Effectiveness Indicators – Revenue/Call, Sales/Call

Effectiveness Indicators – Revenue/Call, Sales/Call
Turaj Seyrafiaan
In the last issue (December 2010), the concept of “Effectiveness Indicators” was discussed and we reviewed a major key indicator in Call Quality and Quality Index. In this issue we tackle another key indicator that represents the effectiveness of the centre – as part of the overall contact centre strategy – in generating revenue (assuming revenue generation is a key mandate for the centre).

Profit Centre vs. Cost Centre

As discussed in earlier issues, traditionally call centers were managed in order to minimize the costs. The reason for that seemed simple and obvious; taking the calls and providing service on the phone appeared to be of no additional value to the organizations. The call centre activities were concentrated around providing the after sale services and at best would be considered as revenue protection (a necessary evil!!). It was many years later that organizations started realizing the value of their contact centers in not only protecting revenue but also in generating revenue from both new and existing customers. This new realization brought a new operational concept to the contact centre environment: “invest more in the centre in order to generate more revenue”!

In today’s environment, contact centers operate in two distinct modes: Profit Centre vs. Cost Centers. In a profit centre environment, the centre is operated similar to an independent or self sustaining business unit. The budgetary and operational decisions are taken with focus on generating revenue for the organization. Although revenue generation may not be the sole purpose of the centre, its management is responsible to operate – and perhaps expand – using internal funds. In a cost centre environment, the budgetary focus continues to be on minimizing the costs. Majority of the operational decisions will be scrutinize in order to find the lowest cost approach with less regard for their value to the centre or the organization. In fact in most cases it would be very difficult to quantify the value of these decisions in a tangible manner.
Which one of these two approaches is right for your centre? Well, the answer depends on the role of the centre within the organization (for example “Technical Help Desk” vs. “Sales & Services”) and the overall mandate for the centre. There are advantages and disadvantages to both approaches. In a revenue centre, the management has broader control over its internal decisions, but with the control comes broader responsibilities and accountability in making the right decisions. On the other hand, in a cost centre environment, there is constant pressure in maximizing the efficiency of the operation (which is not entirely a bad thing) while the management may feel they have none to very little control over decisions that would impact their centre.

The dividing line between the two approaches is not always clear but it is extremely important for the contact centre management to decide on an approach since it will determine and establish the contact centre priorities.

Revenue/Call
In those centers with opportunity to sell products and services, an aspect of effectiveness can be measured in terms of revenue per call ($/Call). As it sounds, this metric provides the average Dollar amount of revenue being generated by each call (can be calculated at the agent, team or centre level). When compare to the overall revenue targets by the centre (or the team or agent) it can also provide meaningful information such as: “are the numbers moving in the right direction?” and “what is the gap between actual and target”. Analyzing the revenue per call against cost per call can also provide information about relationship between revenue and selling costs. Please note that cost per call presents only the contact centre costs and does not include other costs such as cost of goods sold, marketing and/or fulfillment.
It is normal for many centers to introduce revenue per call as part of agents overall performance, however, there is a risk of over emphasizing the importance of this metric. Agents, as well as contact centre management, may sacrifice other key (and sometimes basic) aspects of the operation (such as Resolution or Quality) in order to improve their overall performance results. Have you ever called to ask for assistance with regard to a product and/or service and they tried to sell you other products and services to remedy the shortcoming of the first product and/or service? Or perhaps all you wanted to do was a change of address and they tried to upgrade your entire services?
One of the recurring challenges in establishing revenue per call environment can be determining who can claim what revenue. In some center all revenue or sales are attributed to the Sales department regardless of where they occur. If the sale is made in the call center then the revenue should be ‘credited’ in some manner to the call center.
In a mixed sales and service environment it would be more crucial to train agents to recognize situations when there is an opportunity to sell and situations when there is no opportunity! At the same time, it would be great if we could measure the effectiveness of the agents (teams and/or centre) in closing the deal when that opportunity presents itself.

