The 4 main impacts of a low FCR rate on customer relations
A low First Call Resolution (FCR) rate can have significant consequences on the customer relationship. Not only does it affect customer satisfaction, but it also leads to higher operating costs, lost sales opportunities, and lower employee satisfaction.
In this article, we will explore in detail the four main impacts of a low FCR rate on your business and how to remedy them.
1. Decrease in customer satisfaction and recommendations (CSAT & NPS)
According to Harvard Business Review, reducing customer effort is the factor with the greatest impact on customer loyalty.
Accenture's studies highlight the same observation. According to them, a bad customer experience is one of the main reasons for customer churn:
46% of customers switch providers after a bad experience with the company.
47% immediately ended 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 impolite employees (56%)
- Failure to honor promises made during the purchase (55%)
It is noted that the primary reason for dissatisfaction is linked to the first call resolution rate. It can therefore be assumed that if the FCR is improved, customer satisfaction could benefit.
This is demonstrated by a study conducted by SQM Group, which reveals that a 1% improvement in FCR leads to a 1% improvement in customer satisfaction. This data clearly highlights the correlations between FCR and customer satisfaction.
Thus, the more calls it takes to resolve a problem, the more the customer's appreciation degrades. When resolution required 2 or more calls, the average NPS score drops to 35. More alarming: the NPS drops to -27 when a request has not resulted in a resolution.
Companies are aware of this, and yet the sources of customer dissatisfaction, linked to customer service, have changed very little in recent years. Companies are indeed struggling to improve their FCR.
These difficulties are highlighted by SQM Group, which points out that a contact center has an average First Call Resolution (FCR) rate of 70%, meaning 30% of customers have to call again because their first call did not resolve the issue.
Despite these difficulties encountered by companies, 93% of customers who contact call centers expect a resolution on their first contact.
2. Increase in operational costs
A high call-back rate not only impacts customer satisfaction but also leads to operational costs for the company.
To put it simply: a customer call-back must be handled by an advisor, which generates costs with each new contact (call costs) and each handling by the dedicated service (multiple handling costs). When problems are resolved in a single call, the company becomes more efficient, and the agent can handle the next caller.
The cost of resolving a customer problem (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 call in a contact center is €5.5, compared to €7.22 ($8.82) in North America.
On average, a customer has to call 1.4 times to have their request resolved by telephone. The contact centers in the world's top 5% achieve 82% First Call Resolution (FCR), meaning only 18% of customers have to call back to resolve their issue. This translates into an average of 1.1 calls per customer to achieve satisfaction.
Thus, the average cost per resolution is:
- €7.7 (€5.5 x 1.4) in France
- Versus €10.12 ($12.35) in North America
3. Losing sales, up-sell & cross-sell opportunities
All studies agree that every instance of customer dissatisfaction impacts a company's turnover. Regarding call centers, a high FCR rate can impact a company's turnover in several ways.
To measure these effects, we will examine several studies that allow us to grasp the subject and the potential shortfall in sales.
Customer churn
One of the direct effects of a high FCR rate is linked to churn and, therefore, customer loyalty. The SQM FCR study highlights this link, as, according to their studies, 23% of customers facing an unresolved first call express their intention to leave the brand.
Time spent on sales calls
When advisors handle service and sales calls, the time saved by improving FCR allows them to spend more time on sales (or high value-added calls), thus improving the company's turnover.
In other words, allocating more time to high value-added sales calls improves the company's turnover.
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)
If a request is resolved, 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 one wishes to optimize results.
If the advisor cross-sells before the request or problem is resolved, the customer generally becomes irritated and feels that the advisor is pushing aside their needs instead of addressing them.
As a result, the customer's relationship and trust are weakened. Hence the importance of improving FCR, to improve customer loyalty and increase sales.
New customer acquisition
We all know the saying:
“A satisfied customer tells 2 people, a dissatisfied customer tells 10.”
It's easy to understand that a dissatisfied customer shares their experience and makes much more noise than a satisfied customer.
Even if it's a poorly documented customer relationship dogma, this helps to understand the effect of “word-of-mouth,” here doubled by a multiplying factor of X5 for dissatisfied customers.
Except that today, “word-of-mouth” has gone digital, particularly on review sites, and can increase this multiplying factor by the thousands for some companies.
88% of consumers consult reviews before deciding to purchase 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 very well informed and increasingly puts brands in competition, almost all respondents (96%) highlight the negative impact that e-reputation can have on their decision to purchase a product from a particular brand.
In 66% of cases, unfavorable comments lead them to postpone the purchase:
- Either by taking extra time to think about it (39%),
- Or by going to a store to see the product directly (27%).
4. Decrease in employee satisfaction (ESAT)
We have seen that FCR is logically used to improve customer loyalty, reduce costs and improve sales.
It is therefore not surprising that FCR is considered a measure of how effectively your contact center conducts its activities to meet this triptych:
- Satisfaction
- Costs
- Sales
The quality of the customer experience also depends on the quality of your advisors' speech. And the latter depends largely on the quality of training and motivation of the 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 experiences a very high level of stress when handling the second or third call from a customer whose problem was not resolved during the first contact.
Conclusion
A low First Contact Resolution (FCR) rate can have adverse consequences on several 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 the overall performance of your company and weaken the relationship with your customers.
FCR should therefore be considered a key metric. Investing in its improvement is essential to optimize your company's overall performance and strengthen the relationship with your customers.
