"But Boss, It All Depends"

By Peter DeHaan

June/July 2009

People often contact me in search of information about medical call centers.  Whenever possible, I direct them to content on the 500-page AnswerStat Website or one of our other related online resources, such as StartACallCenter.com or StartAnAnsweringService.com.  These queries are the easy ones. 

However, often the inquisitor asks about benchmarking and statistical issues for medical call centers.  This is frequently precipitated after the "boss" comes back from a convention or hears about the stellar statistical achievements from another call center.  Then, be it via implication or decree, the message is simply, "Match these numbers."  Common targets are arbitrary occupancy rates or labor percentages, but these cannot and should not be readily transferred from one call center operation or another.  Consider the following:

Occupancy Rate: A frequent area of interest is ascertaining an acceptable agent occupancy rate.  (Agent occupancy is the percentage of time that an available agent is processing calls or information.)  There is a trade-off between occupancy rates and various customer service related metrics, making the optimum occupancy point hard to determine.  Although it may seem insolent, the correct answer to this question is, "It all depends." 

First, it depends on the form and function of the call center.  Centers that handle multiple contact points, such as phone calls and email, will realize a higher occupancy rate, since non-time-critical activities (processing email) can be done at slow times or between time-critical activities (answering calls).  Also, some centers fill agent idle time with ancillary support activities, such as data entry, transcription, callbacks, and so forth.  Again, this allows occupancy rates to increase. 

However, the size of the call center is the main variable, affecting both feasible and ideal occupancy rates.  I have heard of call center occupancy rates as low as the mid-twenties to as high as the mid-nineties and everywhere in between.  In specific circumstances, any of these results could be the appropriate occupancy rate.  Conversely, they could also be the wrong rate.  The key reason for this hinges on the primary reason for call centers in the first place, economies of scale.

The smallest staffed call center will have one person working per shift, 24/7.  There will be times when this solitary agent is extremely busy (peak daytime traffic) and other times when virtually no calls are arriving (the middle of the night).  As such, occupancy rates will vary greatly throughout the week, from quite low to moderately high. 

Also, there is a tendency for calls to bunch up.  Here I share my recent experience at the AnswerStat Magazine editorial office.  Since most of my interaction with readers, authors, and vendors is done via email, the phone does not ring too often.  I continue to be surprised at going several hours without a phone call, only to have two arrive at once.  I talk to the first caller, while the second goes to voicemail.  In a one-person call center, this second call would go into the queue and wait for the "next available agent."  With only one agent, that wait could be substantial.  Even though the occupancy rate will still be low, the service level has substantially eroded.

The occupancy rate of a one-person call center can be driven higher by driving more calls to it without increasing staffing.  As such, there will increasingly be callers in queue, hold times will mushroom, and the average answer time will skyrocket.  The only way for a solitary agent to realize a high occupancy rate is to have calls continuously in queue.

Although the answer to the occupancy question depends on many factors, small call centers can generally only achieve average occupancy rates in the mid-twenties to upper thirties.  Attempting to push rates higher will result in call center suicide: long hold times, high abandonment rates, disgruntled and complaining callers, and stressed-out agents.

As call centers get larger, efficiencies increase, and there are more agents available to handle the calls in queue more quickly.  Therefore, traffic spikes are easier to deal with, as there are more agents available to answer calls.  The midsize call center can experience occupancy rates hovering around 50%.

Larger call centers enjoy even greater economies of scale and can better respond to traffic peaks, keeping agents occupied a higher percentage of time while still maintaining an acceptable service level.  Occupancy rates in the seventies become a realistic goal.  However, it is the very large call centers, with hundreds of agents, that can experience call center nirvana.  They can provide acceptable service levels, even though their agents are chugging along at occupancy rates in the nineties.

All of this indicates, that as far as the ideal occupancy rate, I can correctly say, "It all depends."  I'm not being caviler, flippant, or smart-alecky, merely factually honest.

Labor Percentage: Another common area of interest is determining the appropriate percentage of expenses to be spent on labor.  Here, too, "it all depends," with call center size again being the primary variable.  Within the smallest of call centers, there is a potential for overhead to be low -- which is a good thing -- and therefore labor costs will be high.  (This is even more pronounced if the manager is involved in taking calls.)  Administrative and support tasks can be effectively handled between calls and at slow times.  As a result, all functions in the small call center can be highly integrated and efficient; this means low overhead.  Therefore, the percent of expenses spent on labor could therefore be upwards of 70% or more.

When call centers increase in size, a disproportional amount of effort and expense go to a quickly expanding corporate, management, and control structure.  Supervisors need to be added, customer service staff become necessary, a scheduling function is separately identified, and so on.  As a result, a much higher percentage of expenses become allocated to non-agent areas, with the percentage spent on agent labor correspondingly decreasing.  Mid-sized call centers can be the most inefficient overall, with agent labor percentages dropping below 50%.

For larger call centers, the support and organizational structure can be cost-effectively scaled to handle increased scope.  This resultantly pushes the percentage spent on agent labor up.  For the largest call centers experiencing massive economies of scale and great overall efficiencies, labor percentages can rise to the 70, 80, and even 90% mark.  This is because of all other costs being spread over more agents. 

Call Center Size: Given these two examples, one might conclude that larger call centers are ideal.  After all, with increased size comes increased call occupancy rates and greater efficiency (that is, increased labor percentages and correspondingly decreased overhead percentages).  There are, however, significant downsides experienced in the larger call center, including increased management and control issues, along with far greater complexity. 

Therefore, when asked how to determine the ideal call center size, just as ascertaining the ideal occupancy or labor rate, I can unequivocally state, "it all depends."

To read other articles written by Peter DeHaan, go to Vital Signs or check out his blog at blog.peterdehaan.com.  In addition to publishing AnswerStat and Connections Magazine, Peter is offers custom publishing and Internet publishing (www.MyArticleArchive.com).  He may be reached at dehaan@answerstat.com or www.PeterDeHaan.com.