Close/Call

As mentioned above, Revenue per Call provides the Dollar amount generated by each call. There is, however, risk of comparing results from different individual or different teams as they my not have the same opportunity in terms of total Dollars. In addition, the metric does not clearly indicate the effectiveness of individuals and/or the selling process. In order to quantify this aspect of the operations, number of centre use “Close per Call” ratio as a key performance indicator. This ratio, while removing the impact of Dollar value of the sales, indicates the success rate of the centre (agents and/or teams) in being able to complete a sale cycle. In calculating and analyzing this metric, one must recognize that not all calls have an opening for a sale. If possible, it would be more accurate to consider only the calls that present that opportunity. (Depending on the communication and IT setup, it may be easier for some centers to capture and track their sales calls while other centers may have to rely on sampling and/or quality listening to collect such information).

The Bottom Line

Revenue per call, and to certain extend close per call, highlight a different and perhaps more tangible aspect of any contact centre. This is a direct outcome of the operation which is easily understood and this may be the reason for the occasional obsession with improving it. However, like every other indicator, revenue per call or close per call must be considered as part of the bigger picture. No one should focus entirely on one or two metrics without respect to other indicators. A contact centre with all internal processes is like an automobile with all its mechanical parts. A good manager, like a good driver, must hear and see (and feel) the entire system while trying to achieve the most out of a given situation.

Knowing this negative impact on the operation, many contact centers have created a set of standards and measurements dealing with this attribute. Error Rate, measures the ratio of the errors made over number of transaction (typically shown per 10s of thousands). Clearly the higher the error rate, the higher the cost and therefore the higher priority in fixing the problem. Improving the error rate can partially be achieved by using automated verification. For example making sure that street address matches the postal code, or all the digits for a credit card have been entered. On the other hand the contact handling process, as always, is in the hand of Representatives’ who can improve the ratio by ensuring their quality of their work. This can be measured by call quality listening and scoring, and be improved by coaching and training.

Call Quality

The second impact of lower quality is directly felt by customers and reflected in their overall satisfaction (keep in mind that there are other factors affecting the overall customer satisfaction). For example, customer may feel that he or she was rushed through the call, his or her spending was not appreciated or that Representative was rude. On the other side the contact center management may feel that Representative did not follow the call handling procedure or perhaps broke certain policies and regulations or did not use the opportunity to up-sell and/or cross-sell!
In some respect Call Quality can be compared with product quality coming out of a manufacturing line as it is measured against certain pre-determined quality specifications. The difficulty, however, is to define and measure those specifications. While certain characteristics of a contact – such as Representative knowledge of products and services – can be defined, other (behavioral) aspects such as friendliness and empathy is hard to measure as they are defined by each individual customer! A call judged as friendly by one customer may be considered too rigid by a different customer while a third customer may consider the same call as unprofessional!!!

The solution to this dilemma revolves not only around the Representatives’ experience (in recognizing and responding appropriately to each contact) but also in focusing on the final outcome and the role of the center as a link between customers and the organization. This role has progressively evolved from simply answering the calls to becoming the major factor in building customer relationship. A high quality call is not the one that blindly follows scripted actions and announcements but rather the one that enhances the relationship with the customer!

Quality Listening and Quality Score

Assuming that an organization knows what is important to its customers and how to enhance the relationship between the organization and its customers, how do we measure and report the associated call quality? The process starts with developing a Quality Document that clearly explains what are the desired outcomes for each contact type as well as how to achieve those outcomes. This quality document must follow the same steps that are outlined within the call handling process to ensure that customers have similar experience dealing with the center regardless of their issue or which agent they are talking to. The quality document must also provide various examples for each step in the process as well as a simple score that clearly links back the actions to building relationship with customers. For example, if a Representative activity damages the customer relationship, it must be scored as poor. If it does not damage the relationship but not enhancing it either, then it can be considered as satisfactory. Other grade of scores, such as Good and Excellent can be defined similarly for each individual action.
Based on such document and definitions a quality Scoring form can easily be developed. Quality scoring form is then used within the quality listening process to measure and score individual calls and CSRs. Although the numbers and procedure for listening and scoring calls are varied from organization to organization, the single success factor is on-going consistency. Quality listening cannot be a onetime activity.

While individual quality reports for each agent can be included in their performance measurements and be used for coaching and training, at the center level the results must be combined, analyzed and acted upon in order to increase the call quality (as a result increasing customer satisfaction and enhancing the relationship while reducing the overall operating costs).
Including quality score as one of the KPI can signal the commitment of the management to increasing quality of calls.