Entire books have been written on the process of budgeting, implementing, measuring, and adjusting large call centers based on cost. However, I haven’t been able to find a guide that helps start-ups, entrepreneurs, or other smaller entities discover their true cost of support in a scenario where expenditures cannot be easily amortized.
What you will discover as you grow is that the customer support function of any business resembles a snowball. What starts with the founders is continued by your first rep, and suddenly requires support from IT, Human Resources, and the addition of new management function. Software and hardware purchases enter the equation and quickly the value of people versed in things like Erlang, NPS, and Asterisk skyrocket.
This guide is meant to help growth-stage companies better measure not only their current costs, but also to see what lies potentially right around the corner:
Labor: This includes the hourly wage that you are paying the employee as well as any applicable taxes the company is responsible for.
Benefits: Include in your calculation the employer share of any healthcare benefits, profit sharing, and other perks, which can include things as simple as company-paid lunches and dinners (common in the tech space) to more lavish items like retreats. Also included in the line items are peripheral benefits, like personal internet usage (which can be a huge bandwidth suck for larger organizations).
Management: An often overlooked item, especially in smaller companies, this is a line item that will bite you if not accounted for early on. Early-stage customer support organizations often draw on spare bandwidth of existing resources for initial support functions (taking escalations, training support agents, providing real-time assistance on issues, etc.). That does not mean that it cannot be measured. Ask yourself what the responsibilities would be if you hired someone today whose sole job was to manage CS. The answer will probably not fill their day, but you can get a rough idea of how much time that would take up. You should then calculate that cost based on the people who are filling in that responsibility now (how much did you’re lead engineer or CEO make while discussing a password reset for a beta customer?), but another acceptable way is to calculate it based on the going rate for a CS manager or director.
Attrition: I have really bad news. Your customer support people will not be with your forever. In fact, unless you take initiatives to minimize attrition (a focus of mine and a subject for a later blog post), the larger your desk and your company grow, the shorter your average CS agent tenure will be. In order to accurately calculate the cost impact attrition will have on your business, you need to understand the moving pieces. Take a look at the HR cost associated with finding a new representative. Look at it like you would a marketing expense – how much does it cost to get enough interviewees in the doors to find someone worthy of talking with your customers on a daily basis? How much time does it take your manager / HR to go from accepting applications to training to sitting on the floor taking contacts? Do you do background checks? Most importantly, what is the cost of the decrease in productivity you see from new representatives versus tenured ones? It’s common sense that someone who has been doing their job for a while is going to be more efficient. What might surprise you is that we find that a fully tenured agent (one who has been with you at least 2-3 years) often is going to accomplish more than twice as work as someone with a tenure of 3-6 months.
Real Estate / Office Space: What is your cost per square foot per year and how much space does this take up? Even if you’re using existing space now, as you grow, you will eventually be faced with the decision to add more space for other employees or relocate CS.
IT / Equipment : Cost of employee workstations, as a yearly recurring amount (they do need to be upgraded and replaced periodically, after all). Add in utilities and telecom including PBX and handset costs while you’re in this section.
Software: Cost per seat of CRM tool should be easy enough – this section also can include dialers, chat software, an email client, and any database system your agents need to integrate with.
Odds are, it’s going to be challenging to add these all together without historical data. At the end of the year, mature call centers are able to look back and break this down to two important metrics, cost per call and cost per agent hour. Using those past numbers, they can budget for future needs based on forecasts. Without a strong track record of info to go to, however, the important takeaway is to be prepared for these costs to rear their head.
If you keep these in mind, you can avoid reaching your peak season of business, just to realize your HR team doesn’t have the bandwidth to onboard the necessary staff, you didn’t account for 2 of your team members to leave for another position, or you’ve run out of space at the HQ.
Taylor
taylorworth 