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Tuesday, May 24, 2011

How to Define/Measure Cost of Repeat Calls | THE RETENTION FACTOR

Rosanne D'Ausilio, Ph.D.
The Retention Factor with Rosanne D'Ausilio, Ph.D.

It’s a given that customer satisfaction is crucial to customer loyalty, positive word of mouth, and return on investment. First Call Resolution is and has been the #1 driver for customer satisfaction.

However, there is no standard definition. Could it be as simple as I make a call and get my issue resolved in that one call? Yes. Could it be I make a call and get transferred and the second person helps resolve my problem? Yes, in fact I only made the one call.

But what if I went to your website first, maybe even web chat and couldn’t get what I needed. Now I escalate it to a phone call. While I may be calling you for the first time I have actually used two touch points to get my issue resolved. Is that first call resolution? Maybe.

The bottom line is that it’s up to you as to how you define it. What’s important is that you are consistent in your definition, as well as your measurement. For instance, if you measure it starting today, one month, two months, or three months from now measure it again and benchmark against yourself. Notice the gaps and take action to remedy them.

A study recently released from CFI Group reports that (yet again) first call resolution (FCR) has the most impact on customer satisfaction, and therefore, their loyalty and likelihood to recommend. In this study, across all industries, almost a fifth of all callers hung up with their issue unresolved. Of those customers who didn’t have their issue resolved, 68% are at risk of defection: 43% said they’d definitely defect; 25% weren’t sure. Are you one of these statistics? I sure am.

Customer Relationship Metrics’ research reports that caller satisfaction ratings will be 35% to 45% lower when a second call is made on the same issue.

Repeat calls have a price. In the chart below, column #1 represents the # of calls made; column two is the percentage of problem calls, and the third column is the number of additional calls (beyond one) that are made using 200,000 calls per quarter as the example.

Formula for Repeat Calls

Based on 200,000 calls per quarter

# of Calls

% Problem Calls

# of Additional Calls

2 Calls


28K x 1 = 28,000

3 Calls


22K x 2 = 44,000

4 or More


16K x 3 = 48,000


120,000 x $5 cost per call = $600,000 per quarter or $2.4M Annually

Source: Dr. Jodie Monger, The CEO Refresher

In this example, 14% of the 200,000 calls per quarter are taking two calls to resolve an issue--thus one call beyond or 28,000 additional calls. Using $5 cost per call (for simplicity), that would mean $600,000 quarterly or $2.4 annually on repeat calls, not to mention what it costs to lose a customer.

It’s been reported that for every 1% improvement in FCR, you get 1% improvement in customer satisfaction. And, if a customer’s inquiry or problem were resolved in the first call, only 3% of those customers were at risk of going to a competitor.

As mentioned earlier, the challenge still exists today as to how to define and then measure FCR accurately, effectively, and efficiently. Some companies allow agents to determine if the customer’s issues were resolved on first contact. The problem here obviously is that it’s totally subjective.

Some centers use their QA (Quality Assurance) people to decide whether calls were resolved on first contact. This method is based on a random sampling and doesn’t reflect a complete picture.

Others use post-call surveys and directly ask the customer whether or not their issue was resolved on the first contact.

We believe the best way to determine the question of resolution is to ask your customer. Many technical programs, measurements, etc. will provide data that certainly could be useful for internal purposes, but please don’t forget the customer. It’s their perception that matters.

In Part II (next month) we’ll look at the Top 5 Ways to Achieve FCR, Human Errors, and Best Practices.

Look forward to your questions, comments, feedback, and suggestions for future topics.

ROSANNE D'AUSILIO, Ph.D., industrial psychologist, consultant, master trainer, bestselling author, executive coach, customer service expert, President of Human Technologies Global, specializes in human performance management providing needs analyses, instructional design, and customized, live customer service skills trainings. Also offered is agent/facilitator university certification through Purdue’s Center for Customer Driven Quality.

Known as 'the champion of the human,' she authors Wake Up Your Call Center: Humanize Your Interaction Hub, 4th ed, Customer Service and the Human Experience, Lay Your Cards on the Table: 52 Ways to Stack Your Personal Deck (includes 32-card deck of cards), How to Kick Your Customer Service Up A Notch: 101 Insider Tips, How to Kick Your Customer Service Up A Notch: ANOTHER 101 Insider Tips, The Expert’s Guide to Customer Service, The Expert’s Guide to Customer Service, Volume II, and her popular ‘tips’ newsletter on How To Kick Your Customer Service Up A Notch! at

For more information, please visit Rosanne's TNNWC Bio.

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