Top 5 Reasons to Improve First Contact Resolution
Since 1996, Service Quality Measurement (SQM) Group has been a leading North American contact center industry customer experience research, consulting, and performance awarding firm. In fact, SQM is viewed by the contact center industry as being the thought leader and the gold standard for measuring, benchmarking, and improving First Contact Resolution (FCR). Before I share the Top 5 Reasons to Improve FCR, I thought it would be helpful to show some of SQM’s Voice of the Customer (VoC) FCR research and share how we define and measure FCR and contact resolution. SQM’s VoC research shows that improving FCR remains a huge opportunity for the entire contact center industry. Furthermore, our research shows that for the average call center, 72% of calls are resolved on the first call, which means 28% of customers have to contact the organization back because their issue was not resolved on the first call. Of the 500 leading North American call centers SQM has conducted an FCR benchmarking study, only 5% of the call centers are at the world class FCR performance standard of 80% or higher.
When customers call a call center for most call reasons (e.g., customer service, account inquiries, orders, product information, reservation, sales and technical) they expect their call to be resolved on the first call. In most cases, customers expect to achieve FCR whether their contact reason is of low or high complexity no matter what contact channel they use. In addition, it does not matter if they are contacting their health insurance, bank, cable, or energy company, customers expect FCR. SQM’s research shows that 86% of customers expect that when they call a call center, their call will be resolved on the first call. Each time a customer has to call back to the call center to resolve an issue that was not resolved on the first call, Csat (top box survey response) drops, on average, 15%. In other words, if a customer calls a call center three times to resolve their issue, on average, Csat (top box response) will drop 30%.
It is SQM’s belief that a customer’s experience in using any contact channel should be measured by using the FCR metric. The FCR metric is just as important to customers using the web self-service, IVR self-service, and email contact channels as it is to customers using the call center contact channel. Using FCR as a common metric among the different contact channels can provide an accurate comparison of customer experience (CX) performance for each contact channel. The below chart shows FCR performance comparison for core contact channels. The FCR data shows that web self-service (76%) and IVR self-service (74%) contact channels had the highest FCR performance and the email (61%) contact channel had the lowest FCR performance. The main reason web self-service and IVR self-service contact channels have the highest FCR performance is the contact reasons (e.g., orders, status updates, payment) are lower in complexity compared to the contact reasons the call center and email contact channels handle. In most cases, the email contact channel handles the highest complexity of contact reasons for all contact channels and most customers who use this contact channel do so because it allows them to document their interaction. When an inquiry or problem is not resolved on the email, IVR self-service, or web self-service channels, most of those customers will phone the call center to resolve their issue. Therefore, the call center channel is the last line of defense for resolving an issue and, most importantly, retaining customers.
Contact Channel FCR Comparison
Defining and Measuring FCR and Contact Resolution
Most contact center managers struggle with defining and measuring FCR and contact resolution. The most common reason for this struggle is because they do not have a working definition and understanding of how to effectively measure FCR and contact resolution. At SQM, we define and measure FCR and contact resolution the same way for all core contact channels. Interestingly, many contact centers use internal FCR measurement methods such as quality assurance (QA) and repeat-call tracking technology, which can be good practices but are not best practices for defining and measuring FCR and contact resolution. SQM’s research shows that contact centers using internal FCR metrics report their FCR 10% to 20% higher than their VoC FCR performance. In the majority of cases, repeat-call tracking technology overstates the contact center’s FCR performance. Therefore, managers should not rely solely on internal FCR methods for defining and measuring FCR. Internal FCR measurement methods should be viewed as a supplement to VoC FCR measurement methods. A best practice for defining and measuring FCR and contact resolution is to let the customer be the judge of determining if their contact was resolved and how many contacts it took to resolve. After all, the customer’s opinion is what really matters most. So, with that in mind, defining and measuring VoC FCR and contact resolution are based on the following VoC survey methodology.
First Contact Resolution
The definition of VoC FCR is based on using a survey method. To be an FCR inquiry a customer answered ‘yes’ to the question, “Was your contact resolved?” and ‘one contact’ to the question, “How many contacts did you make to resolve your inquiry?”
VoC FCR world class standard is 80%
The measurement of VoC FCR is based on the number of surveyed customers who stated their contact was resolved using only one contact, divided by the total number of customers who were surveyed.
FCR measurement example: Based on survey results, the number of customers who stated their contact was resolved using only one contact (288) ÷ by the total number of customers who were surveyed (400) = 72% VoC FCR performance level
The definition of VoC contact resolution is based on using a survey method. To be a contact resolved inquiry a customer answered ‘yes’ to the question, “Was your contact resolved?”
Contact resolution world class standard is 95%
The measurement of VoC contact resolution is based on the number of surveyed customers who stated their contact was resolved, divided by the total number of customers who were surveyed. In some cases, customers had their inquiry resolved in one contact and in other cases, it may have taken two or more contacts to resolve their inquiry.
Contact resolution measurement example: Based on survey results, the number of customers who stated their contact was resolved (352) ÷ by the total number of customers who were surveyed (400) = 88% VoC contact resolution performance level
FCR Measurement Method Differences (Pros/Cons)
Below are the three most used FCR measurement method differences (pros and cons).
