The 4 main impacts of a low FCR rate on customer relations
A low First Contact Resolution (FCR) rate can have significant consequences for customer relationships. Not only does it affect customer satisfaction, but it also leads to higher operational costs, lost sales opportunities and lower employee satisfaction.
In this article, we'll explore in detail the four main impacts of low FCR on your business and how to remedy them.
1. Decline in customer satisfaction and recommendations (CSAT & NPS)
According to Harvard Business Reviewreducing customer effort is the factor with the greatest impact on customer loyalty.
Accenture's studies point to the same conclusion. According to them, a poor customer experience is one of the main reasons why customers leave:
46% of customers change supplier after a bad experience with the company.
47% immediately ceased all relations with the company after a bad experience.
Looking more closely at the characteristics of bad experiences, Accenture found that the top three sources of customer dissatisfaction were
- Having to contact the company several times for the same reason (cited by 60% of respondents)
- Dealing with unpleasant or rude employees (56%)
- Failure to keep promises made at the time of purchase (55%)
We note that the primary reason for dissatisfaction is linked to the first-call resolution rate. This suggests that improving the FCR could have a positive impact on customer satisfaction.
This is demonstrated by a study conducted by SQM Group, which reveals thata 1% improvement in CRF leads to a 1% improvement in customer satisfaction. This clearly demonstrates the correlation between CRF and customer satisfaction.
Thus, the more calls required to resolve a problem, the more the customer's appreciation deteriorates. When resolution required 2 or more calls, the average NPS score drops to 35. Even more alarming: the NPS falls to -27 when a request has not resulted in a resolution.
Companies are aware of this, yet the sources of customer dissatisfaction linked to customer service have changed very little in recent years. Companies are struggling to improve their CRF.
These difficulties are highlighted by SQM Group, which points out that the average contact center has an FCR of 70%, i.e. 30% of customers who have to call again because their first call did not result in a resolution.
Despite these difficulties, 93% of call center customers expect a resolution on first contact.
2. Increase in operating costs
A high call-back rate not only impacts customer satisfaction, but also generates operational costs for the company.
To put it simply: a repeat customer call has to be handled by an advisor, which generates costs for each new contact (cost of calls) and for each handling by the dedicated department (cost of multiple handling). When problems are resolved in a single call, the company can be more efficient, and the agent can deal with the next caller.
The cost per call resolution is the cost per call x the average number of calls made to resolve a problem.
Let's take France and North America as examples:
In France, the average cost of a contact center call is €5.5, compared with €7.22 ($8.82) in North America.
On average, a customer has to call 1.4 times to get their query resolved over the phone. Contact centers in the top 5% worldwide achieve 82% First Call Resolution (FCR), meaning only 18% of customers have to call back to resolve their problem. This translates into an average of 1.1 calls per customer to obtain satisfaction.
The average cost per resolution is :
- 7.7€ (5.5€ x 1.4) in France
- versus €10.12 ($12.35) in North America
3. Lost sales opportunities, up-sell & cross-sell
All studies agree that any customer dissatisfaction has an impact on a company's sales. As far as call centers are concerned, a high FCR rate can impact a company's sales in several ways.
To measure these effects, we're going to take a look at a number of studies that provide an insight into the subject and the potential loss of sales revenue.
Customer loss
Oneof the direct effects of a high FCR rate is linked to churn and therefore, customer loyalty. SQM's FCR study highlights this link since, according to their research, 23% of customers faced with an unresolved first call express their intention to leave the brand.
Time spent on sales calls
Whenadvisors handle both service and sales calls, the time saved by improving FCR enables them to spend more time on sales (or high-value-added calls) and thus improve the company's bottom line.
In other words, spending more time on high value-added sales calls can improve your company's sales.
Conversely, a high FCR rate prevents advisors in charge of both inbound and sales calls from optimizing new customer acquisition and up-sell and cross-sell opportunities.
Additional services and cross-selling (up-sell & cross-sell)
In the event of a resolved query, the customer conversion rate for additional services increases by 20%.
SQM's research shows that the customer's needs must be resolved before the advisor moves on to any type of sales activity, if the results are to be optimized.
If the advisor cross-sells before the request or problem has been resolved, the customer usually becomes irritated and feels that the advisor is putting off his or her needs rather than responding to them.
As a result, customer relationships and trust are weakened. Hence the importance of improving the FCR, to improve customer loyalty and increase sales.
Acquiring new customers
We all know this quote:
"A satisfied customer tells 2, a dissatisfied customer tells 10″.
It's easy to understand that a dissatisfied customer shares his experience, and makes much more noise than a satisfied one.
Even if this is a little-documented dogma of customer relations, it helps to understand the effect of "word-of-mouth", here doubled by a multiplier coefficient of X5 for dissatisfied customers.
Except thattoday, "word-of-mouth" has been digitized, particularly on review sites, and can increase this multiplier by thousands for some companies.
88% of consumers consult reviews before deciding to buy a product or service. (Source: IFOP)
When these reviews are consulted by thousands of customers, the proportion of negative reviews influences consumer choice.
In the age of the "expert consumer", who is highly informed and increasingly pits brands against each other, almost all respondents (96%) emphasized the negative impact that e-reputation can have on their decision to buy a product from a particular brand.
In 66% of cases, unfavorable comments led them to postpone their purchase:
- Or by taking a further period of reflection (39%),
- Or by visiting a store to view the product directly (27%).
4. Decline in employee satisfaction (ESAT)
We have seen that the RCF is logically used to improve customer loyalty, cut costs and boost sales.
Unsurprisingly, the FCR is considered to be a measure of the efficiency with which your contact center carries out its activities in response to this triptych:
- Satisfaction
- Costs
- Sales
The quality of the customer experience also depends on the quality of your advisors' discourse. And the latter depends to a large extent on the quality of the training and motivation of your advisors.
For every 1% improvement in FCR, there can be a 1% to 5% improvement in employee satisfaction. (Source : SQM)
As the SQM Group study shows, there is a direct relationship between first call resolution (FCR) and employee satisfaction. Call centre agents who are skilled at resolving customer issues receive praise from management and positive feedback from customers, which builds their confidence and increases their job satisfaction.
Conversely, an advisor feels a very high level of stress when handling the second or third call from a customer whose problem has not been resolved during the first contact.
Conclusion
A low First Contact Resolution (FCR) rate can adversely affect many aspects of your business. It directly affects customer satisfaction (CSAT), increases operational costs, reduces sales opportunities and negatively impacts employee satisfaction (ESAT). These combined effects can compromise your company's overall performance and weaken your relationship with your customers.
The FCR should therefore be considered a key metric. Investing in its improvement is essential to optimizing your company's overall performance and strengthening your relationship with your customers.
