How to Calculate Contact Center ROI

Customer service leaders and CX enthusiasts grapple with fundamental questions: What are our customers' true desires, and how can we meet those expectations with a cost-efficient approach that maximizes contact center ROI? These quandaries drive innovation in customer service. 

Recent technological strides, predominantly AI-driven, have revolutionized contact center operations and yielded powerful contact center intelligence. This, in turn, ensures a positive customer experience and contributes to improved ROI. However, despite these advancements, the challenge lies in calculating contact center ROI, a task often elusive and complex. Articulating these intricacies to the leadership team tends to raise more questions than answers. 

This blog delves into the nuances and significance of contact center ROI, examining the contributing factors to costs. Gain valuable insights into key strategies for optimizing contact center ROI. 

What is contact center ROI? 

Simply put, contact center ROI quantifies the financial returns derived from investments in a contact center. It is the gain or loss relative to the cost of running a contact center, including capital and operational expenses. These investments encompass a spectrum, spanning technology, telecommunication, integrations and the indispensable elements of training and consulting costs. Likewise, the gain factors in revenue impact as well as uptick in customer satisfaction, agent productivity and visibility share.  

While the straightforward nature of these investments is apparent in customer service, the calculation of contact center ROI proves to be a nuanced endeavor. The intricacies arise from the multitude of variables at play discussed above, introducing a layer of complexity that necessitates a thoughtful approach to measurement. 

Importance of contact center ROI 

When assessing contact center ROI, it's crucial to determine whether the returns justify the costs and how quickly you can recover your investment. 

Regularly evaluating your contact center's ROI is essential for effective budget management, identifying inefficiencies and managing risks. This assessment also plays a crucial role in justifying costs related to technology upgrades, staffing and making data-driven decisions for your company's sustained success. 

A relevant example is Microsoft, which strategically enhanced the contact center experience through AI-driven solutions and agent efficiency improvements. This initiative resulted in substantial savings exceeding $3 billion and a significant boost in customer retention across various industries. 

So, it’s essential to understand that contact center ROI is about achieving operational excellence, building customer loyalty and optimizing costs to ensure sustained success for your company. 

How to calculate contact center ROI 

When calculating contact center ROI, the fundamentals follow a straightforward and widely applicable formula.

Let's break it down with a practical example: 

• Revenue Gained: A $15,000 increase after implementing a new customer service platform. 
• Expenses: $10,000 for acquiring and implementing the platform. 

Now, plug these into the formula: 

ROI = ($15,000 - $10,000) / $10,000 x 100 
ROI = 50% 

In this scenario, your contact center's investment in the new platform yields a 50% ROI. Essentially, for every $1 spent, your organization gains $1.50, signaling a positive return on investment. 

But hold on — it's not as straightforward as it seems! 

When dealing with customer service software, quantifying direct gains can be tricky. The key lies in understanding the total investment cost, a factor we'll explore further in the next section.   

Investment costs in calculating contact center ROI

To attain a thorough grasp of contact center costs and effectively evaluate contact center ROI later, let's categorize the breakdown of expenses into two key categories: Capital Expenditure (CapEx) and Operational Expenditure (OpEx).  

 In addition, there could be associated costs categorized as either CapEx or OpEx, depending on the nature of the expenditure and the accounting policies of your organization. 

• Consulting fees: Costs associated with hiring external consultants for expertise in contact center setup, optimization or technology implementation. 
• Integration costs: Expenses related to integrating new technology or software with existing systems. 
• Licenses and subscriptions: These recurring fees, paid per user, cover essential expenses for ERP and contact center CRM. Additionally, they encompass agent salaries during peak hours, with costs varying based on seasonal demands. 
• Facilities upgrades: Investments in physical infrastructure improvements or upgrades beyond initial setup. 
• Human resources: Beyond agent costs, this category factors in the integral role of IT specialists. Their salaries contribute significantly to the seamless contact center management, making them a crucial part of your ongoing operational expenses. 