Repeat-call tracking technology - tracks whether a customer called back within a certain amount of days. Most contact centers use 5 or 30 days as their repeat-call standard. The pros of repeat-call technology method are that all or most calls are tracked and can provide accurate FCR trends and opportunities to improve FCR. The cons with this technology method are that some customers are calling back on a different issue or some customers may not call back even if their inquiry or problem was not resolved. Many customers who do not call back defected to the competition or chose to use another contact channel (e.g., website, email, chat) to resolve the inquiry or problem. The biggest cons with repeat-call tracking technology are that internal FCR is overinflated by 10% to 20% over external VoC surveying FCR reporting, and limited or no customer feedback is available to help improve CX.
Quality assurance - involves having an internal quality assurance (QA) analyst listen to and determine if the call was resolved and on the first call. One of the pros with the internal QA method is that the contact center analyst knows more than the customer on some specific call types as to whether their inquiry or problem was truly resolved. For instance, a QA analyst would be able to identify that an inquiry or problem was not resolved even though at the time of the call, the customer thought their inquiry or problem was resolved only to find out later that it was not. One of the cons with this measurement method is that it is the organization’s viewpoint, and not the customer’s viewpoint. After all, the customer’s viewpoint is what matters the most. In evaluating QA impact on FCR with over 100 leading North American contact centers, we have determined there is little or no positive impact on FCR performance. In fact, only 19% of CSRs showed a positive impact on FCR performance due to contact center QA evaluations.
Post-contact customer survey - a telephone, outbound IVR, or email survey is conducted within one business day of a customer contacting an organization. One of the pros with this method is that it is the customer’s viewpoint whether their contact reason was an FCR experience. The post-contact customer survey method is by far the most customer-centric FCR measure of the three most used FCR measurement methods because it truly represents the customer’s viewpoint. In addition, because this method uses customer feedback to determine FCR it is by far the most accurate method for measuring FCR, identifying, and providing FCR improvement insights. This FCR measurement method is highly correlated to Csat. In fact, for every 1% improvement in FCR there is a 1% improvement in Csat. However, one of the cons with this method is that it is the most customer intrusive method (e.g., calling a customer at dinner time or while they are driving). There is confusion about consumer dial-out laws such as national Do Not Call lists, Telemarketing Sales Rule, and the Telephone Consumer Protection Act (TCPA). For instance, most customers do not know the difference between telemarketing and market research, and the different rules that apply to each. Additionally, the TCPA restricts calls made to US mobile phones when express consent has not been given by the customer. However, the rules of the TCPA and compliance for express consent are unclear and can be difficult to consistently adhere to which makes it difficult for CX researchers and organizations to conduct surveys due to potential litigation issues.
Top 5 Reasons to Improve FCR
FCR is widely considered the only key performance metric that provides a balanced view (quality and cost) of a call center’s overall performance. The following are the top 5 reasons to improve first contact resolution:
- Reduce operating costs - for every 1% improvement in FCR, a call center reduces its operating costs by 1%. If a call center is performing at the FCR contact center industry average of 72%, it is important to understand that, potentially, 28% of customers will have to call back because their issue was not resolved on the first call. It is also important to note that for the contact center industry average, it takes 1.4 calls to resolve a customer’s inquiry or problem yet, for customers who do not achieve FCR, it takes on average 2.5 calls to resolve their call. This is an enormous opportunity to reduce a contact center’s operating costs as repeat calls represent 23% of the average contact center’s operating budget.
- Improve Csat - for every 1% improvement in FCR, there is a 1% improvement in Csat (top box response). Clearly, FCR is highly correlated to Csat. In fact, of all the contact center internal or external metrics, FCR is the metric with the highest correlation to Csat. The absence of FCR is the strongest driver of customer dissatisfaction. In fact, as previously mentioned, Csat (top box response) drops, on average, 15% every time a customer has to call back to get their initial call resolved. In other words, if a customer had to call in three times to get their call resolved, their Csat (top box response) would be 30% lower than a customer who had their call resolved on the first call.
- Improve Esat - for every 1% improvement in FCR there can be a 1% to 5% improvement in Esat (top box response). Contact centers with high FCR tend to have high Esat. Conversely, contact centers with low FCR tend to have low Esat. The level of stress is very high for the CSR who handles the second or third call from a customer whose issue was not resolved on the first call. Increasing FCR improves both Esat and Csat. The bottom line is that when customer calls are consistently resolved on the first call, Esat can increase substantially, especially for low FCR performing contact centers. Most contact center managers connect to the concept that high Esat can provide high Csat/FCR, but it also goes the other way in that high Csat/FCR can provide high Esat.
- Increase opportunities to sell - when a customer’s call is resolved, it increases the customer cross-selling acceptance rate by up to 20%. SQM’s research shows that the customer’s needs must be resolved before the CSR has earned the right to move on to any type of sales activity. If the CSR cross-sells before the inquiry or problem is resolved, the customer typically becomes irritated and feels that the organization is pushing its needs, rather than serving the customer’s needs. As a result, the fundamental customer relationship is undermined.
- Reduce customers at risk - only 2% of customers who have their call resolved on the first call expressed their intent not to continue to use the organization’s products and services as a result of their contact center CX. However, if the call is unresolved, 19% of customers expressed their intent not to continue to use the organization’s products and services as a result of their contact center CX. The cost of customer defections as a result of their contact center experience tends not to be understood by contact centers because it is not often measured. For many contact centers, retaining customers represents the biggest opportunity to add true value to their organization. Resolving calls is the key to reducing customers at risk.
If you are interested in learning more about how FCR can improve Csat, increase customer referrals, and retention, please contact SQM.