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Economics of call centers

Posted by: Stephen Baker on March 11

Look at the numbers from ATT’s point of view. They have some 60 million customers, and the average customer calls with a question or complaint six to eight times per year. The average call costs about $1 per minute to handle, and lasts four to five minutes. That means that ATT, according to industry averages, must spend around $2 billion per year on call centers.

I got these estimates from P.V. Kannan, CEO of 24/7 Customer, a call center company based in Campbell, Ca.

The question it raises, which confronts lots of companies, is this: What’s the economic case for mistreating customers? The downside can be an explosion of call center traffic. That has a cost, which can be projected. It can also create a storm of bad publicity in blogs, Twitter, social networks, and in some cases the mainstream press.

But there’s opportunity. Companies like 24/7 analyze customer dynamics in call centers. They can estimate a customer’s income, and how sensitive that person is likely to be to a rate change. They monitor voices to gauge a selection of the callers’ emotional states. They know which people are likely to call 30 or 40 times a year, and they can calculate the return on investment for that caller. Often it’s negative.

Where’s this going? Companies are figuring out which customers to cozy up to and which ones to fire. In Kannan’s words: “Are you pissing off the right set of people?” A lot of the strategy in this drama revolves around call centers.

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Reader Comments

John Caddell

March 11, 2009 05:00 PM

Steve,

I agree with PV Kannan that tons of insight about customers is available in the call center. I know, because I've done projects for companies to help them understand what the stories their customers tell CSRs are saying about their products and services.

PV Kannan is completely wrong, in my opinion, when he focuses on diagnosing frequent callers and suggesting companies decide whom to "piss off."

There may be a value proposition here for companies, but it's certainly not where I would spend my effort. Firing customers has backfired on many companies (example: Sprint), and certainly needs to be handled very carefully if attempted.

But focusing on firing customers who overuse the call center obscures the true value of the call center, which is that, for many companies, it's the only human-to-human contact they have with their customers.

This is a resource with far more uses than diagnosing who's using it too much.

Imagine what companies could learn if they focused on learning what is tripping up customers who are using their products, what's enraging them about their billing and collections procedures, or what they really feel about upselling.

That information is all there, too. It's not easy to get "numerati"-style, but with a little effort and project design, these lessons are accessible.

I wrote a white paper on digging into the inbound sales part of the call center, if your readers are interested in learning more: http://bit.ly/wmXRG

Thanks, John

PV Kannan

March 16, 2009 09:12 AM

John

I could not agree more with you, I did not suggest that companies use data to figure out who to piss off. But the point was made that data guides that some customers need t be proactively guided with assistance. In the example Stephen quotes, some of the customers call frequently to check balances more frequently than others and end up costing lot of money (even with IVR) .. so the idea was could we proactively update them with SMS (if they request)...

The last thing we would suggest is any strategy that makes it more difficult for customers to reach a call center, such things end up always being counter productive and not a great way to build a brand or a company.

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In Blogspotting Senior Writer Stephen Baker and Associate Editor Heather Green take a look at how cutting-edge technologies are changing business and society. Whether its blogs or wikis, data crunching or data targeting, technology’s advances are reshaping the world that we live in.

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