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Expert Angle: Forecasting for the Future

Forecasting for any size contact center starts with building a strong capacity plan and having a well-defined governance process. Forecasting in any environment -- be it an inbound call center, outbound call center or blended inbound and outbound -- is not a fire and forget exercise. There are two distinct steps in creating a forecast: capacity planning, which is performed on an annual cycle; and a 3-2-1 approach, which is conducted continuously throughout the year.

Capacity Planning

Based on historical information, as well as predicted upcoming changes to the market or marketing plan, a call center should build a capacity plan for the upcoming year that can be used to predict the number of calls or interactions that it will handle. This prediction can then be utilized to determine the number of technology resources and agents that are required to handle the demand. While many smaller contact centers utilize spreadsheets to build their capacity plan and forecasting, the popularity of Software-as-a-Service and hosted solutions has opened access to many of the top workforce management software packages.

During this initial planning phase, it is important to bring in all stakeholders that may have an impact on the capacity and forecast for the coming year. For example, at a sales and service call center, it would be important for the operations team to involve marketing in its capacity plan in order to gain access to the coming year’s marketing plans, product releases and sales targets. This, coupled with historical information for similar releases, would provide insight into potential call volume increases over the previous year.
The annual capacity plan is only a guideline that will feed hiring plans, real estate and infrastructure needs for the call center. As a twelve-month view, it is not going to be pinpoint accurate, but it is an excellent planning guideline when developing budgets for the coming year.

Once the prediction for the year’s interactions has been established and applicable handle times have been calculated using historical data, these values can be plugged into either an Erlang calculator or a workforce management software package. This will provide a prediction for the required staffing.  However, as this is a long-term forecast, it is best to develop a further governance process that will allow for quarterly, monthly, weekly or even daily revisions, depending on the needs of the call center.

3-2-1 Method

A common best practice approach used in many call centers involves the conducting of structured re-forecasts that take into account changing trends, unpredicted events or dramatic changes to the original plan. The 3-2-1 method is simply a review of the forecast that takes place 3 months out, 2 months out and 1 month out, at set intervals to ensure relevance and allow for changes. It can also be used 3, 2 and 1 weeks out or even 3, 2 and 1 days out, depending on the needs of the call center.
As an example of this methodology, a capacity plan built for the year may be completed one fiscal quarter prior to the start of the year in order to provide for planning and budgeting. When the year actually begins, the call center may decide to review the previous quarter to make sure that all assumptions made during the capacity planning phase of the forecast are still relevant and accurate. They might then conduct a forecasting exercise for the upcoming three months, matching current assumptions with previous assumptions and matching those further with current trends. In this way, the forecast remains fresh and relevant. These exercises are typically done in the last week of the month prior to the next cycle and take a look at the preceding three months’ worth of historical data as a trend indicator.  Again, depending on the complexity of the call center, deeper drill-downs can be done into the month, week and day to further refine the forecast depending on need.

Seasonal Peak Volume

By utilizing a year’s worth of capacity planning that includes historical data, season peak volumes can be adjusted for as part of the planning phase and better accounted for by utilizing the 3-2-1 method to keep the initial annual forecast relevant. Planning ahead and keeping track of volume and market trends will allow a call center to stay ahead of the curve and adjust forecasting to actual results accordingly.

Forecasting is an art form rooted in historical data, strong governance and experience.  However, any size call center can maintain an accurate forecast by training their workforce management teams in best practices, investing wisely in workforce optimization tools and keeping abreast of changes both internal and external to the business and the call center.