How to Evaluate the True Cost of Call Handling: A Data-Driven Approach for Founders

To make the decision-making process more quantitative, we can introduce metrics and calculations to assess the potential impact of handling customer calls in-house versus outsourcing them to a call handling service. Here are the same questions with a quantitative focus:

1. What is the current volume of customer inquiries or calls we’re handling?

• Quantitative Aspect: Track the number of inbound calls per day, week, or month. Calculate how many calls your team is able to handle effectively versus how many are missed or abandoned.
• Metrics:
  • Inbound Calls Per Month (A): Number of customer calls received each month.
  • Average Handling Time (AHT): Average duration of each call.
  • Missed Calls: Number of calls that go unanswered or abandoned.
  • Opportunity Loss: Estimate the revenue loss from missed opportunities (e.g., sales leads, service requests) based on historical conversion rates.
• Calculation:
  Opportunity Loss (%) = (Missed Calls / Total Calls) x Conversion Rate

2. Are we able to provide timely and personalized responses to every customer?

• Quantitative Aspect: Track your First Response Time (FRT) and First Call Resolution (FCR) metrics. These will give you a sense of whether you’re meeting customer expectations for timely, personalized service.
• Metrics:
  • Average Response Time (FRT): How long does it take for your team to pick up or respond to a call/email/chat?
  • First Call Resolution (FCR): Percentage of calls that are resolved in the first interaction.
• Calculation:
  FCR = (Number of Issues Resolved on First Call / Total Issues Raised) x 100

If FCR is low, outsourcing can help by improving efficiency with specialized call handling.

3. How does customer service impact our brand reputation?

• Quantitative Aspect: Use Net Promoter Score (NPS) or Customer Satisfaction (CSAT) scores to measure how customer service is affecting your reputation.
• Metrics:
  • CSAT Score: Average customer satisfaction rating after support interactions.
  • NPS Score: Likelihood of customers recommending your company based on service interactions.
• Calculation:
  NPS = (% Promoters – % Detractors)
  CSAT = (Sum of Customer Satisfaction Ratings / Total Responses) x 100

Lower CSAT or NPS could indicate that service quality is lacking, signaling that an external call handling service might improve these scores.

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4. Are we losing sales or business opportunities due to missed or neglected calls?

• Quantitative Aspect: Calculate the revenue loss due to missed or abandoned calls. Multiply missed calls by conversion rates to estimate lost opportunities.
• Metrics:
  • Missed Call Rate: Percentage of calls not answered.
  • Conversion Rate: Percentage of calls that convert into sales, service bookings, or other key outcomes.
• Calculation:
  Revenue Lost = Missed Calls x Conversion Rate x Average Sale Value

5. How are we currently managing after-hours or overflow calls?

• Quantitative Aspect: Track the number of calls received after hours or during busy times. Measure the impact of missing or delaying these calls.
• Metrics:
  • After-Hours Call Volume: Calls received outside regular hours.
  • Overflow Calls: Calls that cannot be handled during peak times.
• Calculation:
  Missed Opportunities from After-Hours = After-Hours Call Volume x Conversion Rate x Average Sale Value

6. Is our internal team capable of scaling with the growth of our business?

• Quantitative Aspect: Analyze growth trends in customer inquiries and calculate whether your internal team can scale. Compare this with the cost and capacity of outsourcing.
• Metrics:
  • Year-over-Year Growth in Call Volume (Y-o-Y): The percentage increase in inbound calls over the past year.
  • Employee Headcount: Number of customer service agents available to handle calls.
  • Cost per Call (In-house): Average cost to handle a single customer call internally (including salaries, software, etc.).
• Calculation:
  Scalability Gap = (Growth in Call Volume / Available Team Size) x 100
  Cost per Call (Outsourced) = Total Outsourced Call Handling Costs / Total Calls Handled

7. Do we have the right technology, processes, and people to efficiently manage call handling?

• Quantitative Aspect: Measure the Cost per Call (CPC) and compare the technology efficiency by tracking call resolution times and call abandonment rates.
• Metrics:
  • Call Abandonment Rate: Percentage of calls abandoned before they are answered.
  • Average Handling Time (AHT): The average time an agent spends on a call, including time spent researching or resolving issues.
• Calculation:
  CPC = Total Operating Costs / Total Number of Calls Handled
  Call Abandonment Rate = (Abandoned Calls / Total Incoming Calls) x 100

If these metrics indicate inefficiencies, it may be a sign that outsourcing could improve your call handling efficiency.

