Demo

Calculating the Cost of FCR

As a Call Center Consulting firm we have access to numerous studies and interesting research articles. A recent study by the CFI Group suggested that one in five customers come away from a contact centre interaction with unresolved issues. This would suggest to me that the issues in question were not resolved and the First Contact Resolution (FCR) can be no higher than 80%. This will lead to additional contacts and additional cost to the call center operator. But what will this cost really be?

I like to walk through the following process to help clients gain some insight into this hidden cost. I say hidden because most centers do not effectively track resolution. Instead they ask customers through the agent of an IVR survey or worse based upon the agents judgment if the issue was resolved. Of course the customer may not even know if the issue is truly resolved…will the billing credit appear on the next bill? Will the promised gift card be received? Will their service be restored by 5 pm today? None of these issues can be truly labelled as resolved until the required processes and activities are completed. But that is fodder for another post.

Back to the financial costs for an 80% FCR rate: if your average call (or contact) is $5 at an 80% FCR your average resolved contact on first call will cost you $6.25 or 25% more than your cost per contact. Of course those whose issues were not resolved will call back and once again they will receive an 80% FCR and those callers will only receive at best an 80% FCR and so on and so on. After the second call your overall cumulative FCR will be 96% and after three cumulative calls over 99%. But your costs for resolved calls will be $6.25 each and not the $5.00 that is likely in the budget. If you had 10,000 calls/month the annualized savings associated with just a 5% improvement in FCR would be more than $44,000.

This calculation does not factor in the likelihood that the call types that go unresolved are often the more complicated or difficult ones, that will by virtue of their nature represent a significantly larger percentage of Wave 2 and beyond calls than they represented in Wave 1. Nor have we factored in the fact that when the unresolved calls are received they will increase the volumes and adversely affect the scheduled agent hours and by extension the ability of the center to meet its service level and other KPI’s such as schedule adherence.

So the costs are far greater than just the cost of repeat callers. Keep this in mind when you are setting your goals and targets and when you establishing you budgets.

2 thoughts on “Calculating the Cost of FCR

  1. Paul Camrass says:

    Hi there.

    Not sure I follow the assumptions around cost per call. What is it that drives up the cost of an inquiry resolved on the first call from $5 to $6.25?

    Thx…Paul

    • colin says:

      Paul,
      A great question. If our cost per call is estimated at $5.00 and we have an 80% FCR that means that out of every 100 customer calls we only resolve 80 on the first contact. The remaining 20 will need to call again. These second calls also receive an 80% resolution rate meaning that 16 of 20 of these inquiries are resolved. This brings our overall total to 96 out of 100 calls resolved. The four remaining callers phone back for a third time and receive the same 80% resolution rate and therefore 3.2 of them…lets call it 3 are resolved. This brings us to 99 out of 100 calls are now resolved.

      To get this level of resolution however we have fielded a total of 124 calls to serve our 100 customers and resolve 99 out of 100 calls. At $5 per call this equates to $620 ($5*124) to support the 100 customers or $6.26 per each of the 99 resolved calls ($620/99).

      I hope that I have helped clarify the math. Let me know if you have any further questions on this topic.

      Thank you again.

      Colin

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!