Original Publication: Customer Management Insight - June 2008
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Focusing on first-call resolution and call resolution — both in-house and for outsourcers — results in better retention and more opportunities to deepen the customer relationship, according to benchmarking firm SQM Group.
If you ask call center professionals what their call center’s main purpose is — as SQM Group did in its First-Call Resolution Survey — you get answers such as: to service customers, to resolve their calls, to operate in an effective and efficient manner, to service and sell to customers, to create customer loyalty to the organization, to help bring in new customers to the organization, etc.
These are all good goals; however, we believe that the call center’s main purpose is to maximize and protect the organization’s greatest asset — its customers. In other words, it’s the call center’s responsibility to retain customers so that they don’t defect to the competition as a result of a poor call center experience.
According to our survey, between 65 percent and 85 percent of all customers who contact the call center do so one to two times a year and have a four- to six-minute phone conversation, after which the call is resolved. In these cases, the call center has done its job to help retain the customers for the organization. But with these customer interactions (which the customer likely forgets within a short period of time), it is very difficult to create customer loyalty to the point that a customer will go out of his or her way to actually buy more products and services or recommend the organization to others.
The exception to this behavior would be add-on sales while the customer is on the phone. In most of these cases, the call was resolved, which, in turn, allowed the CSR the right to make a selling offer to the customer. The same logic should apply to the call center in that, if the call center does a good job at retaining customers, it has earned the right to sell. If the call center does not do a good job at retaining customers, it has not earned the right to make selling a key component of its purpose.
The survey found that 15 percent to 35 percent of customers who contact a call center have a four- to 60-minute phone conversation, after which the call remains unresolved. These customers will not forget that they called. In fact, they will likely defect to another organization and tell five to 10 people about their experiences.
Most of the unresolved calls tend to be more complex calls (i.e., technical, billing and complaints). While many call center professionals focus on trying to create evangelist customers, their attention should be on the 15 percent to 35 percent of customers who did not get their calls resolved and who will likely defect.
The complexity of incoming calls, those that can’t be served by the IVR or Web self-service channels, is increasing. A legitimate proxy for measuring call complexity is a comparison of yearly data on call length (talk time and wrap-up). Our call center benchmarking data shows that call length increased by 38 percent from 2002 (four minutes) to 2007 (5.5 minutes).
Despite this increased complexity, the support structure to handle calls has not changed in the last five years. For example, when a customer calls in a second or third time trying to resolve their call, in most cases, they have to repeat their messages to different CSRs for every call. Resolving those complex customer calls is critical to retaining customers.
Our call center 2007 benchmarking data helps us better understand call centers’ impact on retaining customers and to help call center professionals improve call resolution performance. The study sample covers seven key industries (retail, health care, energy, insurance, financial, government and telecommunication) and includes more than 300 leading call centers, 400,000 customers who recently called a call center, and more than 22,000 employees who work in the call center. Our examination specifically targeted call center performance by industry and by aggregate to determine:
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What is most important to customers calling a call center
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Call resolution impact on call center customer loyalty impact indicators
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Unresolved calls financial impact on operating cost
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Areas for reducing the need for customers to call two or more times
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Impact on customer satisfaction (Csat) and first-call resolution (FCR) when calls are transferred to escalation CSRs
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Resources CSRs use to resolve calls and their satisfaction with those resources
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Call centers and their organizations’ Csat
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Contact channel comparison for Csat and FCR performance
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Outsourcer comparison for Csat and FCR performance.
FCR and Call Resolution Impact on Call Centers and Organizations
At SQM, we strongly believe that FCR and call resolution are the most important key performance indicators (KPIs) for determining if the call center is both satisfying and helping to retain customers. Our definition of FCR is this: The customer’s inquiry or problem is resolved in one call. Furthermore, the customer, not call center management, must be the judge of FCR.
Call resolution is the most important attribute for customers calling a call center (see Chart 1). CSR attributes such as knowledge, helpfulness, caring, listening, etc., are also very important for customers. Customer navigation and speed attributes such as wait time, customer identification and voice menu attributes, are of very low importance for customers, as are selling attributes such as features, needs-based selling and selling approach. However, call center managers tend to neglect call resolution — the most important attribute for customers — and pay more attention to navigation and selling — attributes that customers value less.
Chart 1. What Is Most Important to Customers Calling a Call Center?
Key Finding: Call resolution is the most important attribute for customers calling a call center. The above numbers are based on a statistical correlation between Csat for the overall call center and for each specific attribute.