 Investment gains in calculating contact center ROI  

• Improved CLTV and retention rate 
  Satisfied customers tend to stay loyal, increasing customer lifetime value. You can further leverage cross-selling and upselling opportunities, providing a more robust financial return. Similarly, happy customers are more likely to refer others. Implementing customer referral programs can capitalize on this, directly impacting revenue and overall ROI. Bonus Read: Average Customer Retention Rate by Industry in 2023   
• Improved KPIs 
  Contact centers can directly influence CSAT scores by focusing on contact center metrics such as first-contact resolution and call abandonment rates. Higher satisfaction levels correlate with increased customer loyalty and positive business outcomes. Efficiently managed KPIs directly translate to streamlined contact center operations, reducing unnecessary costs and ensuring resources are utilized optimally, thus positively impacting ROI.   
• Cost reduction and savings 
  Beyond call routing, AI can be employed for predictive maintenance, contact center workforce optimization and customer self-service. These innovations contribute to substantial cost savings by minimizing downtime, enhancing efficiency and reducing the need for additional workforce.  

Good to know: Modern conversational AI platform is tailored to manage intricate scenarios, minimizing reliance on human agents. You can elevate your self-service rate by 150% through swift and personalized responses, diminishing average hold times and enhancing overall customer satisfaction.

• Increased employee retention and satisfaction 
  Investing in ongoing training and development opportunities boosts employee satisfaction and equips staff with the contact center agent skills needed to handle diverse customer interactions efficiently. Advanced technology fosters a positive work environment, making the job enjoyable and less stressful for employees. This, in turn, contributes to lower turnover rates and reduced recruitment costs.   
• Enhanced productivity and increased income 
  Moving to cloud-based contact center solutions reduces service costs and provides flexibility and scalability. This transition allows you to adapt swiftly to market changes, resulting in increased income and a positive impact on ROI. Must Read: The Financial Advantages of Migrating to a Cloud Contact Center Solution    

Things to consider while determining the ROI for a contact center  

Here are the key factors that you should consider while determining the contact center ROI:  

• Factor in technology lifespan 
  Remember that a more advanced contact center tech stack can reduce operating costs. Consider the lifespan of technologies and anticipate the potential need for upgrades or replacements. This foresight prevents unforeseen expenses and disruptions.  
• Tangible and intangible benefits 
  While financial metrics are essential, consider qualitative factors such as brand perception, customer experience and employee satisfaction. For instance, a new contact center solution improving customer response time by 20% leads to cost savings and enhances customer satisfaction. Similarly, implementing a work-from-home policy may result in better agent retention and performance in the long run despite having no direct monetary value.  
• Evaluate total cost of ownership (TCO) 
  Look beyond the initial investment. Consider ongoing operational costs, maintenance and any potential future upgrades. Understanding the total cost of ownership provides a more accurate representation of the investment's impact. 
• Account for implementation time 
  Acknowledge and communicate to the leadership team and stakeholders that the benefits of certain investments may take time. Some technologies or process improvements require time for implementation, adoption and results. Consider this timeline in your contact center ROI calculations. 
• Assess scalability  
  Choose scalable solutions to accommodate future growth or changes in customer demand. Scalability ensures that your contact center investments remain effective and cost-efficient in the long run.
• Select relevant metrics  
  Prioritize contact center metrics that align with your objectives. For example, metrics like net promoter score (NPS) or customer satisfaction become crucial if the goal is to enhance customer satisfaction.   

Do you know: Utilizing omnichannel survey software enables you to monitor customer satisfaction across all channels, encompassing 100% of conversations. Additionally, it seamlessly converts survey questions into conversational formats, automating their execution through bots to solicit feedback automatically.

• Consider external factors  
  Acknowledge external factors influencing ROI, such as market trends, regulatory changes or technological advancements. Anticipating and adapting to these factors is crucial for sustained success.

10 tips to enhance contact center ROI

 If you’re looking to get the most out of your contact center investment, there are a few key strategies that you can implement to maximize your contact center ROI.  

1. Implement advanced technologies

Implement contact center AI and automation for improving customer satisfaction, identifying inefficiencies, reducing costs and enhancing productivity. Similarly, customer interaction analytics help you understand your customer needs and respond quickly to changes.  

2. Invest in training and skill development

Keep the team sharp! Regularly invest in training and coaching programs for your agents. A well-trained crew not only nails customer interactions but also boosts your ROI. It's like having your A-team always ready for the customer satisfaction championship. 

