Cost per Contact

Modern call centers serve more customers now than ever before. This sheer volume can challenge managers when assessing data to improve operational efficiency. Fortunately, call centers can use industry metrics to track and evaluate their progress for short- and long-term goals. While different call centers have varying objectives, one metric that should always be prioritized is the cost per contact. But what is cost per contact in a call center?

Definition of Cost per Contact

Every time an agent connects with a customer via call, email, or SMS, the company spends money on labor and operational costs. The cost per contact is the average cost of handling each interaction. This metric is one of the essential efficiency measurements for a call center and is an important aspect of the cost-benefit analysis.

What Is the Purpose of the “Cost per Contact” Metric in a Call Center?

The cost per contact metric indicates how efficiently a call center operates. This key performance indicator (KPI) provides vital insights into the organization’s operational costs, allowing them to make better decisions about allocating their money and resources.

A high cost per contact may indicate limited operational efficiency. For example, if two call centers perform the same services, yet the one has a cost per contact of $8.00, while the other is only $4.00 per contact, the latter is considered more efficient. However, when defining what cost per contact is in a call center, it is also critical to consider other factors. For instance, a higher than average cost per contact may not necessarily indicate bad performance if high levels of customer satisfaction accompany it. Likewise, a low cost per contact with compromised customer service is not necessarily a good indicator.

This is why key performance indicators like cost per contact are often evaluated along with other metrics, such as average handle time, adherence, and call resolution.

How Is Cost per Contact Calculated?

Understanding what cost per contact is in a call center becomes easier when illustrated with an example. This KPI is the sum of all costs associated with running the call center, divided by the total number of contacts handled by the agents.

The following costs are factored in when calculating the cost per contact:

  • Compensation: This includes the salaries, benefits, bonuses, incentives, and other forms of compensation given to agents, supervisors, and other individuals supporting the call center.
  • Recruitment Costs: This refers to the total costs associated with the education, training, and onboarding of new employees in the call center.
  • Telephony: The cost of your phone system.
  • Software: This considers the licensing expenses for tools like CRMs, and work management software.
  • Fixed Costs: This includes fixed expenses, such as facility rentals, maintenance costs, and internet charges.

man juggling his jobHowever, the total number of contacts encompasses all ways clients reach out to the call center. You’ll need to define this variable before calculating the cost per contact. Depending on the services the business caters to, these sources may include:

  • Calls
  • Emails
  • Social Media Messages/Mentions
  • Walk-Ins
  • Faxes

In short, the formula for calculating cost per contact is:

(Cost per contact = Total call center operating costs / Number of customer contacts handled)

How Can You Improve This Metric?

Call centers can be more efficient by reducing the cost per contact. However, management should not sacrifice customer service quality to reduce the cost per interaction. Call centers can minimize this metric while maintaining customer satisfaction with these strategies:

1. Optimizing Interactive Voice Response (IVR)
IVR systems should provide concise and relevant options to help customers reach the most suitable agents to address their concerns. It should also have an effective verification process to help agents address unresponsive callers.

2. Providing Self-Service Options
Live chatbots and self-service portals can empower customers to solve simple issues independently.

3. Maintaining Strategic Shift Schedules
Optimize agent schedules based on peak times and expected call volumes. For example, experienced agents should be on board during peak hours to ensure that calls are handled effectively.

4. Investing in Quality Education & Training
Upon onboarding, ensure that agents are adequately trained to handle calls per industry standards.

5. Using Real-Time Call Monitoring & Recording
Real-time call monitoring and recording can help management identify areas for improvement and allow them to assist agents when resolving complex concerns. Moreover, it can help measure other KPIs, such as call duration and average handle time.

Improve Your Cost per Contact with ROI Call Center Solutions

Defining what cost per contact is in a call center emphasizes the importance of effectively utilizing company resources while maintaining stellar customer service. Partner with ROI Solutions today, and let us handle the work for you.

Our award-winning call center services will help your business reduce cost per contact while ensuring the success of each customer interaction. We treat your clients as our own, handling each customer with exceptional care and professionalism. Reach out to ROI Call Center Solutions today to learn more about how we can serve your business!

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