AIRS discussion document

I&R and “Cost per Call”

Driving an I&R on the basis of cost per call, is like running the fire department on the basis of cost per fire …

If the AcmeFire Department made 60runs last monthand only 30 this month, their cost per fire has increased … but taken alone, it doesn't really mean anything. Were the fires uniform in every aspect? Should they quietly set more small fires to lower their unit cost?

One of the simplest measurements of call center effectiveness is the basic concept of ‘cost per call’ – total operational costs divided by total calls answered.

  • If agency X answers 10,000 calls per year and its total operational budget is $200,000, its cost per call is $20
  • If agency Y answers 20,000 calls per year and its total operational budget is $200,000, then its cost per call is $10
  • Ergo, agency Y is “better” than agency X
  • Agency X manages to answer 15,000 calls the next year while reducing its costs to $150,000, and lowering its cost per call to $10
  • Ergo, agency X has “improved”

The concept has value but it is important not to overstate that value. Within the world of commercial call centers, it is acknowledged that effectiveness is reflected within a handful of key performance indicators, including but far from limited to, cost per call.

The reason for this is if cost per call was the key driver for call center managers then the blunt options for improving (i.e. lowering) that number are to reduce costs and/or to increase calls.

“Success” in this endeavor can come at a price that a company should not want to pay:

  • Customers are answered briskly and not listened to. They are unhappy with the service and unlikely to call back.
  • Re-work increases in all other divisions of the enterprise to cover mistakes made at the initial call center interaction.
  • Staffing decisions place emphasis on lower paid entry level staff and encourage more experienced and higher paid staff to leave – which results in more quality problems.

One, possibly apocryphal, anecdote from a major financial institution tells of a spot prize for the call center agent who answered the most calls that day. Competition was fierce, the calls mounting impressively and cost per call no doubt plummeting as the complaint calls began to arrive about customers experiencing continual hang-ups as soon as they said ‘hello’.

Within a commercial call center, total costs and total volume are important but so too is the quality of the call and the value accrued to the company through that quality. If sales are improved by 30% through increasing costs by 10% through training, bonus incentives and better technology; then an increased cost per call is more than justified.

Similarly, within I&R/2-1-1, a blanket effort to reduce cost per call will have a range of negative effects on the local human services infrastructure:

  • Assessments are not conducted properly so more people receive incorrect or incomplete referrals. They are unhappy with the service and unlikely to call back.
  • Other agencies receive more inappropriate calls and spend longer handling each one as they either refer the caller back to the I&R agency or attempt their own referrals without a proper resource database.
  • People with problems do not get the help they need until their situation escalates into a crisis – at a greatly enhanced cost to the entire human services system.

Taking 2 minutes rather than 90 seconds to answer an average call may increase the cost per call but the investment may be more than justified by the quality outcomes generated by those longer calls.

It is easy to fool a funder that you are doing a great job with a low cost per call, especially when the negative consequences are only reverberating in other organizations. Equally, pointing to your high cost per call is nothing to be proud of per se – it does not actually prove that the quality of your service is also high.

Within I&R, cost per call is one measurement but it must be factored in with other key performance indicators such as:

  • Number/percentage of callers who better understand their options as a result of their call.
  • Number/percentage of callers who follow-up on referrals provided.
  • Number/percentage of callers who receive the help they need as a result of their referrals.
  • Outreach into high risk communities.
  • Reports on those reasons why people did not receive the help they needed (service did not exist in community, service was not accessible because of transportation or operating hours, service was too costly, the waiting list was too long, etc.)
  • Number of calls monitored for quality assessment purposes.

Cost per call as a comparative measure

Accepting that cost per call should be a measurement but not the measurement of I&R effectiveness, still leaves the danger of stakeholders comparing apples to nachos.

Within most agencies, there are a dozen components of what could and could not be included within the total cost figure to allow the figures to be manipulated higher or lower – is it only the call center cost? What about the administrative cost and is that going to appear higher in an I&R agency than in an agency whereby I&R is one of several programs? What about other services that might be operated within the same call center – are their revenues omitted from the calculations? Should the cost of the resource database be included in that total and if so, would that include production of public directories – and what about instances where the database is maintained by another agency and the call center appears to have a lower cost because key functions have been separated?

Which barely brings us such variables as regional wage and rent differences, disparate telecommunication charges, the value of the volunteer component (where sometimes the strain of recruitment, training and oversight exceeds the ‘savings’ generated), the complexity of socio-economic issues portrayed in calls received from different communities, the effects of additional programs that might generate additional revenue but may or may not require disproportionate incremental costs, etc.

On a year-by-year basis for a particular organization, cost per call is an important factor providing the criteria for calculating it remains the same. If an agency has been doing it to compare their annual performance, then whatever method created should be followed – but it should not be blithely compared to the cost of another entity.

As a guide, the following would be a reasonable (although perhaps overly detailed) method to follow:

Total Calls Answered

  • This should not include abandoned calls, phantom calls, call transfers, emails or walk-ins.
  • If it is being calculated on an organizational basis, it will include calls to all services answered within the call center.
  • If it is being calculated on a program basis, it will only include the calls to the main call center program such as 2-1-1.

Total Costs

  • In a dedicated I&R organization calculating the figure on an organizational basis, this means total operational costs (including all administrative, resource database and auxiliary items).
  • In a dedicated I&R organization operating several programs and calculating the figure on a major program basis, this means total operational costs minus the revenue generated by the other call center programs and minus any clear costs directly related to the other programs. (Note that this is not completely logical as one is technically deducting an income from an expense).
  • In an organization which has other programs than I&R -- the number of full-time equivalents fully attached tothe I&R (call center, plus database, plus supervision/management) as a proportion to total FTEs should be used as the factor to assess the proportion of organizational staff and resources that are not dedicated to other distinct programs. So that ... if there are 60 people in an agency and 15 of them are part of 2-1-1 with 25 staff working in other distinct programs (e.g. campaign and allocation staff in a United Way; or volunteer recruitment staff in a blended I&R agency); then the 2-1-1 program comprises 25% (15/60) of the total cost for all other non-211 costs outside of the distinct programs (for example, 25% of the salaries/benefits of the 10 "non-aligned" people (such as ED, office staff, reception, payroll officer, HR person,IT people, public relations person, etc.). The 25% formula would then go to all other shared costs such ascomputers, rent, utilities, etc.