Operations Benchmarks & Best Practices
Barry: Contact center reps in the Northwest make, on average, $12 to $14 per hour. In the Midwest it's $7 to $9 per hour. If labor makes up 50 percent of your cost per order, as it does for most catalogers, your costs will be very different depending solely on where you're located. Looking at cost per call or cost per order without getting behind the data to the labor rates will mislead you.
CS: When in your view does benchmarking become particularly problematic?
Barry: Financial people often want to know ratios such as percent to net sales. These can be misleading if you make an incorrect comparison between companies of widely differing AOV, conventional vs. automated sortation in the warehouse, etc. It's better to focus on units of work: calls or e-mails answered, cost per order, etc. These can be compared between similar companies.
Kislik: And don't forget the service levels. Say I'm a b-to-b cataloger or I sell only high-end merchandise. I have a limited pool of customers. I can't afford to lose even one. It's better for me to be inefficient in some cases and spend more time on the phone or make more calls per sale, instead of losing a customer.
Barry: Other times that benchmarking becomes problematic are when you don't define the data clearly, when data comparability is not possible, or when your business changes dramatically, for example, when you expand your merchandise mix. Say you always sold apparel, but you started selling home decor, too. Your ratios will be different for both internal and external benchmarks.
Kislik: The most problematic part of benchmarking is when people go to sessions at a conference and hear a panel of three practitioners who share some data element. The conference attendee then goes home and says, "We need to get our x to this level that they quoted at the conference."
- Liz Kislik Associates LLC