Operations and Management: Cutting Call Center Costs, Not Service

In these days of cost-consciousness, it’s the rare operations manager who hasn’t been asked to reduce call center expenses. But when asked to tighten your belt, where should you begin?

Traditional cost-cutting measures include staff reductions; workload alterations; technology applications; and process reengineering. Significant savings lie in each of these areas — but so do potential risks.

Staff reductions

Since more than two-thirds of a call center’s operating costs are related to staffing, it’s generally the first place managers look to reduce costs. But before you write up the pink slips, make sure you understand the implications of staff reductions in the call center.

Let’s assume that you have a call center with fewer than 50 agent seats. Most days you’re meeting your service goal of answering 70% of calls within 30 seconds. The chart below (“Staffing-Level Options”) shows service levels with varying numbers of staff during a half-hour in which you’re receiving 175 calls.

As you can see, staffing with 33 “bodies in chairs” would enable you to meet your service goal fairly consistently. But the loss of one person would reduce your service level from 74% to 62% (or your average speed of answer from 30 seconds to 54 seconds).

Eliminating another person would drop the service level to 46%, and the average delay would soar to 107 seconds. And reducing staffing levels by three would horribly deteriorate service level to only 24%, resulting in an average delay of 298 seconds. So those callers accustomed to waiting for 30 seconds in a queue would now be waiting nearly five minutes!

Staffing-Level Options
Number of agents Average delay Service level (in 30 sec) Agent occupancy
30 298 seconds 24% 97%
31 107 seconds 46% 94%
32 54 seconds 62% 91%
33 30 seconds 74% 88%
34 18 seconds 82% 86%
35 11 seconds 88% 83%

And service isn’t the only thing that suffers. With 33 service representatives in place to handle the call workload, agent occupancy (the measure of how busy reps are during the period of time they’re logged in and available) is in a good range at 88%. Taking away one body raises occupancy levels to 91%; taking away two results in 94% occupancy; and taking away three means staff would be busy 97% of the time during the hour. In other words, only 3% of an hour — 108 seconds! — would be free for “breathing room” between calls. Such a high level of occupancy can’t be maintained for long. The likely result will be longer handle times, longer periods spent in after-call work to catch their breath, burnout, and turnover.

And there’s another point to consider. The reduction in staff might be outweighed by the increased telephone costs associated with the longer delay times. In this example, with 33 agents in place the average delay is 30 seconds a call. Multiply that by 350 calls an hour, and that’s 10,500 seconds, or 175 minutes of delay. If we apply a fully loaded telephone cost per minute to that usage of $0.06 a minute, that’s $10.50 an hour for the queue time.

If the call center were to decrease staff by 10% to a 30-person staffing level, remember that the average delay increases to 298 seconds. Multiply that by 350 calls, and that’s 1,738 minutes of delay, priced at $0.06 a minute, for a total of $104.30 for the queue time that hour. In other words, by eliminating three staffers to save money, we’ve increased our telephone bill by $93.80 for that hour. And this doesn’t even take into account the likelihood of a longer call given the poorer-than-expected service levels. Telephone charges would likely increase even further.

So a simple staff reduction may not save you any money. In fact, it may cost you more in terms of poor service, excessive occupancy levels, as well as increased telephone costs.

Workload alterations

Since staffing represents the biggest part of your call center budget, you can improve those numbers without hurting service and occupancy by minimizing the number of people required to do the job. In other words, you have to change the workload so that not as many agents are required.

One of the most important concepts to understand about call center staffing is the principle of economies of scale. Simply put, the bigger the agent group, the better. As the size of the team increases to meet an increased workload, the use of every individual within the group improves. So look for ways to combine smaller groups. Cross-train personnel, and look for ways to use skill-based routing to tap into everyone in the site who can handle every call type. The benefits in reduced staffing can be tremendous.

According to the chart above (“Workload Options”), a call center agent group handling the 100 calls will require 14 staffers, with each agent busy only 71% of the time. If you were to have five such groups, to handle 500 calls, you would need 70 agents. But if all of the work of the five groups could be consolidated and funneled into a single group, you’d need only 56 agents, each of whom would be busy 89% of the time.

