Total cost to perform the processes "manage sales orders", "manage customer service requests/inquiries", and "manage customer complaints" per FTE that performs the process "manage sales orders" and the function "manage customer service"

This measure calculates total cost to perform the processes "manage sales orders", "manage customer service requests/inquiries" and "manage customer complaints" per FTEs for the process "manage sales orders" and the function "manage customer service". Total cost is the sum of personnel (compensation/benefits), systems (direct and/or allocated), overhead (direct and/or allocated), other internal, and outsourced costs. The Process "manage sales orders" includes [Taking, receiving, processing, and acknowledging new customer orders or amendments to outstanding customer orders. Monitoring status from order receipt to customer delivery/customer invoicing.]. The Process "manage customer service requests/inquiries" includes [Handling the requests and inquiries from customers that seek information regarding the organization's products/services. Obtain the customer requests online and by phone. Direct these requests to higher-level representatives. Approve requests, and respond to customers.]. The Process "manage customer complaints" includes [Obtaining customer complaints online or by phone. Direct these complaints to higher-level representatives as appropriate. Resolve them. Respond to customers.]. The Function "manage customer service" (10006) includes [Managing customers before and after the delivery of services. This includes developing and planning customer service practices with an eye on steering processes relating to inquiries after sales, feedback, warranties, and recalls. ]. This Cost Effectiveness measure is intended to help companies understand this cost expenditure related to the function "Manage Customer Service".

Benchmark Data

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Measure Category:
Cost Effectiveness
Measure Id:
105543
Total Sample Size:
364 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
Yes

Compute this Measure

Units for this measure are dollars.

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(Total cost to perform the process "manage sales orders" + Total cost to perform the processes "manage customer service requests/inquiries" and "manage customer complaints") / (Number of FTEs who perform the process "manage sales orders" + Number of FTEs who perform the customer service function)

Key Terms

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Process Cost Components

Total cost for a process, process group, or function consists of the following five components.

Internal/In-house operating cost consists of the first four components (personnel, systems, overhead, and other).

Personnel Cost

Personnel cost is the cost associated with personnel compensation and fringe benefits of employees (i.e., those classified as FTEs which includes both full-time and salaried/hourly employees) contributing to each respective process. Personnel cost should include all of the following costs.

Employee Compensation: Includes salaries and wages, bonuses, overtime and benefits.

Fringe: Includes contributions made towards the employees' government retirement fund, workers compensation, insurance plans, savings plans, pension funds/retirement plans, and stock purchase plans. This should also include special allowances, such as relocation expenses and car allowances.

Systems Cost

Systems costs include all expenses, paid or incurred, in conjunction with:
Computer hardware or computer software acquired by the organization or provided to the organization through service contracts.

Any related costs to process, service and maintain computer hardware or computer software. The costs of providing and maintaining services for each applicable process (e.g., computer system(s) processing (CPU) time, network/system communication charges, maintenance costs for applications and data storage). This includes the costs related to LANs, WANs, etc. This does not include one-time costs for major new systems developments/replacements. Consultant fees should not be included in depreciation of new system implementations. Include only those costs that occur more than six (6) months after implementation, as normal system maintenance costs. Any systems cost (e.g., maintenance) which is outsourced to a third party supplier should be captured in the separate cost category labeled outsourced cost.

Systems cost should include all salaries, overtime, employee benefits, bonuses or fees paid to full-time, part-time or temporary employees or independent contractors who perform services relating to computer hardware, computer software, processing or systems support.

Overhead Costs

For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.

Other Cost

Other costs are costs associated with the specified process, but not specifically covered in personnel cost, systems cost, overhead cost and outsourced cost in this questionnaire. These other costs include costs for supplies and office equipment, travel, training and seminars. Include the cost of telephones, except for that portion captured in systems cost.

External/Outsourced Cost

In determining outsourced cost, include the total cost of outsourcing all aspects of the specified process to a third-party supplier. Exclude one-time charges for any type of restructuring or reorganization. Outsourced costs should also include costs for intracompany outsourcing (i.e., reliance on a shared services center or other business entity).

FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

Cost Effectiveness

Cost effectiveness measures are those in which two related variables, one of which is the cost and one of which is the related outcome related to the expenditure are used to determine a particular metric value.

Median

The metric value which represents the 50th percentile of a peer group. This could also be communicated as the metric value where half of the peer group sample shows lower performance than the expressed metric value or half of the peer group sample shows higher performance than the expressed metric value.

