Cost Center to Profit Center: Is Your Contact Center a Revenue Generator?

By Alexandra Warner, Platform28 on September 21, 2014

Platform28 first explored the role of the contact center in generating revenue in its recent blog, “Contact Center: Cost Center or Profit Center.” In this article, we offer a more in-depth analysis of this idea.

The widespread transitioning of a contact center from its historical designation as a cost center to a new label as a profit center is a movement that was predicted several years ago in a DMG Consulting article. The author cited that within ten years, the majority of service-oriented contact centers would become revenue-generating profit centers.

In 2014, what are the benefits and costs to this transition?

Benefits of this Shifting Perspective

Turning a contact center from a cost center to a profit center has one fairly obvious and significant benefit:  the generation of revenue. A desire to improve profitability is a driving force in many business undertakings, however, they tend to involve initial costs and risks. Transitioning a contact center from strictly providing customer service and support, to becoming a sales and marketing entity can generate significant income for the enterprise.

Actual bottom-line increases are not the only benefit of moving the contact center from cost center to profit center.  Increasingly, customer satisfaction is not just measured by managers looking at contact center key performance indicators. Customers evaluate products and service via social media and customer review websites, and their opinions count. A 2013 survey from BrightLocal indicated that 79 percent of consumers trust online reviews as much as personal recommendations (up from 72 percent in 2012). It is imperative, therefore, that all consumer interactions with contact center agents be treated as opportunities for increasing customer lifetime value. The customer is increasingly likely to share his or her appreciation of or disdain for the company in a very public manner.

There are costs and risks inherent in every transition. The decision to shift from a totally customer-service based contact center to a blended service/sales contact center has an obvious and significant risk: that it won’t work.  Obtaining corporate buy-in, updating metrics and technology to effectively measure these new accountabilities, hiring new employees, and retraining current agents may not bring about the desired results. Resources may be invested without the predicted return.

Is it reasonable to attempt the transition of a contact center from a cost center to a profit center? A good place to start to answer that question is by making a business case. Can the specific enterprise realize sufficient gains from making this transition?

According to the DMG Consulting paper mentioned earlier, a 10 to 15 percent increase in average call time is normal when agents are asked to shift from solely support functions to both providing support and initiating sales. What is a reasonable prediction then for sales success rate and revenue per sale? Is the increased cost associated with a lengthier average call handle time offset by increased revenue? The same article that suggested the aforementioned increase in call time also reported returns for some customer service organizations of 10 to 40 percent of new revenue generated. Determining these figures for the specific business in question provides step one in the flow chart of decision-making.

The adoption of agile, non-premise-based technology can play a role in facilitating the transition of the contact center from cost center to profit center at far less expense than might be anticipated. University of Michigan Ross School of Business Professor M.S. Krishnan offers this perspective in a 2012 interview about how American Express transitioned its contact centers from transactional to relationship-focused. “…Cloud computing allows companies to dramatically reduce capital requirements…It shifts how companies look at computing. It used to be about products.  You would buy products off the shelf. But now we get computing as an experience. You can buy on the go and pay only for what you consume. This reduces capital intensity and democratizes access to capability”

Getting Started

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If the case is made that shifting the contact center from a cost center to a profit center is a reasonable undertaking for the organization, the next step is to obtain the support of one or more key executives who understand and appreciate the innovation of the new contact center values and role, and are willing to commit to support this vision during the transition. Organizational change can be challenging, and having a champion from the upper tier is a good strategy.

A gradual transition, phasing into the new role as sales and not only support, is helpful to insure agent understanding of, and acceptance of their new roles.  In the new world of the contact center as a profit center, the agent’s task is threefold: hear the customer and resolve the issue that prompted the call; go deeper and probe for possible sales opportunities beyond the stated purpose of the call; and educate the customer to increase brand awareness and benefits.

Not all customer service agents are born salespeople.  The skill sets of customer service and sales have some overlap: both are people-intensive, involve listening and speaking, and require the ability to work toward providing solutions. However, because of the traditional emphasis on speed in resolving customer service requests, agents may need significant retraining to learn how to take the time to go deeper, and to hear beyond the spoken words to ferret out potential upsell and cross-sell opportunities. Product and service knowledge need to be up-to-the-minute accurate. Metrics need to broaden from an emphasis on rapid resolution, to include attempted sales, brand ambassadorship, and closed sales, among other indicators.  Incentives, too, need to be readjusted.  Rolling out these changes gradually, obtaining agent buy-in, and incentivizing each new metric can move the transition forward more rapidly, and with greater success.

Building customer relationships is another aspect of this new climate of revenue generation. A reasonable question is whether investing the time and training for this particular role is actually beneficial to the bottom line. It was noted earlier that consumers both share and widely consume opinions about companies via social media and customer review websites, which provide the ability to disseminate opinions rapidly.  Is “world-class customer service” enough of a force to be reasonably construed as a factor in the transition from cost to profit center?

Take note of the experience of American Express, documented in a case study by Michigan’s Professor Krishnan.  The study, entitled, “Customer Service at American Express:  A Relationship, Not a Transaction,” reviewed the decision by American Express Executive Vice President Jim Bush to move the vision and mission of the contact center from speedily resolving customers’ problems to viewing each customer contact as an opportunity to build a relationship and educate consumers about the benefits of their relationship with American Express. To do this, Bush recruited new employees from hospitality industries and initiated the revamping of training to be 70 percent working with customers, and 30 percent learning technology and script. The result? Customer satisfaction increased, card member spending increased, and, somewhat counter-intuitively, call handle time decreased.

The decision to evolve a contact center from a cost center to a profit center is a significant one. Introducing and/or expanding elements of sales, education, and promotion in the contact center are not without cost and risk. The benefits may outweigh the costs, especially in this age of media-savvy consumers whose opinions are a new hallmark in buyer decision-making. Making a business case, choosing the right technology and training, obtaining corporate buy-in, and rolling out the changes in phases can guide the decision-makers on the best course for the enterprise.

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Find Out More About Platform28

Platform28 offers an easily customizable Communications-as-a-Service (CaaS) solution to contact centers that need a comprehensive, highly scalable communications platform. Platform28 delivers a carrier-grade solution that includes multichannel Contact Center, PBX, IVR, Unified Messaging and network call routing. Our customers include mid-to-large enterprises, Tier1 carriers and government agencies, with 150,000 active users and 600,000,000 interactions monthly. The platform is completely customizable using open standards and web services, enabling tight integration with virtually any application. Platform28’s flexible delivery enables customers to meet the strictest security standards using distributed database and extraction layers. The interface has been re-engineered to deliver an intuitive user experience and complete business intelligence throughout the platform.  

Contact us at 800.861.6228 or moc.82mroftalpnull@ofni for more information.