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Economics of call centers

Look at the numbers from ATT’s point of view. They have some 60 million customers, and the average customer calls with a question or complaint six to eight times per year. The average call costs about $1 per minute to handle, and lasts four to five minutes. That means that ATT, according to industry averages, must spend around $2 billion per year on call centers.

I got these estimates from P.V. Kannan, CEO of 24/7 Customer, a call center company based in Campbell, Ca.

The question it raises, which confronts lots of companies, is this: What’s the economic case for mistreating customers? The downside can be an explosion of call center traffic. That has a cost, which can be projected. It can also create a storm of bad publicity in blogs, Twitter, social networks, and in some cases the mainstream press.

But there’s opportunity. Companies like 24/7 analyze customer dynamics in call centers. They can estimate a customer’s income, and how sensitive that person is likely to be to a rate change. They monitor voices to gauge a selection of the callers’ emotional states. They know which people are likely to call 30 or 40 times a year, and they can calculate the return on investment for that caller. Often it’s negative.

Where’s this going? Companies are figuring out which customers to cozy up to and which ones to fire. In Kannan’s words: “Are you pissing off the right set of people?” A lot of the strategy in this drama revolves around call centers.

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