Cutting Contact Center Costs: Treat the Root Causes, Not Just the Symptoms
A senior executive recently voiced concerns about escalating costs in their contact center and the significant pressure this was placing on their bottom line. This is far from an isolated issue; many organizations face the same challenge. The common response is predictable: leadership directs the contact center team to identify efficiency improvements and reduce operational costs.
In most cases, contact center performance metrics emphasize resolution efficiency—first call resolution (FCR), average handle time (AHT)—and customer satisfaction. While optimizing these metrics is important, it often feels like leadership is focused on managing symptoms rather than curing the disease.
Typical strategies employed to reduce costs include leveraging offshore teams, expanding virtual assistants and AI-powered chatbots, and increasing reliance on interactive voice response (IVR) systems. These initiatives may offer short-term relief, but they fail to address the underlying causes driving the need for support in the first place. To make matters worse, these initiatives can be counterproductive, impacting customer loyalty and spend.
At a recent conference, Diane Magers, former CEO of the Customer Experience Professionals Association (CXPA), delivered a thought-provoking statement: “High costs in the contact center are the tax organizations pay for a mediocre product.” The reality is that customers reach out because they encounter friction—your product or service is not intuitive, seamless, or self-sufficient enough to meet their needs without assistance.
The cost isn’t just in the contact center. Every unnecessary contact presents risks to customer satisfaction, brand loyalty, and future revenue opportunities. Whether successfully resolved or not, these issues can drive customer churn, limit cross-selling potential, and stymie referrals.
Understanding the Drivers of Contact Volume
The reasons for a high volume of support contacts are varied but typically include:
Product Issues: Core functionalities may not be performing as expected.
Usability Challenges: Customers may struggle to find or use key features, despite available resources.
Feature Gaps: The product may lack functionality that customers expect or need.
Why Aren’t These Issues Addressed?
If resolving root causes can reduce costs and improve customer outcomes, why do organizations often settle for stopgap measures? Several factors are at play:
Lack of Clear Ownership: Frequently, no single senior executive is responsible for identifying and addressing these root causes across product, operations, and customer service teams.
Misaligned Cost-Benefit Analysis: Leadership may not fully grasp the long-term cost-benefit equation of addressing these issues. The initial investment required to improve the product or processes might seem high, but the downstream savings and revenue potential can be significant.
Short-Term Focus on Cost-Cutting: During periods of slow revenue growth, cost-cutting initiatives tend to be reactionary and blunt, rather than strategic. This limits the ability to address the deeper issues driving contact center costs.
A Strategic Path Forward
High contact center costs are often a signal of poor product-market fit or friction within the customer journey. Senior leadership teams must take a more proactive, strategic approach to solving this challenge. Regular analysis of contact center data should be part of a broader cost-benefit analysis, leading to one of three potential outcomes:
Fix the Product: Improve the product or related processes to deliver a more intuitive and seamless experience, reducing the need for customer support.
Refine the Target Market: Evaluate whether it is worth continuing to serve segments that drive disproportionate support costs. In some cases, it may make sense to eliminate certain customer segments from your focus.
Increase Operational Efficiency: If the cost drivers are not significant enough to warrant a product overhaul or market refinement, then further investment in efficiency improvements—like automation or outsourcing—may be justified.
By reframing the problem and focusing on root causes, organizations can turn a contact center from a cost center into a source of strategic value, enhancing both the customer experience and the bottom line. It's time to move beyond short-term fixes and recognize the win-win opportunity that lies in addressing the underlying drivers of contact center costs.