Overview

Contact Center Economies of Scale

Call centers exist for one very important reason—it’s more economical for a large group of people to answer customer phone calls than smaller groups of individuals to answer those same calls.  For example, retailers or hoteliers often send the calls from their stores to call centers because it is cheaper (and often provides better service).  What’s the magic?  It’s the economies of scale.

Image A

Image A

Economies of scale are the savings that larger operations get as they spread their fixed costs (the call center infrastructure) over more and more output (calls answered).  Larger centers have lower costs per call than similar, smaller call centers.

A while ago, I put together an article on economies of scale for the Society for Workforce Planning Professionals where I developed some cool data on economies of scale.  I will recreate those graphs here.  The graph below shows the first step to determining the economies of scale.  Simply, we determine the number of staff required to hit service standards as volumes continually increase. In this case we determined the number of staff required using a discrete-event simulation model (the most accurate planning algorithm).  Note that the slope and intercept of the line will vary for every call center.

Image A demonstrates a classic economies of scale curve. The line looks as expected; as volumes increase, the number of staff required to answer the calls within the service level goal also increases.  Where the analysis gets interesting, however, is when we convert this graph into a graph where we track calls answered per agent.  In simple terms, we divide the agents required to hit service goals by the number of calls each agent answers.

Image B

Image B

In Image B, the curve shows us how productive each agent should be.  It’s interesting because it readily demonstrates the natural point where a contact center group is at maximum capacity.  In this example, with an average handle time of around 400 seconds, you run out of natural economies at 50,000 calls per week, or roughly 150 rear-ends-in-seats. I would have expected the number to be higher.

But there are also other forces at work in call centers. The graph in Image B explains the operational efficiencies we gain by growing bigger, but economies of scale are most often drawn to include the costs of running a center. High start-up costs will greatly increase the point at which economies of scale are exhausted.

Make sure you check out the webinar recording to learn more about how economies of scale can help you forecast.  Watch Now.

Let me know what you think!

C3 – IT’s Ticket to a Bigger Seat at the Table

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