The business case for any investment
must include a reasonable return on
investment (ROI). That holds true for call center business as much as for any
other aspect of a company’s operations.
Smart Business spoke with Chris Wagner, vice president of marketing at Info-Cision Management Corp., to get tips on
creating a solid return on a company’s call
center business.
Is the bottom line on ROI simply sales?
In a call center, there are a lot of considerations, and it is not always a straight
line to sales. The key is to look at costs
outside the call center.
The importance of media cost. For
example, if I am a company running ads
on TV, the largest cost I have is the advertising that drives calls to the call center.
If it costs $5 to handle a call, the cost of
driving that call to the call center is likely $15 or $20. Some people say that a
cheaper per-minute cost in the call center
is key. But if you are not maximizing your
return on the cost of driving the call, you
will lose out.
The importance of conversion and
abandon rate. If I run an ad that drives
100 calls to the call center — at $10 a call,
I’ve spent $1,000. Of those, the abandon
rate (inability to handle a call) at this particular call center is 10 percent. So I end
up with only 90 opportunities to sell. If I
sell them at a 50 percent rate, I’ll make 45
sales. If each sale generates $20 of profit,
my return is only $900; I actually lose
money.
A better call center operation might
lose only 2 percent of its calls, leaving 98
chances to sell. If their employees are
better at selling, I can get 60 percent of
the callers to buy, meaning 58 total sales.
At the same $20 profit per sale, I now
make money.
The only things that changed were the
result of the call center’s ability to handle
the calls, the quality of the people on the
phone, and the quality of the training, not in the product or the profit per unit.
Remember, the biggest cost is usually
driving the caller to the call center.
Should the call center be the focus when
maximizing ROI?
ROI is not necessarily reflected in the
revenue generated by a call to the call
center. Studies show that poor call handling can reduce a customer life cycle by
as much as 30 percent … all for the cost
of improperly handling a $10 phone call.
Additionally, you can benefit from up-sells and cross-sells. We have a utility
client who has many customers calling
with billing questions. It costs them $7 to
handle each billing call. But when we
make a $10 per month up-sell to only 5
percent of those customers, we net them
$70 annual profit. That eliminates 50 percent of their cost of handling calls. In
short, one transaction pays for 10.
The call center should not be a drain on
the budget. When properly executed, a
call center should — at worst — break
even. A well-run customer call center
will get you additional sales at no added
acquisition cost.
What are some overlooked areas that are
ripe for exploring?
Look at customers who called but did not
buy. Build a database and handle them specially. Offer them a slightly sweeter deal on
the callback. They were half-convinced.
Look at your own customer base and
sell them product upgrades, cashing in on
brand loyalty.
Traditional metrics focus on reducing
call time or handling time. In many cases,
the opposite is true. One added minute on
a phone call can add ROI. After all, if the
customer called in, he or she has some
time set aside. You can use that time to
up-sell or cross-sell.
Should I expect my call center to suggest
ways to maximize returns?
At a lot of companies, the call center is
an afterthought. In a partnership, information is shared back and forth. This requires good, open communications. Both
the client and the call center need to understand the client’s customer model.
Then you can build a strategy that treats
the customer in a way that will maximize
the return on investment. It lets you create value on each transaction.
If a company doesn’t feel like it is getting this kind of service from its current
outsource partner, I would strongly encourage it to have discussions with other
competitors. Finding the right fit is the
key. If a company has internal call centers
that are not performing at this level, I
would always encourage split-testing of
that center against an outsourced partner.
A great way to pick up the creativity on
your program is to challenge them
against competition. It is also a great way
to share best practices.
CHRIS WAGNER is vice president of marketing at InfoCision
Management Corp. InfoCision is a privately held teleservices
company and is a leading provider of inbound and outbound marketing for nonprofit, commercial, religious and political organizations. Reach Wagner at (330) 668-1400.