# How to Calculate the Financial Cost of Contact Centre Downtime

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Filed under - Industry Insights,

Justin Robbins of Talkdesk takes us through his preferred method of calculating the costs associated with contact centre downtime.

The financial cost of contact centre downtime can have a devastating impact on an organisation. From lost productivity to customer-recovery efforts, it’s important to understand and measure the costs of outages.

So, let’s define the various financial costs that are associated with outages and provide guidance on how to measure each in your contact centre.

A contact centre outage results in both direct and indirect financial costs. Direct costs can be tied to a specific object (like contact centre labour costs or the cost of producing your product), while indirect costs may be shared across departments (like utilities or business development costs). Understanding each of these costs and how they’re affected during an outage will enable contact centre leaders to articulate the importance of keeping contact centre operations up and running.

The calculations that we’re sharing today are not an exhaustive list but encompass the most common and accessible financial measures of contact centre downtime. While your organisation may have financial measures that go beyond what we’ve shared, the most accurate calculation of downtime’s financial impact will take all or most of these into consideration.

Revenue-to-contact ratio This calculates the potential lost revenue costs for contact centres that are revenue-generating or sales-oriented. It is calculated by multiplying the average revenue per contact by the average number of contacts in a given interval.

For example, a contact centre has a one-and-a-half-hour outage. It typically averages \$75 in revenue per contact and receives 1800 contacts per hour.

(1.5-hour outage) X (1800 contacts) X (\$75 average revenue per contact) = \$202,500 potential lost revenue

Direct lost productivity This is the dollar amount associated with the costs of staffing the contact centre during an outage that prevents employees from doing any work. Lost productivity costs should include wages, benefits or other compensation that employees will receive for being at work during the outage interval.

For example, a contact centre has a three-hour outage. 125 agents were clocked in during the three hours, each with an average total compensation of \$18 per hour.

(3-hour outage) X (125 agents) X (\$18 per hour) = \$6,750 direct lost productivity

Indirect lost productivity – In some instances, contact centre agents are utilised for other types of work during outages. Additionally, there is a non-productive amount of management time that occurs as a result of downtime. This calculates the cost of lost management time, as well as any agent inefficiencies that may occur.

For example, a contact centre has a one-hour outage. During that time, managers were only able to complete half of their scheduled tasks. There were four managers working, each earning an average total compensation of \$35 per hour.

(1-hour outage) X (4 managers) X (\$35 per hour) X (.5 unproductive time) = \$70 indirect lost productivity

Operational expenses  These expenses come in two forms: those which occur during an outage and those which occur as a result of catching up from an outage. The most common type of outage-related operational expense is the cost of the overtime or additional staffing that’s required to handle the temporary increase in contacts that occur when the contact centre resumes operation.

For example, a contact centre has a service level agreement (SLA) to answer 90% of calls within 20 seconds. Its typical inbound volume requires it to staff 50 agents on the phone. But, as a result of the outage, its inbound volume is almost double its average. It would need to pay increased staffing costs to ensure that it has the appropriate number of agents to maintain their SLA.

Justin Robbins

Lost revenue and customer-recovery costs – One of the greatest long-term financial risks of an outage is that it could cause potential customers to choose a competitor or make an existing customer think twice about their loyalty. Some of these costs can be calculated (such as decreases in monthly revenue or known expenses for compensating customers) while others are largely unknown. It’s virtually impossible to know everyone who tried to contact you and where they ended up going.

Author: Robyn Coppell

Published On: 12th Mar 2019