Archive for August 2011

Cut Support Costs by Reducing Escalations

August 29, 2011

Three times in the last month I’ve had a conversation with a member company about escalation levels and cost per support level (Level 1, Level 2, etc.). I just wrote a quick research report on the topic that will be out in a few weeks, until then, I thought I’d share some of the data with a larger audience.

According to member surveys, incident cost increases at least 40% when escalated to Level 2, and 80% or more when escalated to Level 3. Where does that cost come from? Part of it is salary costs, and the other is just time involved. We began capturing salary costs in the benchmark last fall, so I have preliminary numbers I can share. These are averages for fully burdened employee costs by Level.

Average salary cost by Level or Tier are shown in Figure 1. Amounts are fully burdened costs for direct employees, not outsourced workers. Level 1 employees have an average salary cost of $43.58 per hour, with the average climbing $10 for Level 2, at $53.64 per hour. Level 3 workers earn an average of $58.27 per hour. Obviously there are B2B numbers. Salary costs for high volume, low complexity consumer call centers would be significantly lower.

Escalated incidents also cost more just because of the time involved. The longer it is open, the more time support techs spend on it, the higher the incident cost.

To reduce the number of issues escalated, support organizations should:

  1. Understand why issues are being escalated. Issues resolved by Level 2 or beyond should be classified to determine why it was not resolvable by Level 1. Typically this is one of two reasons: either the issue was too complex for a Level 1 tech to resolve, or the time required to research and resolve the issue was too long for a front line support tech, whose primary focus is productivity and keeping th inbound incidents.
  2. Identify which of the issues could be resolved by Level 1 with additional training and/or knowledgebase content. Though more senior technicians may be wary of documenting their expertise in the knowledgebase, if it allows front line techs to be able to resolve an issue faster, it lowers operational costs and improves the customer experience.
  3. Shift resources to Level 1. Over time, Level 1 should grow as a percent of overall staff, showing more issues are being resolved at a lower price point, as well as lower overall employee costs. As seen in Figure 2, currently 45% of support staff, across all TSIA members, is in Level 1. 31% of workers are in Level 2, with 24% in Level 3. Companies should target having at least 50% of employees in Level 1.

I’m hearing more these days about alternates to classing Level 1/2/3 organizations. Phil Verghis of the Verghis Group has done some interesting projects in this area, and I’m sure he will discuss his “no more tiers” thinking in the workshop he is doing at our Vegas TSW event in October.  The workshop, Transformational Leadership: Beyond Shiny Objects, will cover moving customers from a transaction-based-support model to a relationship-based one. For more information, check out the list of workshops.

If you have had a successful project to lower escalations, please chime in with your story! And as always, thanks for reading!