Why your contact centre cost model is broken - Interview with Robert Bradshaw of WiserOwl

0:00So welcome to the next edition of the Punk CX podcast. With me today I have Robert Bradshaw who is the president of Wiser Owl. Now, you might be asking yourself, what is Wiser Owl all about? Well, I don't know, but Robert's going to tell us at some point. But I can tell you that he is a contact center veteran, let's say, expert. and he's got some really, really interesting kind of views about measurements and analytics and how we might be measuring the wrong thing or costing out the kind of things going to be the wrong way. But anyway, Robert's going to help us kind of like decipher all of that and lay some, drop some knowledge on you that will make you think twice or again about your existing contact center operation.

0:42So welcome to the podcast, Robert. How are you doing? Adrian, thank you. And thank you for having me here today. I'm doing very well. Things are very positive and very upbeat. And being here is just another good reason for me to be happy. Excellent. Now, I know that we met on a CSG webinar a little while ago, and then we were talking subsequently. And I wonder if people are not familiar with Wiser Hour or yourself, I wonder if you give me a bit of a thumbnail sketch or a bit of a background on yourself and the work that you do before we can get cracking into some of the things that you can do.

1:20that you mentioned to me when we have to talk about that sort of stuff. Sure. I spent a career working in several industries and technology over about 30 years and started off in Fortune 100 and then pivoted over to working in some startups. And one of the organizations I worked with was focused on contact centers and specifically in procedural guidance. And that actually gave me an opportunity to work in contact centers that had maybe 30 agents, 50 agents, all the way up to 10 ,000 agents. Okay. And what came out of all of that experience was a general theme that the leadership, whenever it came down to having to make decisions.

2:11And when those decisions involved money, one of the things that they had expressed as sort of this blue sky wish was, boy, I really wish I could just have the actual dollars of this particular decision I'm trying to make here so I know what the savings are going to be or what it is I'm really dealing with because at some point I'm going to have to tee this up the ladder. And so that was really the inspiration for where Wiser Al came from and really what it is we do. And that is what Jerry talked about. We measure the actual contact center costs, what work actually costs in a contact center. But we do that from the ground up.

2:53And we do that by measuring activity by activity, contact by contact, instead of averaging a cost from the top down. Right. I mean, I think that's really important because for the longest time, you know, people, particularly in the service space, but also in the broader experience space have been, if you like, asked for the demonstrable kind of proof of the ROI that their initiatives are delivering. and i think what you're what you're going to tell us a bit about is it's given an insight in terms of how we could do that um you know based on the kind of how you how you go about it so when you explain this to me there was like a there was following the webinar that we did with csg um there was a whole bunch of things that you said which i thought that's super interesting and and i think people would would really benefit from from understanding some of those sort of things and so if i may i'd like to just kind of go through a few of them and so we can get you to unpick or unpack choose your kind of adjective or your verb or whatever the word is the um the the things that you're saying now the first one you said which i thought is almost a headline one is you said contact centers measure activity with extraordinary position uh precision but it cost it with an average that erases all of that precision.

4:17And I was a bit like, okay, help me, explain to me, what do you mean by that? Sure.

4:27Every ACD in the world, they track talk time, hold time, wrap up time. They do it second by second. And for folks out there who know, yeah, there are ACDs out there that'll track it down to the thousands of a second. Right. And so they have this hyper precision that so so what that does is it equips managers and leaders with with the knowledge of exactly what's happening in their operation on an activity perspective. But then when they take the cost and they try to put a cost to all of that, they take all of that work and and it and they take all of the money that's spent on the work and then they divide it by total contacts or other total numbers.

5:09So you end up with all of this hyper-precision on your activity represented by a single cost number. And what we talk about is, or what I had mentioned to you before was, you measure your work from the ground up and you cost it from the top down. Right. And that's where I see as, that's a challenge. Yeah, because like you say, you take the number of interactions and then your costs and you put it together and you get this kind of big, what you're saying is it's almost a bit of a blancmange sort of number, which actually doesn't tell you what gives you an average but as you say if you've got tools that that are measuring things with such precision you're not necessarily looking at individual kind of calls and maybe different kind of intents or different types of kind of like fixes that you're doing and trying to understand kind of like where your costs are going across the across the across the landscape and you're basically averaging it out and so you don't see the the spikes as it were the differences is that right yeah actually you know we talk about how does all this translate into a day-to-day picture?