Editor’s Pick: 10 Customer Service Coaching Tips to Supercharge Your Support Teams  

3. Give your customers a DIY option 

Save your agents for the best. Use self-service and automation for the rest. Integrate self-service options like chatbots and IVR to handle the usual stuff. It makes your team's life easier and saves you significant bucks – a win-win situation!   

4. Utilize omnichannel routing 

Maximize operational efficiency with the prowess of AI-driven omnichannel routing. Swiftly guide customers to resolutions, irrespective of the contact center channel, accelerating issue resolution. This not only delivers instant gratification but also streamlines workflow management, ensuring optimal agent utilization rates.

Here’s how it works: You can establish an omnichannel routing logic to seamlessly deploy agents across various channels boosting their utilization. Advanced omnichannel routing software identifies necessary skills for incoming queries and intelligently routes them to the most qualified agents, utilizing assignment strategies such as round-robin, quota-based distribution and identification of last engaged or least utilized agents.

5. Regularly update technology

Stay abreast of technological advancements and regularly update your contact center technology. This ensures that your operations remain efficient, secure and aligned with industry best practices.  

Speaking of latest technology: In partnership with OpenAI, Sprinklr AI+ seamlessly integrates human-like insight into every customer service interaction. It evaluates the tone of conversations, highlights key points and retrieves pertinent information from your help center. When addressing customer inquiries, you can communicate with confidence, assured in both your message and approach.    

6. Utilize analytics for continuous improvement 

Implement analytics and reporting tools to track and analyze customer interactions. Data-driven insights can highlight areas for improvement, allowing you to refine processes, enhance efficiency and consequently, improve ROI.  

Finance and insurance brand tackles a 110% surge in messages with the power of AI

Finance and insurance brand tackles a 110% surge in messages with the power of AI

7. Move from proactive to preventive support 

It involves not only understanding your customers' current sentiments but also anticipating future needs. With social listening, your brand gains invaluable insights into ongoing conversations about your products or services, along with expectations and sentiments.  

This proactive approach allows you to identify potential support issues and crisis situations before they escalate, enabling swift action by concerned teams. Moreover, it also serves as a preventative measure against opportunity costs associated with lost customers and leads. 

Quick Read: Tips for Creating a Proactive Customer Service Strategy 

8. Conduct regular performance reviews 

Regularly review the performance of your contact center using key customer service metrics. Identify areas for improvement with contact center analytics and implement strategic changes to optimize operations and enhance ROI continually.. 

9. Explore automation opportunities 

Automation reduces the burden of mundane tasks on your agents, freeing them up for more complex and high-value interactions. This increased productivity directly impacts efficiency, allowing your contact center to handle more tasks with the same or even fewer resources. 

Suggested Read: Maximizing Agent Efficiency: How Automation Can Benefit Contact Centers 

10. Optimize workforce management with regular performance audit  

Efficient workforce management ensures that resources are allocated where they're needed most. Meeting contact center KPIs helps in strategic resource allocation, avoiding overstaffing or underutilization. This optimization directly impacts operational costs, ensuring that every resource contributes to the overall efficiency of your contact center.  

Contact center ROI calculation need not be complicated  

As you delve into the intricacies of calculating contact center ROI, the path becomes clearer — complexity need not be the status quo. In a landscape crowded with disparate solutions, simplicity emerges as the hero. This is precisely where a unified contact center solution like Sprinklr Service steps in to untangle the web of intricacies. 

Say goodbye to multiple systems. Embrace easy cost management with optimal control over processes. Schedule a demo with our experts today and discover how Sprinklr Service transforms the game:  

• Unified platform: Streamline operations and consolidate diverse tools into a cohesive ecosystem, reducing costs and complexity.  
• Asynchronous conversations across 35+ channels: Unleash the power of conversations across diverse channels, reducing contact center operating costs and creating more upsell and cross-sell opportunities. 
• Sprinklr AI+: Experience a 50% faster response time and accelerated customer service. 

If demos aren't your thing and you prefer self-exploration, we've got you covered. Take a 30-day Free Trial to explore Sprinklr Service at your own pace.