The Question Isn’t Whether to Outsource Calls, It Is How Much

March 9, 2016 navisadmin

Most people have heard about the extremes that Zappos.com will go to for customers, sometimes even sending them to competitors if it means the customer is better served. In fact, the company’s mission is to provide the very best customer experience in the online retail world. As a result, Zappos staffs its call center 24 hours per day, 365 days each year, taking call center service to new heights. (Thus far the longest call has been 9 hours and 37 minutes, according to Business Insider.) The brand is so widely respected for customer service that brands of all kinds have tried to emulate their strategies for success.

While hospitality is a different ballgame, fundamentally the goal is the same: superlative customer experience. This requires that nowhere during the path to purchase or during the stay does customer experience fall short. Unfortunately, the emphasis around online bookings has left many in hospitality undertraining and understaffing call centers. When customer experience fails as early as the first call, business is lost and/or the brand is forever damaged. Even when guests choose to book after a long hold time or a less-than-stellar call, their impression of your service level is already established before they’ve set foot on property.

We know that not every business can be like Zappos. However, achieving the lowest level of call abandonment and the highest level of customer service means ensuring 24-hour call center coverage. That said, for most hotels and vacation rentals round-the-clock, in-house call staffing drives down agent occupancy levels (the percentage of time agents are actively engaged with reservations inquiries), which isn’t profitable. On the other hand, abandonment rates run too high without proper coverage, and high abandonment rates can take a significant toll on revenue. A NAVIS study on the impact of abandoned calls showed that over half of abandoned calls do not call back, and 40% book with a competitor.

The bottom line is that no lodging provider should be attempting to cover all of its call center volume. Even for big brands with 40,000+ call center employees, the last 5% of calls are outsourced.

The question then is not whether to outsource calls – but how much to defer?

The answer is in achieving the right balance of agent occupancy and call abandonment rates. The best-performing call centers are staffed to a threshold that maintains a low abandonment level with a desirable agent occupancy level. For instance, to achieve 6% abandonment, meaning only 6% of total calls are terminated before a conversation with an agent, a property might run at 45% agent occupancy, meaning agents are engaged with guests 45% of the time. For a smaller reservations team to reach 6% abandonment, staffing would be at a level that isn’t profitable because you would need enough staff available constantly that agent occupancy would suffer (i.e., you would need too many agents available at all times so that calls don’t sit on hold, which would lead to less overall time spent on profitable activities). However, if a small team is staffed according to desired agent occupancy, and calls above and beyond what they can handle are outsourced (to the point of achieving the ideal abandonment rate, that is), the team can function at its most profitable level.

It sounds tricky to determine the right balance, because it is. In fact, understanding ideal call center staff levels requires so many considerations that at NAVIS we built an algorithm that uses average stay values, conversion rates, labor costs, and more to determine the percentage of calls to outsource to maximize profitability and efficiency. When we plug in all of the variables, you get a clear picture of the optimal percentage of calls to outsource—all with the end goal, like that of Zappos—of ensuring the ideal customer experience.

For a complimentary assessment of the profitability of outsourcing a portion or all of your call center service, contact a NAVIS system consultant.

 

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