6:14And the idea is that today, a single contact might touch an IVR, then a bot, then an agent, maybe a second agent. And every one of those costs something different. And a senior agent isn't a junior agent. A bot isn't an IVR. And yet an average cost folds all of that into a single figure. And so what does that translate into financially? Well, what that means is a leader can tell you their total cost to the dollar and can't tell you what any single piece of work actually costs. What's the Q cost? What about the channel? What about all the off-phone work? I read one industry study actually out of Europe that put the average contact center operation at about four different technologies.

7:03So there's a lot of complexity going on there, and yet it's all trying to be articulated to the business using a single number. Which is, if you don't get that clarity or that granularity, as it were, then when you propose sort of improvements to the system around trying to make, improve efficiency, whether it might be to your IVR or your bot or agent handling or whatever it might be, if you're always using an average cost number, then you're going to struggle to prove that ROI because you don't get that granularity. Is that fair? It is. And we all know, I think everybody is fully aware that AI is pretty much the event, if you want to call it, the boardroom level event that's really turned the lights on to this whole costing issue.

7:50And when you talk about averages, is an average cost made a lot of sense for contact centers and what they were built for. We all know contact centers largely started out as really a single channel with agents doing similar work at a similar cost. And so dividing your costs by your volume actually got you really close to being spot on. Nobody's ever been wrong to use it. The whole industry uses it and they use it for good reason. But what's changed, I think, and again, I think AI is what's flipped the lights on, but what's really been exposed is that it's the operation that's changed. We're multi-channel.

8:34We've got bots. We've got automation. Now we've got AI. We've got agents at genuinely different costs. Nothing is financially uniform anymore. And so what does that really mean? How do I explain that? And the answer is that really the complexity of the of the contact center has exceeded what that average cost was built to measure. And the irony is it's nobody's fault. There's no fault here. It's simply that the questions the business is now asking have changed faster than the answers. That's a really good point. I mean, so you say that the average cost is, as you say, it isn't wrong, but it was built for a time where it was contact centers were dealing with maybe one or maybe two channels.

9:23But now they're dealing with multiple channels and multiple different types of queries as people's products and service portfolios have expanded and their different types of customers have increased. And so, yeah, I think it's a really great point, the idea that the complexity of the operation has exceeded what this average cost measure was built to measure, in effect. So I think that's really interesting. but then the other thing that i wanted to to go on and ask you about is that you said that the contact center is the bellwether of the business i've always believed this i've always kind of believed that it's if you want to know when things kind of go wrong then you just need to go speak to or what's happening in your business you need to go speak to the contact center and you said like you know the first to know when products services or customer experience break down it's it's the contact center but without actual cost data it can only describe these problems in volume and handle time.

10:18Right. So I completely agree with the first part of it, what you were saying about that, that being the bellwether, but it's basically the value of having that extra fidelity on costs and its impact on the kind of the business. Yeah. So I think the bellwether part of a contact center, I think everyone can, especially everybody who works in a contact center near it, you know, everybody can see that, right? Everybody knows that whatever's going on, the contact center is going to hear it first. A product breaks, something confuses customers, an experience goes wrong. The phones know or the contact center knows before anybody's dashboard does.

10:58The thing is, is that knowing first is only worth something if the business acts on it. And the business doesn't act on volume and handle time. Those are the contact center's language, not the enterprises. The business acts on dollars. And so without this cost fidelity, the contact center is the first to know and the last to be heard. And so really what that means is the contact center can describe the problem with great precision, but it can't price it. Right. And gaining this financial fidelity is really, or gaining this financial precision is what the fidelity changes. And so I actually have a story if you'd like, I can give you a quick story.

11:43Sure. Go ahead. It's actually my favorite because it was wonderful to see the reaction in the room with senior leadership. But we had a situation, contact center sitting down with not only contact center leaders, but some of the C-suite. And the interesting thing was we were talking about the contact center and operations and all the metrics were green, right? Green dashboard, wonderful. The operation ran multiple brands. And the thing was their customers called a separate number for each brand. Right. And every call that was closed was a first call resolution. And it generally was. You know, customer called, handled, done.