Measure Scope

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Cross Industry (6.1.1)

  • 5.1 - Develop customer care/customer service strategy (10378) - Defining a plan that removes customer obstacles by gathering operational insight and competitive insight, as well as improving soft skills and forward resolution for employees. Develop customer segmentation. Define rules and regulations for customer service. Establish service levels for customers.
    • 5.1.1 - Develop customer service segmentation/prioritization (e.g., tiers) (10381) - Identifying and categorizing customer needs, and creating priority lists around them. Order and prioritize existing customers into segments. Adjust the customer service strategy accordingly. Analyze customer feedback.
      • 5.1.1.1 - Analyze existing customers (10384) - Analyzing existing customers needs and behaviors to enhance the customer experience as a whole. Use techniques such as behavior analysis, purchasing analysis, and ceiling price analysis.
      • 5.1.1.2 - Analyze feedback of customer needs (10385) - Adopting a feedback strategy by designing and implementing feedback forms--or through direct communication by phone or online. Comprehend the customer needs and behavior to help develop customer segmentation.
    • 5.1.2 - Define customer service policies and procedures (10382) - Outlining the framework of policies and methods for developing customer service strategy. Establish the rules and regulations that serve as a guideline for the customer service strategy. Take into account customer needs and behavior.
    • 5.1.3 - Establish service levels for customers (10383) - Determining and implementing levels for customer services. Benchmark certain customer service practices, and base customer level services on those benchmarks. Create a service level agreement, which is a negotiated agreement designed to create a common understanding about services, priorities, and responsibilities.
  • 5.2 - Plan and manage customer service operations (10379) - Planning and administering work force operations for customer service provision by taking care of customer services requests/inquiries, as well as the complaints.
    • 5.2.1 - Plan and manage customer service work force (10387) - Creating and administering the work force deployed for the customer service process. Forecast the customer work force needs to correctly schedule the work force. Track the utility of the work force deployed. Examine the interactions between the customer and customer service representatives to achieve high quality.
      • 5.2.1.1 - Forecast volume of customer service contacts (10390) - Projecting the total work force required to service customer service inquiries in order to effectively predict the volume of vendor contracts required. Estimate the number of the customer service contracts in an agreed-upon time frame in order to strategically maintain the work force necessitated for customer inquires. Analyze historical data around customer service contracts, the universe of customer inquiries, frequency of inquiries, servicing capability (per head) of the employees, etc.
      • 5.2.1.2 - Schedule customer service work force (10391) - Deploying the work force to manage customer service contracts. Create a systematic summary of the operations and service required, as well as the specific amount of work force that is to be deployed to the customer service operations. Ensure work force is directly proportional to the estimated forecast of customer service contracts.
      • 5.2.1.3 - Track work force utilization (10392) - Tracking the utilization of work force deployed for managing customer service operations. Monitor the utility of the work force deployed for managing customer service operations in order to evaluate its efficiency and cost effectiveness. Calculate the overall labor effectiveness, which measures the utility, performance, and quality of the work force.
      • 5.2.1.4 - Monitor and evaluate quality of customer interactions with customer service representatives (10393) - Tracking and determining the quality of interactions between the customer and customer representatives. Use electronic devices to record and effectively assess customer representatives' interactions.
    • 5.2.2 - Manage customer service requests/inquiries (10388) - Handling the requests and inquiries from customers that seek information regarding the organization's products/services. Obtain the customer requests online and by phone. Direct these requests to higher-level representatives. Approve requests, and respond to customers.
      • 5.2.2.1 - Receive customer requests/inquiries (10394) - Receiving requests for information from customers over multiple channels. Receive various requests and inquiries from customers regarding products/services. Accept these inquiries through channels such as email, telephone, online forms, text messages, social media, and in person. Supply dedicated equipment, systems, and personnel.
      • 5.2.2.2 - Route customer requests/inquiries (10395) - Routing customer inquiries in order to service them with the most apposite response. Direct customer inquires to the best suited personnel or system. Have a system or procedure capable of efficiently channeling these requests.
      • 5.2.2.3 - Respond to customer requests/inquiries (10396) - Responding to customer requests by email, conversation, interactive voice response, mail, etc. with the most appropriate reply. Instill a robust process to locate the right information for a solution to a customer's problem.
    • 5.2.3 - Manage customer complaints (10389) - Obtaining customer complaints online or by phone. Direct these complaints to higher-level representatives as appropriate. Resolve them. Respond to customers.
      • 5.2.3.1 - Receive customer complaints (10397) - Receiving any complaints or grievances from customers for the organization's products/services. Receive objections, complaints, and criticism from customers regarding products/services through email, telephone, online forms, text messages, social media, in person, etc. Dedicate equipment, systems, and personnel.
