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Measuring Inbound Contact Center Efficiency

How Do You Measure Your Inbound Contact Center’s Efficiency?

Dhivakar Aridoss

Dhivakar Aridoss

Marketing Head

It is easy to measure the efficiency of outbound contact centers as it is directly related to the revenue generated.

However, when looking at inbound contact centers, you have to consider customer satisfaction, growth in lifetime value, loyalty, and any direct additional revenues you could think of.

What Parameters or Metrics Should We Look At Measuring?

Cost Per Call

The most important metric is the cost per call for every inbound activity.

Let us take an example scenario.

You have 100 agents – each handling 60 calls per day with an average duration of 5 minutes per call.

Now, you will have to include all the operational and capital expenses and divide them by the number of calls you receive to arrive at the cost per call.

Industry benchmarks suggest that an acceptable cost per call could range anywhere between $2.70 and $5.60, including direct labor, indirect labor, capital, and operational expenses.

Calculating cost per call is an excellent measure of overall contact center health. If this metric spikes during a period, digging into why is a valuable exercise to enhance customer experience and drive down costs.

Customer Lifetime Value (CLV)

Let me explain this with an example.

  • You acquire a customer at the beginning of the year
  • You track this customer’s purchasing behavior for three years
  • The customer makes recurring purchases annually
  • The customer acquisition cost is $300
  • The gross margin per customer is 40%
  • The discount rate is 10%

Gross profit per year per customer

Annual revenue per customer = $1000

Gross profit per customer per year = Annual revenue * Gross Margin = $1000 x 0.40 = $400

Present value of Gross Profit over three years

Since we have been tracking the customer for three years and considering the discount rate, we’ll calculate the present value of the gross profit.

Present value of Year 1 Gross Profit = $400 / (1+0.10)^1 = $363.64

Present value of Year 2 Gross Profit = $400 / (1+0.10)^2 = $330.58

Present value of Year 3 Gross Profit = $400 / (1+0.10)^3 = $300.53

Now, the Customer Lifetime Value would be:

Customer Lifetime Value (CLV) = (Present value of Year 1 Gross Profit + Present value of Year 2 Gross Profit + Present value of Year 3 Gross Profit) – customer acquisition cost = ($363.64 + $330.58 + $300.53) – $300 = $694.75

This example provides a simple illustration of the calculation. With one customer over a period of three years, you are making around $700. Assume that you have 100 customers; you are talking about $70000.

Assume that you have a churn rate of 20%, then we are talking about a loss of $14000. The churn rate is directly proportional to your customer service and support. You are in trouble if the churn rate increases from 20% to 40%.

CLV is a good measure of how well your customer experience function performs.

Call Abandonment Rate

Industry statistics reveal that the call abandonment rates are around 9%. This means you miss the opportunity to talk to 9% of your customer calls. This can mean dissatisfied customers, resulting in customer churn and loss of revenue.

Measuring this is critical, and ensuring it is closer to zero should be the aim of every inbound contact center.

You should have enough channels to understand that a customer has tried to reach you, and you should be able to call them up even when representatives are not available to address the customer’s issues.

First Contact Resolution (FCR)

This is a good metric for you to measure. Resolving customer inquiries and issues on the first contact reduces the need for customers to call or seek assistance through any other channels repeatedly.

This improves customer satisfaction and lowers operational costs for your contact center. 

Revenue Generation

I am sure as a business, you would definitely have something you can provide your existing customers.

Your customer service and support representatives can effectively identify opportunities for cross-selling and upselling.

This results in additional revenues and potential extending the relationship you have with your existing customers.

This would result in increasing the CLV as well.

CSAT and NPS Scores

You should monitor customer feedback and measure customer satisfaction (CSAT) levels and net promoter score (NPS).

This will allow you to determine if you meet your customers’ expectations and how likely they are to refer someone to your business.

Efficiency in an inbound contact center is not solely about cost-cutting or quick call resolutions – it is about balancing outstanding service and managing operational costs effectively.

By analyzing a combination of key performance indicators, including metrics related to operational efficiencies, financial performance, service quality, and customer feedback, you can gain invaluable insights into your contact center’s performance.

A well-managed and efficient contact center would mean long-term success for your business.

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