12:22But what no metric was able to articulate to the business was seeing what that customer's journey was in total. Right. What would happen is a customer actually wanted to do business across more than one brand, and they would have to hang up and call another number. And what ended up happening was they would end up, say, a customer would make two calls, and they would sometimes end up talking to the very same agent they just hung up with to finish that. And so leadership was proudly walking around with these great FCR numbers on their brands without realizing how that translated to the customer.

13:02And then for the contact center, it was difficult for the contact center to articulate to the business, hey, this is what it means to you guys financially. And it was the cost data that connected the journey. And by showing them, hey, here's what these callbacks are costing the business. And when they could see the actual costs and we measured those for them, they ended up saying, hey, we need to let agents consolidate to a single call for everything, regardless of brand. And when they did that, call volume dropped. It actually dropped by almost 30%. Wow. Because they were able to complete what the customer needed in a single call.

13:45So instead of multiple calls. And because we had a lot of their data, going back on time, this cost savings and what was happening financially, it wasn't an estimate. We measure the actual before and after, the same way we measured everything else. And so what happened was engagement times, actually, seeing the call volume go down was fabulous. It didn't necessarily shorten their engagement. You're right. A call still was a call. And what was really great was they got more business done almost in the same handle time on fewer calls because they didn't have to re-identify the same person. and they didn't have to go through all the things you had to, but they could just get it all done.

14:29And so it was, boy, it was just such a great outcome. Leadership was thrilled. Contact center leadership was celebrated. It was fantastic. But the bellwether for them was that their metrics were accurate. But without the financials, they were also misleading. Right. And so that really was the moment for them. And I think that's what the cost fidelity really provides. It prices what the operations on numbers can't see, but it does it in dollars that the business can act on. Yeah, no, absolutely. And actually, that's the thing that moves the needle, as it were, when you get to that kind of senior level, right?

15:07Because if you actually start to talk about money saved or money kind of potentially kind of extra, money extra kind of potentially earned, then that starts to make people kind of pay, you know, set up and pay attention. but then you also went on to say that the this actual cost data that you're you're you're encouraging people to go and sort of you know to gather and calculate and and use that to make decisions solves two of the most important context center problems in the enterprise i mean which two problems are you referring to here you know the two biggest problems i think are the first one is today it's the ability to defend against i'm using the word defend it could be rationalize, right?

15:51It could be justify whichever word you want to put in there, but it's all about protecting or defending yourself against financial scrutiny. I think cost accountability is moving more toward contact center leaders. I know it's been in finance forever, but I think it's moving toward the contact center leadership. And so the AI, the ROI on AI or a budget defense or even staffing math, the questions that contact center leaders are being asked are becoming more and more of these precise financial questions. But the evidence that the contact center leaders are going to have to answer those questions was never built to survive that scrutiny.

16:30And of course, that average cost being exceeded by their complexity and actual cost evidence is the foundation to defending against that or justifying. And the second one is, speaking a financial language the enterprise trusts. When the contact center presents cost built the way finance builds cost from actual inputs, the CFOs and CIOs, they can recognize it. And I think that's how a cost center earns a seat at the table. It's not by claiming strategic value. It's by proving it with financial evidence the business understands and trusts. Yeah. And I think that's going to become increasingly important, as you say, because of the impact of AI and some of these operations, but also, I think, and not just because of the use of new tools and applications and the rise of automation, but also because how that technology is rewriting what work looks like in the contact center.

17:35And I think it will become increasingly important because that whole system requires new skills, new expertise, these kind of new patterns of time management and things depending where you deploy your time and and stuff and so having if you like that that clarity that granularity on those kind of costs and what it kind of looks like is is i think is going to be increasingly important particularly you know when we look at there are some leaders that often say well we can do that with kind of ai and it's almost like this almost like a dumb hammer where they go like oh that'll help us kind of reduce cost we can reduce headcount and everything else so you're like you've got to get to the point as you say to either justify or defend kind of decisions and really organize a reconfiguration kind of choices that we're kind of like kind of making and that's not done best with averages that's best done with kind of detail um and so i think that's kind of fair and i think that you've painted a i mean a really compelling kind of picture so people might be going oh yeah of course.

