3 Reasons Why Cost-Per-Contact Is the Most Misleading Metric

When I ask contact center leaders how they rationalize financial decisions, I consistently hear one key metric pop up “Cost-per-Contact.” And after much research I’ve learned it’s a good-looking measure. But… it’s a wolf in sheep’s clothing.


This is not about cost per customer. The power of that metric is in a different article.


In conversations I learned that cost-per-contact is used primarily for four reasons:


  • It’s straightforward and can be used for cost per minute, second, and whatever increment one likes.
  • Everyone can do the math — take the budget and divide by contacts, minutes, whatever, and voila!
  • Easy to express financial performance with the C-suite.
  • It’s well known — you can quickly add another column to your spreadsheet.


Below I explain why relying on cost-per-contact and its variations is in fact the root cause of many of the biggest problems in contact centers.


Reason #1 – It’s misleading

The first, and perhaps most important shortcoming of cost per contact is its misleading nature.


  • Every variable that went into running your contact center is included, eliminating any intelligent way to manage those variables, when they played a part, or how much.
  • It assumes 100% of budget went toward contacts. Would it surprise you learn that less than 40% of budget can go toward contacts?
  • It penalizes good performance. If you reward good work with compensation, then cost per contact goes up. You end up managing weighting instead of work.
  • It, like so many contact center metrics, is a one-dimensional measure full of hidden false positives and negatives that undermines good decision making.


Reason #2 – It’s an indicator not an answer

Because cost per contact is one-dimensional, it can only tell you what you did, but not how you did it, nor how well. You’re left with limited decisions that cannot overcome outside forces that can impact contact center performance such as call volumes, marketing campaigns, or product issues.


The article, Will Contact Centers Still Take Calls In 10 Years? spotlights something that you already know: inbound contacts are changing. Twenty years ago, call centers answered calls. Today, contact center agents interact with customers across multiple channels, such as messaging, phone, apps, text, email, social media, and the web.


Just because a channel can have a lower cost per contact does not mean it is less expensive, nor does it mean the company is creating more loyalty and repeat revenue.


It’s an omnichannel world and cost per contact is incapable of addressing these new differences.


Reason #3 – It Restricts Contact Center Performance

Cost per contact is measure that looks really good on paper, but is impossible to manage without driving up turnover, lowering morale, and creating performance inequalities that favor volume over quality.


  • In its darkest form, contact centers base staffing needs based on this measure, which has nothing to do with improving staff performance. In fact, this measure will falsely undermine good agents.
  • Cost per contact, minute, and second are destroyer of agent empowerment.
  • While cost per contact will express contact center performance in financial terms, it paints contact center leaders into a corner because it requires sacrificing performance for false dollars.


Would you like to go beyond traditional metrics, and optimize the real cost of contact center performance?

Too see how financially optimized your contact center is performing, WiserOwl can provide a view of your operation without impacting data privacy issues, in 30 days or less. Don’t waste your next big decision!