The Importance of Forecasting

Every contact center professional is faced with the challenge of providing top-notch customer service, while at the same time keeping labor costs at a minimum. The two most closely-watched metrics at high-performing contact centers are targeted service levels and operating budget (labor often accounts for as much as 90 percent of costs). Each business must determine the right balance between the competing needs of resources and priorities. It’s a classic supply-and-demand scenario, matching customer service demand – in the form of calls, webchats, emails, etc. – with the “just-right” supply of agents. Your business’ bottom line is directly impacted by the direct costs of hiring and employing your agents, but it is also influenced by client satisfaction, agent morale and other factors.

Your ability to accurately forecast can have a dramatic impact on everything from employee satisfaction to bottom line profitability.

When Demand is Greater than Supply
Understaffed conditions (when demand outpaces supply) can create a domino-effect on operations:

  • Callers wait longer for their calls to be answered, lowering service levels, which in turn can negatively impact customer retention.
  • In virtually every contact center environment, customers represent the revenue side of the profit equation. At the risk of stating the obvious, lost customers means lost revenues.
  • Another unintended consequence is poor agent morale leading to increased agent attrition.

 When Supply is Greater than Demand
On the other hand, overstaffed conditions (when supply outpaces demand) create their own problems. Although service levels are high, you are essentially wasting money on idle and non-productive agents. And, because agent salaries represent the majority of the variable cost component in a contact center, optimizing these costs has a direct impact on profits.

Finding the Balance
In most contact centers, operations fluctuate between over- or under-supply and over- or under-demand. The key to optimizing contact center performance is to find a balance between the two. Accurate forecasting is critical for managing a contact center’s a fluid environment. In order to achieve labor cost savings by balancing staffing needs against call volume expectations, many contact centers use the following common forecasting techniques:

  • Time-Series Technique: Time-series forecasting bases call volume predictions on historical data from the previous three years and involves plotting this information in a graph that displays call volumes for each year on the vertical axis, and the time measurement, such as months or weeks, on the horizontal axis. By doing this, you can see past call-volume patterns, which can then be used to make future predictions.
  • Averaging Forecasting Technique: This technique includes simple mathematical averaging, moving averages and weighted averaging and is considered by many to be the most accurate forecasting method.
  • Point-Estimate Technique: The simplest forecasting method, this assumes that future call volumes will exactly match what happened in the past, regardless of whether the days, weeks or months included in the historical data were typical or atypical. Since the point-estimate technique doesn’t account for events or trends that affected historical data, what actually occurs on any given day the can be dramatically different from the forecast prediction.
  • Intra-Day Forecasting: This technique compares the current day’s forecast to actual call volume and agent scheduling requirements, aggregated into 15-minute to 30-minute periods. It then allows managers to create what-if scenarios based on service-level objectives, and if necessary, alter the forecast to suit changing conditions.

Conclusion
Accurate forecasting makes it possible for you to more closely align contact center demand and supply, which leads to optimal cost and profit performance. ASK has many years of experience in helping clients achieve this balance in order to find achieve the “sweet spot” between managing labor costs and meeting customer service goals. To learn more about how ASK can help your company through critical accurate forecasting, schedule a free demo today.