18:40But they go like, so what does that mean? Do I take a finance course? Or where do we start? What's the first thing they should be doing to get to that kind of point? Yeah, that's really good. I think a rather straightforward and uncomplicated, I think uncomplicated way that people can go about this is really before the next big decision comes to you, whether it's an, again, whether it's an AI business case or, you know, it's a staffing conversation or even budget defense, you know, ask yourself one question, you know, what does this work actually cost? But at the level I'm making the decision, right?

19:22So, you know, the AI business case, AI operates and can operate layers deep into a contact. So taking a average cost per contact is not the answer. It's at the level deep down into that contact where it's actually working. What did the work actually cost before I planned to do this? And if I'm going to do this, well, what does the work cost me now? So it's really not the average, but the actual cost. And I'm not trying to pitch anything here, but the uncomfortable discovery, I think most people are going to have if they're probably already thinking of it already is that almost nobody can answer that question.

20:03Right. But I think the encouraging message for everybody is that they already have the raw material. Yes. Answer the question. And the systems they already have, you have the data. You've got your ACD. You've got HR. You've got payroll. All the data you need to answer the question exists. It's just what's never been built is the cost side to match it. Yeah. I mean, and it doesn't necessarily, I'm sure you're probably not saying that you don't necessarily have to get to the point where you've got like 100 % accuracy or 100 % susceptibility on this, but you almost have to start down the road. as you say you've got all the kind of the all the all the ingredients are there right you've got you know what's the cost of the acd what's the cost of the ivr what's the cost of the kind of the bot what's the cost of the um of the the labor cost what's the cost of all the systems that support all that kind of labor and all these things so when you break it down when you break down an interaction you can start piecing all those things together it doesn't necessarily need to be 100 % accurate, but it'll be a step forward over in terms of kind of, as you say, to fidelity over kind of like what an average cost measure will give you.

21:15Right. Awesome. So I know you told me a story a bit before about what happened with one contact center. I mean, do you have some examples of some real work that you've done with taking this sort of approach, right? This kind of like actual cost state on what you've been able to do and to help me understand And one of the challenges that the brands that you worked with have faced and what they've done to overcome it and how they are benefiting and what sort of outcomes are that they're driving to kind of help them almost like earn that seat at the table and to defend and or justify kind of their decision just so we can bring that whole kind of the whole argument to life.

21:55So I could tell you about an engagement, right? Yeah, sure. Okay. So there was one engagement, I think, that maybe for our conversation today that really stands out. Okay. And that I learned the most was we had a contact center, about 120 agents. They're running multiple channels. They have voice, they've got digital, they've got off-phone work and all the work between the contacts. Their leadership, they already knew the cost of their business. but what they didn't know was they needed to know what was happening within each of those channels. Where were their shortcomings? What was the cost of a shortcoming?

22:40If they wanted to do something or make a fix or repair, how did that stack up and what was the financial impact on the business? The CFO wanted to know. The CFO wanted answers relative to their various brands and products and things that they did because they wanted to make sure that they were protecting margin and not just plastering a generalized average across everything without knowing if they were underwater. And so they wanted to, the contact center was really eager to want to try to gain that kind of precision to really know what was going on. And what they realized was, by working with us, was, yeah, they identified that we really are more complicated and what's happening is really more nuanced than what our averages can tell them.

23:28And what we ended up doing was we did. We built their actual costs. We started from the ground up. We started with every activity. We started with every contact, every agent, every resource, at its actual cost and its actual court of time. And it was pretty awesome. the effect was really almost immediate because the money now hadn't, I'm going to use the word that money now had an address. They could point exactly the spending. It turned out that the spend wasn't where the average implied it was. Everybody knows what their most heavily trafficked queue is, but even the amount of money that they thought was there wasn't really there.

24:14It wasn't the same. And what it turned out was that some of the work they thought was cheap turned out not to be. There was capacity they were paying for that wasn't reaching customers. And nobody could see that because that single average had folded everything that was going on into that one number and they couldn't unravel that or peel the layers back to really see where it was.

