Can Adding Staff Improve the Bottom Line?

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Call centers in the travel business are taking a hard look at their bottom


lines. Budgets and operating expenses are closely scrutinized, and there is growingpressure from upper management to do more with less, including handling more calls with the same (or even less) staff. But while cutting staff expenses first may appear to have a positive impact on the bottom line (after all, it is your call center's largest single expense), cutting staff may actually save less than you think. In fact, adding staff can actually help improve the bottom line. Here's how.


Traditional methods of determining staff levels involve the use of Erlang staff modeling techniques to calculate the number needed to meet a service target. And while nine out of 10 call centers use this approach, there is another method of determining staff numbers worth considering for a travel call center that makes money from each call by booking a reservation.


Figuring out the optimal number of staff for a revenue-generating travel (or reservations) center involves simple cost calculations that take into account overall costs of providing different levels of service to pinpoint the combination that maximizes company profits. Consider the following economic components:


• Potential revenue. The average revenue per call multiplied by the number of calls forecast for the period.


• Staffing cost. Fully loaded staffing cost includes salary, benefits, supervision, equip-ment and overhead.


• Telephone cost. Average cost/hour of answering calls, including long-distance and local charges.


• Abandoned call cost. The potential revenue lost by calls abandoned due to excessively long hold times and not attempted again.


Once management has agreed to the value of these numbers, the exact number of staff required to maximize a travel call center's profitability can be determined. In optimizing the bottom line, you simply seek to balance the cost of adding staff with the increased revenue those staff will be able to generate. Up to a certain point, revenue generated by additional staff will exceed their additional cost. Beyond that number, the cost for additional staff will exceed revenue.


For example, let's assume the average value of a call is $50, and the center expects 300 calls in a peak hour. We also make the assumption that the fully loaded staff cost is $20 per hour, the cost of 800 service is 15 cents per minute ($9 per hour), and each call takes approximately four minutes to handle. The call center has traditionally staffed to meet a delay goal of no more than 30 seconds in queue.


A traditional approach to staffing would indicate that 24 people were needed to meet a 30-second average delay, resulting in an hourly net revenue of $13,568 (see chart). However, when the value of a call is $50, common sense indicates you should try to capture all calls. And indeed, by staffing to virtually eliminate hold time, the net revenue increases substantially, clearly warranting the additional staff. As shown in the chart, each addition in staff improves the speed of answer, thereby shortening the delay time, lowering telephone costs and reducing abandoned calls.


Clearly, in a call center where each call adds revenue to the bottom line, it pays to take time to consider staffing to the point at which net revenue (and therefore profitability) is maximized. This approach is particularly effective in helping to cost-justify additional staff, even during periods when hiring decisions are closely scrutinized.
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