The impact of the call-back rate on customer relationship management
Consequences of a low FCR (First Contact Resolution) rate:
Satisfaction and recommendation (CSAT, NPS)
According to Harvard Business Reviewthe reduction of customer effort is the factor with the greatest impact on customer loyalty. Accenture's research paints the same picture.
According to Accenture a bad customer experience is one of the main reasons why customers leave. After a bad experience, 46% of customers decided to change supplier in 2017. And 47% immediately ceased any relationship with the concerned company. (Source: Accenture)
46% of customers change supplier after a bad experience with the company
47% have immediately stopped 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%);
- and failure to keep promises made at the time of purchase (55%).
It is noted that the primary reason for dissatisfaction is related to the first call resolution rate. It is therefore possible to think that customer satisfaction could benefit from FCR improvement. This is indeed demonstrated by a study conducted by SQM Group, which shows thata 1% improvement in FCR leads to a 1% improvement in customer satisfaction . This data clearly shows the correlations between FCR rate and customer satisfaction.
The more calls (non-FCR) required for the resolution, the worse the customer rating becomes. For example, when the resolution required 2 or more calls, the average NPS score drops to 35. More alarmingly, the NPS drops to -27 when a request did not result in a resolution.
Companies are aware of this, yet the sources of customer dissatisfaction related to customer service have changed very little over the past three years. Companies are struggling to improve their FCR. These difficulties are highlighted by the SQM Group, which points out that the average contact centre has an FCR rate of 70%, or 30% of customers who have to call again because their first call did not result in a resolution. Despite these difficulties that companies face, 93% of customers who call call centres expect a resolution on the first call. contact. (Source: SQM Group survey)
Operational costs
In addition to impacting on customer satisfaction, a high FCR rate results in operational costs for the company.
To put it simply: a repeated 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 one call, it allows the company to be more efficient, and the agent can take on the next caller.
To measure the operational cost of customer re-calls, we need to know the average cost of an incoming call. In France the average cost of a contact centre call is €5.5 (compared to €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.
1.4 callbacks on average per customer to get their query resolved by phone
1.1 callbacks on average per customer in the top 5% of contact centres worldwide
Contact centres that are part of the worldwide top 5% reach a first call resolution (FCR) rate of 82% first, or only 18% of customers who have to call back because their issue has not been resolved, an average of 1.1 calls per customer to achieve satisfaction.
The cost per call resolution is the cost per call x the average number of calls made to resolve a problem. Thus, the average cost per resolution is 7.7€ in France (Source: Batvoice) (5.5€ x 1.4) against 10.12€ ($12.35) in North America). (Source: SQM Group study)
Sales & Upsell
All studies agree that every customer dissatisfaction has an impact on a company's turnover. As far as call centres are concerned, a high FCR rate can impact a company's turnover in several ways.
In order to measure these effects, we will look at several studies that allow us to grasp the subject and the possible loss of sales.
The 4 shortfalls in sales
Customer loss
One of the direct effects of a high FCR rate is related to customer loss and therefore customer loyalty.SQM's FCR study highlights this link as according to their research, 23% of customers faced with an unresolved first call express their intention to leave the brand . (Source: SQM)
Time spent on sales calls
When advisors handle service and sales calls, the time saved by improving the FCR allows them to spend more time on sales (or high-value calls) and thus improve the company's turnover. To put it simply, spending more time on sales calls (high value calls) improves the company's turnover. Conversely, a high FCR rate prevents advisors in charge of both inbound and sales calls from optimising sales and upsell opportunities.
Additional services and cross-selling
When a customer's contact is resolved, it increases the customer's cross-sell acceptance rate by up to 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 they are to maximise their results. If the advisor cross-sells before the request or problem is resolved, the customer usually becomes irritated and feels that the organisation is pushing their needs rather than meeting the customer's needs. As a result, the relationship and trust of the customer is weakened. Hence the importance of improving the CRF, to improve customer loyalty and sales.
20%: this is the increase in the customer acceptance rate for additional services in case of a resolved query
In case of multiple calls for the same query (not FCR), the loss of profit, as we have just seen, can reach almost 20% of the customer's cross-selling acceptance rate according to the SQM Group study.
Acquisition of new customers
We're all familiar with those quotes: "a satisfied customer tells 2; a dissatisfied customer tells 10″ We can easily understand here that a dissatisfied customer shares his experience, and makes a lot more noise than a satisfied customer.
Even if this is a little-documented dogma of customer relations, it helps us to understand the effect of "word-of-mouth" here doubled by a multiplier coefficient of X5 for dissatisfied customers.
Except that today "word-of-mouth" has become digitalized, notably on review sites, and can increase this multiplier coefficient by thousands for certain companies. In fact, according to an IFOP study, 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 therefore influences consumer choice.
In the age of the "expert consumer", who is very well informed and increasingly pits brands against each other, almost all respondents (96%) highlight the negative impact that e-Reputation can have on their decision to buy a product from a particular brand: in 66% of cases, unfavourable comments lead them to postpone the purchase, either by taking more time to think about it (39%), or by going to a shop to see the product directly (27%)
Employee satisfaction (ESAT)
We have seen that FCR is logically used to improve customer retention, reduce costs and improve sales. Indeed, the more quickly and efficiently you can resolve customer problems, the more you will improve customer satisfaction and sales, and the more you will reduce your operational costs.
Not surprisingly, the FCR is seen as a measure of how effectively your contact centre is operating to meet the three pillars of satisfaction, cost and sales. The quality of the customer experience also depends on the quality of your advisors' speech. And the latter depends to a large extent on the quality of the training and motivation of the advisors.
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.
According to the SQM Group, for every 1% improvement in FCR, there can be a 1% to 5% improvement in employee satisfaction (ESAT). Contact centres with a high FCR rate tend to have a high ESAT. Conversely, contact centres with a low FCR rate tend to have a low ESAT. For example, the level of stress is very high for the advisor who handles the second or third call from a customer whose problem was not resolved during the first contact.
Increasing the FCR improves both ESAT and CSAT. When customer queries are consistently resolved at first contact, ESAT can increase significantly, especially for contact centres with low FCR. Most contact centre managers are aligned with the concept that a high ESAT can provide a high CSAT and a higher FCR. The opposite is also true since a high CSAT & FCR rate can generate a high ESAT
In a nutshell, the FCR metric should be considered a key metric as it influences the CSAT, cost, sales and ESAT indicators (Source: SQM).