Warning: Revenue Leakage Caused by Attrition
March 5, 2014
While every contact center focuses on the costs associated with attrition, it is much harder to assess the revenue impact of attrition. Assessment of revenue impact reveals significant leakages linked to attrition. These are driven by efficient gaps between the existing customer service representative (CSR) and the replacement CSR. In their research on the business impact of contact center attrition Everest Group estimates a revenue leakage of 1.6 to 2.6% for an annualized attrition of 30 to 50%.
To explain this, let us assume a business/revenue contribution of US $ “x” made by a CSR in a working week at 100% efficiency. In a span of one year, the CSR is likely to make a total contribution of 46x (excluding vacation/leave period of six weeks in a year).
Considering the attrition event in week 0, the revenue contribution made by the exiting CSR starts tapering due to reducing efficiency while the efficiency of the replacement CSR picks up with a lag (assuming replacement with entry-level CSR). In the case of 500-person center, considering a US$1,000 revenue contribution per CSR in a week, the center is likely to lose revenue of US $0.3-0.6 million over a 46-week period in a year.
Taken across cost and revenue, the overall impact of attrition is potentially significant as it increases the cost base and decreases revenue contribution leading to a loss in net value-add to a business.
In the example in the Everest group study, in a 500-person center, the net cost impact is estimates to be US$ 0.5-1.3 million and a revenue contribution loss of US$0.4-0.6 million. Thus, the center could potentially have a loss of US $0.9-1.9 million in business value-add over a period of one year attributable directly to attrition.
Knowing that you always better manage that which you can measure, this article should prove helpful in better quantifying and, in turn, managing how attrition impacts the business outcomes of your contact center and customer experience operations.