8. How much is customer service affecting our customer retention rate?

• Quantitative Aspect: Calculate how much churn is due to poor customer service. Track customer retention rates and correlate this with your service metrics.
• Metrics:
  • Churn Rate: Percentage of customers who stop doing business with you.
  • Retention Rate: Percentage of customers who continue using your services/products.
• Calculation:
  Churn Rate = (Number of Customers Lost / Total Customers) x 100
  Retention Rate = 100% – Churn Rate

A higher churn rate due to poor service can be mitigated with a more professional call handling service.

9. Can we afford the cost of providing in-house customer service at scale?

• Quantitative Aspect: Calculate the total costs of in-house customer service (salaries, benefits, technology, training) and compare that with the cost of outsourcing.
• Metrics:
  • Total In-House Customer Service Costs: Salaries, benefits, and technology costs.
  • Outsourced Call Handling Costs: Cost per call or fixed monthly costs for outsourcing.
• Calculation:
  In-house Costs per Year = (Salaries + Technology + Training + Overhead)
  Outsourced Service Costs per Year = (Cost per Call x Total Calls)

Compare both to assess the financial viability of in-house versus outsourced call handling.

10. Are we tracking key customer service metrics (e.g., response time, customer satisfaction, issue resolution)?

• Quantitative Aspect: Review the current performance against key customer service KPIs. Quantify the gaps and areas of improvement.
• Metrics:
  • Response Time: Average time to respond to customer inquiries.
  • Customer Satisfaction (CSAT) and First Call Resolution (FCR).
• Calculation:
  Average Response Time = Total Response Time / Total Number of Calls
  First Call Resolution = (Issues Resolved on First Call / Total Issues Raised) x 100

If response times are high or FCR is low, outsourcing may help by improving these metrics.

Also, Read: Mastering Customer Service Basics: The Little Things That Make a Big Difference

11. Will outsourcing call handling help us focus on core business activities?

• Quantitative Aspect: Track how much time your team spends on customer service tasks versus revenue-generating activities.
• Metrics:
  • Time Spent on Service Tasks: Number of hours spent by team members on customer support-related tasks.
  • Revenue-Generating Activities: Hours spent on activities directly related to sales, product development, or other business growth efforts.
• Calculation:
  Time Allocated to Service = (Total Hours Spent on Service Tasks / Total Work Hours) x 100
  Revenue-Generating Activities = (Total Hours Spent on Core Business Activities / Total Work Hours) x 100

Also, Read: Turning Criticism into Opportunity: How Negative Feedback Can Prevent Customer Churn

If customer service takes up a significant portion of your team’s time, outsourcing could free them up to focus on higher-priority activities.

12. How does our customer service align with our overall business goals and customer expectations?

• Quantitative Aspect: Compare your customer service outcomes (e.g., NPS, CSAT) with customer expectations, industry benchmarks, or business goals (e.g., sales, growth).
• Metrics:
  • Customer Expectations vs. Service Outcomes: Track whether customer satisfaction and service quality align with your business goals.
• Calculation:
  Service Alignment Index = (CSAT or NPS Score – Customer Expectations) / Customer Expectations

A misalignment could indicate that your customer service needs improvement, and outsourcing might be the right choice.

In conclusion, understanding the true impact of your call handling operations is crucial for any business aiming to enhance customer satisfaction, improve sales, and streamline operations. By quantifying key metrics such as missed opportunities, customer satisfaction, and cost efficiency, you can make more informed decisions about whether to handle calls in-house or outsource to a professional service. If you’re unsure where you stand, we encourage you to assess your current call handling metrics and compare them to industry standards. If you’re ready to optimize your customer experience and unlock more opportunities, feel free to reach out to us for expert guidance on how to implement a strategy that works best for your brand. Let us help you boost your service quality and scale your business effectively!