24:44And so worked through things and it was using the evidence that they were able to make the decisions and make changes. And what they did was they pulled more than$7 million out of operational costs. And they attributed about$3 million of that to being able to see exactly where the money was. But I want to be deliberate the way I'm saying that. We didn't save them the money. And again, we helped them with 3 million out of that 7 million. What happened was we showed them what was true. They were able to make the decisions now because they had that financial clarity. And so I think that was probably the biggest piece for them.

25:36So tell me, did the people that you were working with, did they have an idea or an inkling that what you were able to help them understand, but they didn't have the data to prove it? Or was the findings that you came up with, was it also a surprise for them as well? Because you know how sometimes people have got this intuitive understanding. They're like, oh, I think it's like this, but I don't know how to prove that because our numbers don't tell that story. and people are always a bit like, ah, what does the data tell? We're led by the data. And you're like going, well, I'm not so sure. And then you've been able to give them a different view and they're going, that's what I thought or felt was going on, but I didn't know how to prove it.

26:19I think what it did more than anything was, I think to your point, it supported some of their intuition. Right. And it also provided clarity on some things that did turn out to be genuine surprises. I remember there were, you know, as you look at this kind of insight and you're able to see it down to the, you know, to the individual agent's performance, they were, you know, they pointed that said, aha, I always knew that person was, you know, was really awesome. Right. And then there were others that they say, gosh, I always thought, I thought this person here was rather a middling performer or whatever, but it turned out they're really strong and they're really dedicated and they're really working hard with the customers.

27:03In my words, it took all of the activity metrics that they all knew so well, their quality, their CSAT, all those kinds of metrics. And having that financial answer underneath, it really strengthened or solidified the meaning of that. It's one thing to say that you've got a quality metric or performance metric that looks really great. But if you find out that you're only getting 30 cents on the dollar for that, but I've got another person who's got quality who's 70 cents on the dollar. Oh my gosh, that's what a big difference. So I think that's what it did was it just helped to shine a light, but it helped them to find out too, well, where should we be focusing?

27:43How can we be helping? How can we optimize? And I can show the business the financial outcomes. And that's really what led them to that savings. It was really interesting. That money that they saved, nobody was trying to hide it. The contact center wasn't trying to hide the money. You couldn't see it because the average, again, was folding it all in. And so it really helped them to identify what was really there. And it just turned out to be a fabulous story. I mean, we worked on them for six years. Wow. And after that initial engagement, it was just fabulous. I think the idea that you were part of a project that was able to help save or pull$7 million in cost savings out of a 120-seat operation, of which you were directly involved in facilitating$3 million of those costs.

28:42I mean, like 7 million out of a 120 seat kind of like contact center, that's a big deal. That's kind of a big chunk of cost sort of thing. It was. And I won't claim to know where the other four came from. I mean, that was their number. That was the number that they told me. And they told me what, you know, the amount of savings that we'd identified for them and what they attributed to us. And so that's why I want to be very clear to say that we didn't do 7 million. And we identified, we helped them to identify three. Yeah, no, that's kind of fair. But I do think it's that taking the approach, as you say, of folding that whole idea that this is not a new thing, but the contact center has, over recent years, come under increasing scrutiny because it's a big cost base, right?

29:34And it's been kind of like heavy with kind of like employees. and it always has become increasingly under scrutiny but then as enterprises and brands have realized that we need to invest in that, it's a big part of our broader customer experience. People are looking for, well, if I'm putting more money in, I want to understand what I'm getting out and then what you're highlighting is that the average measures that we've used don't quite cut it when you're thinking about having those conversations and so taking this actual cost approach and working from the ground up is a really interesting kind of like way of getting them closer to having those conversations or at least getting them involved in having those conversations and earning that seat at the table.

30:21So I think that's fascinating and I sort of applaud kind of the approach that you're taking and the success that you've kind of had and I would encourage people to go and check out the work that you do at WiseRow and just really think about some of this sort of stuff and how they can do that. but um that's sort of kind of what i wanted to do is almost to help you shine a light on that because i think it was really interesting but before we kind of go into some quick fire questions anything else that that that you'd like to add before i wrap up anything we've missed out um i want to just full disclosure uh you know i think it's important that uh Just to quickly explain that this look from the outside, this might look like a data exercise.