Optimize Call Center Costs

By Jenny Kiesewetter
July 27, 2020

Author Andrew Grant famously said, “You never get a second chance to make a first impression.” And that’s true, especially in business. According to Psychology Today, it takes only 7 seconds to make a first impression. As the face of your company, your call center often makes these initial impressions with your customers and has the potential to turn your customers into brand ambassadors while boosting your company’s reputation.

But first impressions come with a cost. Like all line items on your company’s financial statement, you must balance the most effective solutions with cost efficiency. When it comes to call centers, organizations often must make tradeoffs between reducing costs through outsourcing or exceeding customer expectations by having a greater number of agents in-house.

Although first impressions are critical, when running a business—of any size—dollars matter too. For example, with most call centers, about 75% of all costs are related to labor, often driving every other decision within the call center itself. Depending on your staffing model, you may need to make different investments in equipment, facilities, and software costs all while keeping scalability in mind as your business grows.

Determining both the hard and soft costs of call centers is critical to balancing efficiency with that ever-important first impression. Let’s take a deeper look at how to optimize costs in your call center.

The Mechanics of Cost

Costs related to call centers often depend on whether you decide to keep your call center in-house or outsource all or a portion of it. If a business decides to keep its contact center in-house, a variety of costs must be considered. For example, the organization will need to secure a site to house its call center employees and equipment. Across 53 major metropolitan U.S. cities, office space averages $32.39 per square foot, ranging from $19.18 to $84.93. Per employee, you’ll need to budget for 100-250 square feet; thus, for an office of 50 agents, you’ll need at least 5,000 square feet of space, ranging from $95,900 to $424,650 annually in rent alone. Based on the above averages, these can be significant costs especially for early-stage, growing companies.

When factoring in a department of employees, businesses will also need to implement and manage salaries, benefits, time off, and other employee perks in addition to the cost of hiring, turnover, and on-going training. For example, wages and benefits for 50 agents average just over $1.9 million annually. The cost of hiring runs just over $200,000 for an office of 50 agents, where compliance runs about $100,000. Clearly, there’s more to hiring employees than just their salary, which means organizations should factor in these hidden costs when comparing in-house and outsourced call center options. And don’t forget to account for productivity! Most full-time employees are productive about 75% of the time while on the clock, taking into account paid breaks, PTO, and time off the phones.

In addition to office space and employees, voice, data, and other related technologies must also be acquired, potentially requiring a significant investment of capital and on-going maintenance and updates. For instance, contact center software runs upwards of $100 per person, with the top-of-the-line platforms costing upwards of $150. The better systems contain tools addressing automatic call distribution, interactive voice response, call monitoring, call recording, CRM, and real-time reporting and analytics. With such a critical component, companies shouldn’t skimp on these options.

Finally, in-house call centers must implement quality management and risk assessments, such as continually assessing customer experiences and satisfaction as well as developing contingency plans in the case of disaster, such as COVID-19. According to Sungard Availability Services, the cost of an average business continuity management (BCM) platform is just over $88,000.

On the other hand, some organizations choose to outsource part or all of their call centers, creating additional efficiencies and cost savings. For example, if a business wholly outsources its contact center, then certain costs such as facilities can be minimized. Outsourcing can also reduce labor costs by either replacing in-house call center employees or supplementing existing live agents, allowing your agent employees to handle more complex issues while the outsourced agents, either live or powered by artificial intelligence, can handle repetitive, mundane requests.

Let’s dig deeper into outsourcing all or part of your call center and its impact on your bottom line and customer satisfaction.

Outsourcing Your Call Center

For call center outsourcing, businesses usually contract with a third-party provider or BPO that specializes in call center customer service, allowing the third party to answer some or all customer calls, instead of or in addition to their in-house agents. By outsourcing, businesses can scale and save on costs to in theory, run customer service more efficiently.

Let’s look at three options for staffing call center agents: keeping the call center in-house entirely, outsourcing part or all of the call center, or augmenting the existing call center with AI. The most expensive type of call center agent is the on-shore full-time employee, costing from 80 cents to $1.50 per minute on the phone. With on-shore BPOs, the agents are not employees but are in-country. However, they often come with a high price tag. For example, the South Carolina Department of Deployment used on-shore BPOs for staffing, spending three million dollars for 200 agents for 90 days.

When businesses use off-shore full-time employees, they manage company employees in a different country, such as India or Costa Rica. If businesses used off-shore BPOs to staff their call centers, they experience a significant decrease in cost, but an increase in errors. On average, off-shore BPOs cost 40 to 60 cents per minute on the phone. Finally, if companies augment their current call center with AI, they not only save money but they are able to scale more quickly. For example, on the phone, Replicant costs 30 cents per minute as opposed to the $1.50 per minute for an on-shore full-time employee.

Now, let’s take a step back and look at how to replace or supplement your call center with cutting-edge technology, to not only save on costs but also improve the customer experience.

Live Agents vs. AI Agents

By augmenting your live agents with virtual AI-powered agents, you can eliminate a significant portion of your training costs, as virtual agents only need to be trained once, thanks to artificial and machine intelligence. Further, if your business model changes or you notice that a script isn’t working, you can easily change the instructions to your virtual agents, allowing you to immediately deploy the change across your call center as opposed to re-training your live agents on any changes.

Further, virtual agents don’t have the overhead costs that live agents do, immediately providing a return on investment. Virtual agents don’t need employee benefits or days off. Instead, virtual agents can operate 24/7/365, while matching the tone of your company, providing a consistent customer service call every time.

Up and Running in Days

With the benefit of technology, your AI virtual agents can be up and running in a matter of days, answering customer calls 24/7 with high success rates. For example, conversational AI-platforms can shorten customer service calls while reducing errors and providing more insights into your customer data.

With quick on boarding of your outsourced call center, you can answer all calls during your busiest of peaks without hiring short-term capacity. By having the flexibility to scale up or down as your business demands, you have the ability to satisfy customers and meet their needs without delay.

Additionally, with conversational AI-platforms, like Replicant, you only pay for minutes on the phone. You don’t have to commit to upfront usage or pay for wait times, giving you immediate savings.

With customer service on the brink of a major transformation, don’t cut corners with your call center. Instead, weigh the benefits of augmenting all or part of your call center with Replicant, providing you with significant cost savings without compromising service.