Call Resolution Impact on Call Center Customer Loyalty Impact Indicators
Chart 2 shows that customers who did not get their calls resolved have a huge negative influence on call center customer loyalty impact indicators such as call center overall Csat, likelihood of continuing to do business and likelihood to recommend the organization to others. In fact, customers who did not get their calls resolved are five times more likely to defect than customers whose calls were resolved. Customers who got their calls resolved have substantially higher call center overall Csat and are much more likely to continue to do business with the organization. Also, call resolution has a much higher impact on a customer’s willingness to continue to do business with the organization than their willingness to recommend the organization to others. This underscores the fact that the call center’s main purpose should be to retain customers.
It’s very clear from our research that when a call is resolved the customer, in most cases, is satisfied and the call center did its job in retaining the customer for the organization. We also found that when the call is resolved on the first call, the customer is most satisfied and the call center benefits from not having to take two or more calls to resolve the call.
Chart 2. Call Resolution Impact on Call Center Customer Loyalty Impact Indicators
Key Finding: Customers that did not get their call resolved has a huge negative impact on the above call center customer loyalty impact indicators. All ratings are top- or bottom-box response.
FCR and Call Resolution Differences by Industry
According to our data, the telco/TV industry is the most complex industry, with the insurance, financial and banking industries being almost as complex. What is most interesting is that the later industries perform so much higher than the telco/TV industry, despite their near-comparable complexity (see Chart 3). The key message here is that complex industries can achieve high FCR and call-resolution performance.
Chart 3. FCR and Call Resolution Differences by Industry
Key Finding: There are significant FCR range differences by industry and moderate call resolution differences by industry.
Unresolved Calls Impact on Operating Cost
The impact of unresolved calls on a call center operating cost is huge (see Chart 4). For example, based on an annual volume of four million inbound calls, with 32 percent of customers who had to make two or more calls to resolve their inquiry or problem, a call center would see an additional cost of $8 million. This scenario is typical in our benchmarking work.
In addition to the hard cost of customers having to make two or more calls before an issue is resolved, there’s also the cost of lost or unrealized Csat, which drops 20 percentage points for each additional call required in the resolution.
An effective call escalation process can simultaneously avoid a lot of the cost of additional calls and improve Csat — and retain the organization’s customers. If call escalation is handled effectively, Csat doesn’t drop, and total average handle time (AHT) is shorter with the original CSR and the escalation CSR versus two or more individual CSRs handling the call separately.
Chart 4. Unresolved Calls Impact on Operating Cost
Escalation’s Impact on Csat and FCR
Our data shows that most call escalation processes can’t be deemed effective. Typically, Csat drops by 20 percent and FCR goes down by 19 percent when calls get transferred to escalation CSRs (see Chart 5). We found nine main reasons for this:
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Most escalated calls are more complex than normal calls.
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Many call center CSRs are discouraged from transferring their call to the escalation queue and are punished if they do it too often.
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Most call centers do not properly staff their escalation queues to handle customer-escalated calls, and they view escalated calls as an unnecessary extra cost.
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The vast majority of call centers make it difficult for customers to transfer their call to CSRs who handle escalation calls by not informing customers that it is an option or making customers go through a long question-and-answer session.
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The majority of escalation CSRs can handle complex calls, but they tend not to be as good at service recovery. In other words, they can fix the problem, but they lack the required people skills to deal with dissatisfied or upset customers.
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When calls are transferred to the escalation queue, the customer has to repeat the details of their issue because they don’t experience warm transfers.
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Customers are put on hold for a long time before they can talk to an escalation CSR.
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Most call centers do not measure customer satisfaction or FCR for the escalation queue.
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The call center does not have dedicated CSRs to handle escalated calls; therefore, the original CSR has to find someone who can help the customer.
Our findings point to the call escalation queue as the key to improving call escalation effectiveness and retaining customers for the organization. However, most call center managers do not utilize the escalation queue (which tends to be small) to manage the customer experience, sacrificing valuable customer retention opportunities.
Chart 5: Impact on Csat and FCR When Calls Are Transferred to Escalation CSRs
Key Finding: Customer Csat goes down by 20 percent and FCR goes down by 19 percent when calls get transferred to an escalation CSR.
