Businesses outsource their call center services to cut costs. But how can you calculate cost per call to make sure that you really save money instead of spending more?
In this article, we will discuss the basic method of calculating cost per call at call centers as well as the other factors in determining how much you need for your initial investment.
Cost per call (CPC) is a metric used to determine the allocation of budget per call. It measures the overall efficiency, including the ratio of agents to calls.
When analyzing CPC, it is essential to look at both cost and call volume. Having a direct correlation, these two factors affect the total amount you’ll have to invest once you’ve decided to outsource your call center.
The basic formula to calculate cost per call is pretty simple.
First, determine the total operating budget of your call center for a certain period, which includes the following:
Next, divide the total cost with the total number of calls from the same period. The quotient is your CPC.
The equation appears like this:
Cost per call = Total costs / Total calls
Check out this example:
A telecommunications company spent $25,000 in costs to answer 50,000 calls.
Cost per call = $30,000 / 50,000
Cost per call = $0.60
Again, this formula covers only the basics of determining the total cost of outsourcing to a call center. There are also other factors to consider. Modern call centers manage more channels aside from the phone, which adds “non-directly associated” costs into the list. Apart from this, the type of call — resolved or abandoned — also matters.
When you’re using a telephony device such as the ACD, abandoned and transferred calls are not counted twice. This means the resulting CPC becomes lower.
To solve this, simply subtract the abandoned or transferred calls from the total calls.
In this case, the equation looks like this:
Cost per call = Total costs / Total calls – abandoned or transferred calls
When you outsource, you can choose an omnichannel call center service to reach and serve more customers. However, determining its cost per contact becomes too complex, especially when your staff handles multiple channels at once.
The best way to determine the cost of this setup is by calculating the cost per working minute.
Its formula is almost the same when you calculate cost per call but instead of dividing the total cost by the number of calls, divide it by the number of minutes.
Cost per minute = Total costs / total number of minutes
This formula works well for call centers that use different channels and often experience disparity in call length.
Running a call center requires just the right number of call center agents. When starting a campaign, it is important to determine the number of base staff you need to prevent overstaffing or understaffing. This gives you an easier and faster way to scale your business when the right time comes.
To find out the number of agents your campaign requires, you need to calculate the staff workload first.
Staff workload is the amount of work an employee needs to perform within a specific timeframe. It helps you come up with an efficient staff schedule, especially if your call center operates 24/7.
Here’s the step-by-step method of calculating staff workload:
Staff workload = Forecast calls per hour x average handle time
By knowing the volume of workload, you can now determine the number of base staff you need. After this, you can finally work out on their schedule.
Keep in mind that the time of the day, week, or even seasonality greatly affects the average number of calls and the AHT. As a result, the staff workload during the day shift and the night shift is entirely different. If you have a clear insight on what time the workload is the heaviest, you can come up with a more equitable schedule for your agents.
The location of the call center company has a huge impact on call center costs.
Asian countries, particularly the Philippines and India, offer some of the cheapest call center services across the globe. Despite its low rates, the service quality remains the same, especially if you choose the right service provider.
The main reason for the service affordability in these countries is its labor market rate.
For instance, a minimum wage earner in the Philippines earns PHP537 or US$11 per day. That means the basic hourly rate of a Filipino call center agent is PHP67.13 or US$1.38. Meanwhile, the minimum hourly wage in the United States ranges from US$7.25 to US$14.
Just imagine the amount of savings you can get if you move your call center in an offshore location!
Of course, the abovementioned amount covers only the salary. Other factors that affect the final cost of an outsourced call center service are the complexity of the service, recruitment, training, management, IT maintenance, administrative needs, and other add-on services.
Since the price of these factors varies from one call center to another, it would be better if you can talk with an outsourcing company representative directly to get an exact price quotation.
The cost per call metric is a nice-to-have data because it allows you to determine the base cost of a call center service. However, relying solely on your CPC is not enough to think of strategies to save costs. You need to see the bigger picture to come up with a clear-cut method of lowering your expenses without compromising service quality.
Outsourcing is one of the best solutions for that. This business activity allows you to reduce not only the cost per call but all of its associated expenditures.
If you’re having second thoughts because the pricing of top call centers is still beyond your budget, consider Magellan Solutions.
Magellan Solutions is a Philippine-based company dedicated to helping small businesses save operational costs while maintaining the quality of calls. If you wish to know more, contact us using the form below.
Contact us today for more information.
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