Understanding Cost per Sale vs. Cost per Hour in the Teleservices Industry
By Arthur W. Conway, President, Chief Executive, DialAmerica
In today's highly cost-conscious business environment, companies seeking to utilize teleservices strategies to acquire or service customers are meticulously scrutinizing pricing from both on-shore and off-shore providers.
Regrettably, prospects particularly in procurement departments see teleservices as a commodity. Looking for ways to maximize service delivery, while stretching company dollars, they gravitate towards vendors that offer the lowest cost-per-hour for the time-input of teleservices agents.
While such an approach would seem to save money, in many cases it actually represents the antithesis of how teleservices cost-effectiveness should be evaluated. A far more meaningful approach is one that focuses on cost-per-sale for acquisition programs or cost-per-transaction for customer care programs. Cost-per-sale/acquisition the ultimate bottom line of a teleservices campaign is the metric that really matters. Why? Because it reflects the real, bottom line value a company receives not just the cost it incurs.
To make this point abundantly clear, the table below illustrates a hypothetical comparison of two teleservices vendors, each engaged in a customer acquisition campaign. Vendor A operates at $29 per hour for the time-input of its agents, while vendor B operates at $25 per hour, a $4.00 discount.
On the surface, vendor B's costs would appear to be more economical. However, vendor A operates more productively. Its agents are better trained, more closely supervised and more highly motivated. In addition, these agents are supported by stronger account management and better technology. While both vendors have the same sales budget, vendor A makes more sales per hour and requires fewer hours to hit goal. Thus, despite the fact that vendor A operates at a higher cost per hour, it achieves a substantially lower cost per sale, $36.71 vs. $47.16.
This comparison clearly demonstrates that a conventional, cost per hour mind set can mislead a prospect into making a bad business decision about the selection of a teleservices provider.
So if cost per sale is the metric that matters, how does one evaluate a vendor's ability to deliver it? Here are eight key criteria:
- Company Management. Does the company's management have deep experience in the teleservices industry and in serving the specific marketplace sectors of importance to the client?
- Infrastructure. Does the company have a disbursed network of fully-linked call centers, enabling it to efficiently manage/transfer loads as client needs and external circumstances (e.g. weather, natural disasters) dictate?
- Recruiting/Training. Does the company recruit high-potential individuals in each local call center market and train them rigorously?
- Supervision. Does the company supervise its agents closely, via a low supervisor to agent ratio of 1:10 to achieve maximum performance and productivity of each agent team?
- Technology Platform. Does the company employ industry-leading predictive dialing, database management/modeling, skill based routing and security capabilities to guide and support its agent teams?
- Account Management. Does the company have knowledgeable, accessible account managers who are experienced in designing highly effective campaigns and monitoring/adjusting them as necessary?
- Reporting. Does the company continuously provide timely, actionable online reports that provide transparency and clear decision-support?
- Compliance. Does the company have exceptionally ethical procedures and an impeccable record of compliance, assuring clients that they will not be subject to federal and state regulatory problems, citations and fines?
A teleservices company that meets the above criteria will, in all likelihood, be able to penetrate lists more deeply, conduct more productive agent conversations, convert more contacts into sales and ultimately deliver the metric that matters: the lowest cost per sale. At a time of great scrutiny of every business expense, what could be more important?