      • 5.2.3.2 - Route customer complaints (10398) - Routing any complaints or grievances received from customers in order to address them in the most appropriate manner. Direct complaints to the best suited personnel or system. Implement a system or procedure capable of efficiently channeling the various objections, complaints, and criticism from customers over the offerings provided by the organization.
      • 5.2.3.3 - Resolve customer complaints (10399) - Resolving any customer complaints that are deemed to be sound and reasonable. Redress any objections, grievances, and complaints received from customers regarding the offerings provided by the organization. Identify the legitimate complaints, where the situation needs to be appropriately corrected. Deploy personnel who can rectify the issue within a stipulated time frame.
      • 5.2.3.4 - Respond to customer complaints (10400) - Responding to customer complaints including all activities necessitated to service any objections, complaints, or grievances with the most appropriate reply. Source the right information to formulate a response that eases the discomfort being experienced by the customer. (Closely coordinate with Resolve customer complaints [10399].)
  • 5.3 - Measure and evaluate customer service operations (10380) - Calculating and assessing the operational activities of the customer service function. Evaluation is achieved through the customer requests/inquiries handling process, the customer complaint handling process, and product and services quality. Examine activities to ensure high levels of customer service.
    • 5.3.1 - Measure customer satisfaction with customer requests/inquiries handling (10401) - Calculating satisfaction levels of customers by effectively evaluating the process of handling requests/inquiries of customers. Effectively calculate the performance of customer-requests/inquiries handling and resolution. Obtain information regarding requests/inquiries handling and resolution through customer feedback. Use it to explore new ideas and opportunities for enhanced customer requests/inquiries handling and resolution process.
      • 5.3.1.1 - Gather and solicit post-sale customer feedback on products and services (10404) - Obtaining and procuring post- sale customer reviews or feedback on the products and services delivered. Design a customer feedback form, or communicate with the customer through the phone or online.
      • 5.3.1.2 - Solicit post-sale customer feedback on ad effectiveness (10405) - Obtaining and procuring post- sale customer reviews or feedback on ad effectiveness. Design a customer feedback form, or communicate with the customer through the phone or online.
      • 5.3.1.3 - Analyze product and service satisfaction data and identify improvement opportunities (10406) - Examining the information obtained through customer feedback collection. Determine complaint patterns in order to diagnose areas needing enhancement.
      • 5.3.1.4 - Provide customer feedback to product management on products and services (10407)
    • 5.3.2 - Measure customer satisfaction with customer-complaint handling and resolution (10402) - Measuring the satisfaction level of customers as pertains to how their complaints are handled and resolved. This process element requires the organization to estimate the customers level of fulfillment with the process reconciling their complaints and towards the objective of ensuring customer retention. The feedback received can be used to develop concepts for new opportunities to boost the level of customer satisfaction.
      • 5.3.2.1 - Solicit customer feedback on complaint handling and resolution (11236) - Requesting customer feedback on the process of handling and resolving customer complaints. Obtain information about the effectiveness and performance of the customer complaint handling process from the customers through various means (e.g., online and by phone).
      • 5.3.2.2 - Analyze customer complaint data and identify improvement opportunities (11237) - Examining the information obtained through handling and resolving complaints for development/improvement opportunities. Categorize the customer complaints data on the basis of speed, accuracy, courtesy, price, product choice, availability, hours, location, etc. Determine complaint patterns in order to diagnose areas needing enhancement.
    • 5.3.3 - Measure customer satisfaction with products and services (10403) - Calculating satisfaction levels of customers with products/services. Obtain customer feedback on products/services, as well as the effectiveness of the advertising campaigns. Examine this information to reach meaningful conclusions, which could then be used to enhance the customer service operations.
      • 5.3.3.1 - Gather and solicit post-sale customer feedback on products and services (11238) - Obtaining customer feedback/review on the quality and utility derived from the products/services after the sale is complete. Use techniques such as surveys, feedback boxes, and user activity and usability tests.
      • 5.3.3.2 - Solicit post-sale customer feedback on ad effectiveness (11239) - Assessing the influence of advertisements on purchasing behavior. Use techniques such as surveys and product recognition tests, questionnaires or feedback flyers, and toll-free numbers in order to encourage customer interaction after the sale.
      • 5.3.3.3 - Analyze product and service satisfaction data and identify improvement opportunities (11240) - Assessing the information collected on customer satisfaction levels with products/services in order to determine areas for improvement. Examine the data and information extracted from the customer feedback and reviews to measure the satisfaction levels of the customers. Identify opportunities that could enhance the customer satisfaction levels and the overall customer service strategy.
      • 5.3.3.4 - Provide customer feedback to product management on products and services (11241) - Providing feedback from customers on products/services to the product management team. Analyze information collected through Gather and solicit post-sale customer feedback on products/services [11238]. Share with the product management team for consideration while improving existing offerings or developing new products/services.