Cost-Cutting Insurance for Customer Service

A Guide for Reducing Costs without Sacrificing Customer Loyalty

January 2009

By Matt McConnell

Cost-Cutting Insurance for Customer Service
How to make common cost reductions without sacrificing customer loyalty.
Everybody is doing it. Cutting costs, that is. But the businesses that will emerge strong at the end of this recession are the ones who don’t sacrifice customers to make those cuts. Holding on to customers during tough times can prove difficult, given inevitable cost reductions and competitors who are just a click away for a dissatisfied customer. Five of the most common cost reduction methods surface again and again in the call center press, the blogosphere, newsletters, vendor solicitations, etc. They are (in no particular order): • • • • • More distributed agents: at-home and outsourced Decreased headcount Increased self-service Turnover reduction Reduced technology costs

Each of these methods has the potential to reduce costs. Each also has the potential to drive customers to the competition if done incorrectly and without the right safeguards. This guide will outline simple methods to provide that “insurance.”

Distributed Agents
Getting more than you bargained for. One of the most common solutions to “cheaper” has been to cut labor costs through reduced labor, facility and infrastructure costs with at-home agents and outsourcing. But many have discovered that “cheaper” came at the expense of consistency, quality and ultimately customer loyalty. In our research1, executives called for a consistent hiring and training platform and process across all agent segments. Without it, they said, reaching a consistent level of service is almost impossible. Hiring: The most successful call centers are those that have defined, detailed agent qualifications and do not deviate from them when hiring new agents, no matter where they sit. Training & Performance Management: Once key metrics and expectations have been set, all agents – whether in the center, at home, or across the ocean – must be provided with the same training, ongoing coaching, and performance management they need to be effective. This is critical given the dispersed nature of the workforce.

Decreased Headcount
Who has time to answer the phone? Headcount reduction of agents and/or supervisors can have the most potential for reduced customer satisfaction and revenues. There are a few ways to execute some of the measures below, however, with minimized damage:


Reduce agent headcount: Most centers overstaff to allow enough time for training. In a scenario with reduced headcount and the same service levels to meet, training will almost always get trumped. If agents aren’t properly prepared for calls, quality will begin to suffer over time. By reducing training to short intervals and delivering it only during idle time between calls, training and sufficient availability can both be achieved with reduced headcount. Increase supervisor span of control: In our research3 on coaching, time to coach and coaching process execution were top challenges. To effectively manage a larger team, supervisors will need automation to help them find the time to coach all team members and to provide alternatives to face-to-face coaching. Center management will need a safeguard to ensure coaching processes are being executed effectively. Determine who to cut: While performance is typically used to make these decisions, overall turnover risk should also be considered. A way to objectively assess which agents are a fit for the job over the long term will help to make choices that increase retention and reduce long-term costs.

Increase Self-Service
How did you get this number? On paper, it makes sense. If more issues are handled by the customers themselves, you can lower call volume and headcount needed. While self-service can deliver on that promise when executed well, what happens to the more complex calls that require an agent? Will a smaller staff have the time for training and updates needed to deal with the difficult issues? If not, you may be decreasing first call resolution and customer satisfaction. What about the lost cross-sell and upsell opportunities? Will the agents who take the calls have the necessary skills to resolve the problem quickly and increase wallet share? In our research4, training was second only to right people as a service to sales success factor. A pervasive and constant method of training and communications must become part of the call center’s infrastructure to support self-service while continuing to meet customer satisfaction and revenue goals.

Turnover Reduction
I didn’t sign up for this. Attrition is a constant in the call center. It’s a problem most have just decided to “live with,” but when all the true costs are totaled, it becomes a prime target for cost reduction. As with most complex problems, however, the challenges arise in the execution. The call center experiences ongoing hiring volume that might cripple many HR departments in other industries. The only way to reduce attrition and cope with volume hiring is to push objective screening on critical aspects to the front end of the process. In this way recruiters only spend time with candidates who are capable of doing the job and interested in doing the job. This shifts away from the “perfect match” approach possible in other industries to the “screening out the rest” approach. Based on top reasons for agent attrition found in our research2, the screening should: • Set realistic expectations for the job • Measure key skills • Assess job fit By screening out anyone who doesn’t meet the above criteria before an interview, recruiters will maximize efficiency, and the operation will reduce early attrition. For later stage retention, best practice training and coaching play key roles.


Reduce Technology Costs
Another day, another dollar stretched. As centers look to reduce technology costs, many are considering Software as a Service (SaaS) or on-demand software. These solutions deliver software over the Internet, requiring only a browser to access the application. The model is based on renting access to a hosted application, on a pay-as-you-go subscription basis without the capital expense of traditional software. Choosing the wrong vendor could compromise your service. Select only vendors who feature: Rapid implementation: Initial implementation should take days rather than months. Lower upfront costs: Implementation services, software licensing, and initial solution fees should be less than half those of installed software. Reduced dependence on IT resources: The SaaS delivery model should not require your IT department to install, maintain, and support software. Lower total cost of ownership: It should require minimal technology infrastructure and IT resources to maintain. Updates to SaaS products are provided continuously. Secure infrastructure: On-demand solutions are delivered through secure data centers that are built for uninterrupted, protected, and dependable web-based delivery. Optimal service levels: Data centers, 24x7x365 technical support, and expert services should offer higher performance, faster adoption, and better support and response than most companies can deliver internally.

Conclusion: Keep Your Eye on the Ball
Everyone is being asked to do even more with less these days. The good news is that the call center has plenty of practice in meeting that particular directive. The bad news is that there isn’t much left to cut without compromising the original charter of serving and retaining the customer. With all the reductions you may have to make in the coming months, it makes sense to ensure the proper safeguards are put in place to minimize their impact on customer satisfaction, loyalty and ultimately profits. I would love to hear your stories about how you are balancing cost reductions and customer retention. Email me at with your comments.

About Knowlagent
Over 200,000 users around the world reduce labor costs with Knowlagent’s agent management software every day. By automating traditional call center management processes, Knowlagent’s on-demand solutions for training, coaching and hiring reduce spending attributed to off-phone activities while improving the key metrics that matter most to you. With Knowlagent, you can optimize frontline performance faster and more affordably than ever before. For more information on how you can spend less and get better with Knowlagent, call 888-566-9457 or visit us online at


1. McConnell, M (2007). Executive insight: Multi-sourcing. Retrieved December, 2008, from 2. McConnell, M (2007). The true cost of attrition. Retrieved December, 2008, from 3. Qaqish, D, & Lucas, D (2005). Coachpalooza: a call center focus group series summary report . Retrieved December 22, 2008, from 4. Dickie, J, & Trailer, B (2007). in the Call Center: Service + Sales . Retrieved December 22, 2008, from


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