without sacrificing quality.
Invest In Your Agents
The cost of recruiting, hiring
and training agents is high. In Purdue University's latest Call Center
Benchmarking Report, call centers report that the average cost to train a new
agent is over $6,500. The average call center spends over 180 hours training
each agent (including both classroom time and on-the-job training). These
statistics show how expensive and time-consuming it is to hire and train new
agents, especially in a high-turnover environment like the call center. To
reduce employee turnover, it is best to give agents some time off the phone.
Have agents respond to e-mail or perform other administrative tasks. Another
necessity is ongoing training or seminars. It is important to remember to
develop agents' product knowledge and their expertise in dealing with customers
through the development of skills and techniques. Weekly updates on products and
campaigns are essential. Both kinds of training will increase their knowledge
base and also let them know that you value them enough to make an investment in
them. Attend seminars and trade shows. Invest in videos. Read your trade
publications, and look to other call centers for innovative ideas.
Be An Advocate For The
Your small call center will
often be up against other "departments" when it is time to dole out
the budget. Always remember that a call center is mission-critical. In our
competitive business world, customer service is rapidly emerging as an important
differentiator between companies. As the sole point of contact for many
customers, call centers often provide customers with their only impression of
Small call centers face a number
of operational difficulties relatively unknown to the large call center. With
limited resources, a small call center needs to carefully guard against
inefficiency, closely monitor capital expenditures, continually renew technical
knowledge and watch training costs - all while keeping up with significant
hardware and software demands. At first glance, these challenges appear
overwhelming, but there are several workable solutions available to the small
call center. A small call center should consider the issues surrounding the
following operational options: out-sourcing a small call center's functions,
running a small call center in-house, and hiring an insourcer to manage the cal
center. For each operational scenario, issues to evaluate include: the cost of
alternatives, current technology, availability of labor in their area, the
amount of control needed in the call center, and future business plans. If a
small call center decides to keep its operators in-house, designing a flexible
model and increasing MIS expertise can aid greatly in any call center's success.
Also, selecting the right hardware and software, investing in agents and being
an advocate for the call center can have very positive effects on operations.
Although a small call center differs in scope from a larger one, the ultimate
goal of both is an effective call center in line with a company's mission
statement. Small call centers perform many of the same important functions of
those that are larger, yet are sometimes ignored by the call center industry.
While small, these centers are just as mission-critical as their larger
counter-parts. It is time to give small call centers the options - and respect -
This Erlang table demonstrates the dramatic efficiency gains as a call
center grows. This table has been generated for a scenario in which
the average handling time for each call is two minutes. The goal is to
answer at least 90 per-cent of all calls within the first 30 seconds.
The first column shows increasing call rates, and the second column
shows the smallest number of agents that can achieve the service
level, based on the Erlang model.
The first important
characteristic to note is that the relationship between the number of
agents needed and the number of calls is not proportional. For
instance, for 100 calls, six agents are needed. But for 10 times as
many calls, 1,000 calls, only 39 agents are needed, which is far fewer
than the 60 agents that you may expect. Multiply by 10 again, and at
10,000 calls per hour only 341 agents are needed. If call centers were
proportional, 600 agents would be the answer - almost twice as many!
In the lowest-volume
case, six agents need to answer 100 calls per hour. However, those 100
calls will never be perfectly distributed, evenly over the hour.
Sometimes, one or two or even three calls will arrive at the same
time. Therefore, the six agents need to be able to handle the 100
calls even if some of those calls come roughly at the same time.
With only 100 calls
per hour, there will also be times when no calls are com-ing in, and
the agents will be idle. The lower the call volume, the higher the
likelihood that many of the calls will bunch together, while much of
the hour will have few calls. This is the basis of Erlang, but it
comes with a penalty: because agents have idle time, the total
proportion of time they spend on the phone is quite low. The fourth
column of Table 1 shows the occupancy rate for each scenario. In the
six agent case, each agent is on the phone for only 56 per-cent of
each hour. But, according to Erlang, six agents are required to meet
the 90 percent service level goal.
As the call volume and
the number of agents increase toward the bottom of the table, the
occupancy rate actually approaches 100 percent. At 10,000 calls per
hour and 341 agents, the occupancy rate rises to almost 98 percent.
That is almost double the occupancy rate at 100 calls per hour and six
agents, which explains that fact that only 341 agents are needed
rather than 600 agents. In such a large call center, the number of
incoming calls is so large that there is much less variation in the
call volume, and so the agents are almost never idle and therefore
Outsourcers use Erlang
to their advantage by sometimes combining several campaigns. In doing
this, outsourcers push up the call volume and cause the occupancy of
their agents to increase. For example, with far fewer than five times
as many agents, they can handle five times the call volume as a small,
in-house call center.