CSR Resources and Satisfaction
Our study found that frontline CSRs who need help resolving calls ask another CSR — in most cases they ask the CSR sitting closest to them. Another resource frequently used is online manuals. Interestingly, subject matter CSRs and escalation CSRs are not very often called upon to help CSRs resolve calls. (See Chart 6.)
Only 9 percent of CSRs who responded were satisfied with the real-time support (i.e. peer, supervisor, online manual, escalation queue, etc.) offered for helping them resolve difficult customer calls. (See Chart 7.) We see such low satisfaction results across our benchmarking efforts.
Chart 6: Resources CSRs Use to Resolve Calls
Key Finding: Subject-matter CSRs and escalation CSRs are not frequently used to resolve calls.
Chart 7: CSR Satisfaction with Real-Time Support for Resolving Calls
Key Finding: Only 9 percent of CSRs are very satisfied with the real-time support for helping them resolve customer calls.
Call center/Organization Csat
An organization’s ability to satisfy customers does impact the call center’s ability to satisfy customers. As you can see in Chart 8, there are big differences by industry for both the call center and organization Csat rankings, which are based on top-box Csat ratings. However, the call center Csat ranking and the organization Csat rankings are the same, with the call center’s ranking closely following that of the organization when it rises and falls.
However, this tie between Csat for the organization and the call center is not necessarily reciprocal. Those unresolved calls that last between four and 60 minutes can certainly bring down the organization’s Csat, but the calls that are resolved don’t necessarily bring it up. The reason for this is that most resolved calls are short and sweet, and the CSR has performed exactly as the customer expected by resolving the issue. Following such an experience, customers forget that they even called the call center.
Chart 8: Csat With Call Centers and Their Organizations
Key Finding: There are big Csat rating differences by industry for both the call center and organization Csat ratings. In addition, the call center Csat ranking and the organization Csat ranking are the same.
Contact Channel Csat and FCR Performance
SQM’s data also shows that IVR utilization has nearly tripled in the past five years, growing from 26 percent of all inbound call volume in 2002 to 68 percent of all inbound call volume in 2007. The Web contact channel also increased dramatically over the same period.
Web and IVR self-service contact channels have the highest Csat and FCR ratings of all contact channels, according to our data (see Chart 9), with the vast majority of customers who use them reporting that their transactions are successful. It’s important to note, however, that these contact channels also have the easiest contact types to resolve, while the lower-performing CSR and email contact channels have the most complex contacts to resolve, explaining their lower Csat.
Chart 9: Contact Channel Comparison for Csat and FCR Performance
Key Finding: Web and IVR self-service contact channels have the highest Csat and FCR ratings of all contact channels.
Csat and FCR for Outsourcers
Among our study participants, the average for outsourcer performance is 8 percent lower for Csat and 4 percent lower for FCR than inhouse call centers (see Chart 10). This is a significant improvement that has occurred over the past two years.
One major change may be credited with outsourcers’ better performance: They are no longer being paid based solely on call volume. Bonuses and contract renewals are being based on their Csat and call resolution performance.
Still, these performance improvements are not shared by all outsourcers in our benchmarking database. Some have higher Csat and FCR performance than inhouse call centers, and some have significantly lower Csat and FCR performance. We see very few outsourcers whose performance is consistent with their client inhouse call center’s performance.
Chart 10: Outsourcer Comparison for Csat and FCR Performance
Key Finding: The average for outsourcer performance is eight percent lower for Csat and four percent lower for FCR than inhouse call centers.
The Path to Improvement
FCR — strictly defined as when the customer’s inquiry or problem is resolved in one call — and call resolution are the most important KPIs for determining if the call center is both satisfying and helping to retain customers. Furthermore it is the customer — not call center management — who must be the judge of FCR.
There’s room for improvement in nearly every call center’s construction and utilization of its escalation queue. Beefing up real-time support for CSRs can also save time, cost and customer loyalty.
Additionally, identifying and fixing the reasons why customers have to call two or more times is one of the most valuable initiatives that call center management can do to improve their Csat, FCR performance and retain the organization’s customers.
While it may be harder to control the outsourcer’s performance in these areas, tying bonuses and contract renewals to performance creates a strong impetus for improvement.
Targeting these important areas for improvement can significantly increase FCR and call resolution. You’ll see the results in time and cost savings, improved agent morale and enhanced performance — and, of course, in customer retention, which is, after all, the call center’s main purpose.
Mike Desmarais is President and Founder of the call center first-call resolution benchmarking firm SQM Group. www.sqmgroup.com