Workload Options
Number of calls Staff for 30-sec. delay Staff/work ratio Agent occupancy
100 14 1.40 71%
500 56 1.12 89%
1,000 106 1.06 94%

Another workload alteration you may wish to consider has to do with the efficiency of your hours of operation. Many centers feel compelled to be open 24/7 these days, but the volume of calls during the wee hours is negligible for many centers. Staffing during the overnight period is generally inefficient due to the low volume and the need for enough people to maintain security. Dropping just the hours between midnight and 6 a.m. could make a tremendous difference in the staffing cost with only a minor effect on service.

One call center recently discovered that reducing hours in this way could reduce staffing by 7%. Assuming that all of the calls that would have been handled during those hours were lost (and the people did not call back at another time), the analysis revealed a loss of 2,483 calls out of more than 44,000 (about 5.6%). Applying this kind of analysis to your low-volume periods could reveal some reasonable tradeoffs to consider in tough times.

Another strategy is to simply eliminate some of the calls. Of course, for a cataloger, reducing calls is not necessarily a good move! But you should regularly analyze why people call. Getting every call right the first time so that no follow-up calls are required will surely pay some dividends.

Applying technology

Investing in new technology may not be an option in tight budgets, but most call centers can benefit from more effective use of the technology already in place. The automatic call distributor (ACD), for instance, is capable of many features and adjustments that will make a long queue seem more tolerable when additional agents aren’t affordable. For example, you can set the ACD to answer calls on the third ring, rather than the first. Perhaps a delay of three or even four rings before an agent answers would annoy callers less than that same time spent in the queue listening to a recording. And you get the added benefit of savings on 800-service hold time.

You could also use on-hold announcements during busy times to inform callers of better times to call; that can help even out the workload and your staff requirements over the day. Of course, you will need to help management understand that some calls will abandon immediately and that those should not be counted against the center’s service objectives.

For those centers that can justify investments in technology, increasing use of interactive voice response (IVR) and computer telephony integration (CTI) can pay dividends quickly. Check out the voice menus and options from a customer’s perspective. Be sure that the most frequently chosen options appear early in the menu, that you have translated all industry jargon to language that the uninitiated can understand, and that you are getting meaningful reports on the choices people make and where they bail out for human assistance. Offloading as many calls as possible to technology can reduce the size of the staff needed to maintain the expected service levels.

Process reengineering

Perhaps some of the biggest opportunities for savings lie in simply changing the way you do some things. This would include expanding your schedule mix and staggering schedules.

If most of your agents work full-time, eight-hour schedules, then schedule inflexibility is likely a problem. It’s amazing how much more efficient your schedules will be simply by adding some part-time shifts and expanding the definition of full-time to include more than just five eight-hour days.

One call center that recently implemented workforce management software expanded its schedule mix from only four-hour part-time and eight-hour full-time schedules to include five-hour, six-hour, and 10-hour shifts, along with a new days-off rotation. By making these simple changes the overall full-time equivalent (FTE) count went from 189 staff to 152 staff.

Another call center shifted from traditional 30-minute start times to having staff begin their shifts every 15 minutes of the day. The rationale of this change was that by staggering start times, breaks and other off-phone activities could naturally be staggered throughout the day as well. And it worked! The call center went from 124 staff required to only 114 staff.

Turnover reduction

We can’t end this discussion about reducing operating costs without a mention of what staff turnover is costing your company. Turnover can be the single biggest drain on the call center’s budget, not to mention morale. Recruiting, training, and then losing personnel is costly and frustrating.

Most agents who leave blame a poor fit for the job, a lack of a career path, an unsuitable work environment, a lack of recognition, and ineffective supervision. You can improve most of these without a huge investment.

The good news is that recruiting during these shaky economic times should be easier. Make the most of this opportunity by conducting careful recruiting and screening. Be extremely picky, and make sure you get people with both a good technical fit and a good motivational fit who are likely to stay with you even after the job market opens back up.

It is clear that we are in the midst of tough times. Call center operations will continue to be called upon to make sacrifices in order to reduce costs. But you can position your center to weather these times through making smart, informed choices about where the best reductions can be made.


Penny Reynolds is a founding partner of The Call Center School, a Nashville, TN-based consulting and education company.

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