Hourly price to pay for US-based customer service representative?

Factual Questions
1

Hi - are there any publications or web sites that would tell me the average price paid to outsource customer service to a US-based company?

Basically, if I owned a small internet business in the US, and wanted to outsource the customer service aspect to a US-based company, what is a fair or average price to pay? This would be to answer pre-sales and post-sales customer questions, look up account information, etc.

I’m talking with a local marketing company about taking this on. My call volume is very low (maybe 3 - 4 calls a day, and each call might be 2 - 10 minutes). This would just take up a small part of someone’s day, and they are quoting $36/hour. They would round up to the next 5 minutes. So if someone took a 3 minute phone call, that would round up to 5 minutes, and I’d pay $3. I’m willing to pay them a premium because they are a short drive away and I think they will do good work, but $36/hour seems way above market, but I don’t have any data for what market cost is.

Are there any objective surveys or data I can point to in negotiating a fair rate? Thanks.

2

Try http://www.salary.com

3

Salary.com will tell you what the workers are being paid. But you’re not hiring workers, you’re paying a company for their services. Comparing rates is tricky, because you have to take into account exactly what service is being provided, their reliability, etc.

4

Former customer service manager here.

You can’t compare the per-minute cost of having a CSR offsite by an outsourcer with what you actually pay the CSR per minute. That is a substantial part of the cost, certainly, but it isn’t the only one.

Firstly, keep in mind that you’re only paying while the CSR is working, but in most situations, CSRs are paid hourly. While the company should be trying to make sure to minimize the time a CSR is free, this is an easier task than it sounds, and it becomes orders of magnitude more difficult the smaller the shop is (hence the local thing being relevant).

Let’s say you have a bunch of clients and you’re pooling their calls to all your agents. You get a total of 800-1000 calls per business day. Each agent can handle about 100 calls per day. Does that mean you need ten agents on any given day? Ha, no. You need a lot more than that because individual peaks can occur and phone calls are an immediate need; unless you want peak times when people will be waiting in queue for a representative for an hour until a dip occurs, you need to overstaff that number significantly.

This is harder than it sounds. Take for example the following. Let’s say for example the calls work out like this:

8 - 9am 200 calls
9 - 10am 100 calls
10-11am 50 calls
11am-noon 300 calls

These sorts of variances are not atypical based on normal differences throughout the day. Usually opening, lunchtime (depending on how local vs national your calls are) and before close are busiest. But even from there, if you drill down, you tend to get large variances, which are larger the smaller you are. For example, taking a part of one hour:

8-8:10am 50 calls
8:10am-8:20am 40 calls
8:20am-8:30am 20 calls

…and so on. Now, you can’t say, “well, you 5 CSRs will work for ten minutes, then 3 of you not work again until 8:40am…” It just doesn’t work that way. You have to pay them to be there and to handle all the peaks. In a small shop, that can be hard without a lot of offtime. If you’re lucky, you can find other things for them to do in their spare time - but the more skilled that labor is, the more you must pay them, as well. Unless you have some really basic tasks like envelope stuffing, a basic low-tier CSR probably isn’t qualified.

You also need to consider lots of overall costs. You have to pay for the CSR’s time off. You have to pay for a facility for them to work in and all of the overhead costs with that. You have to pay for management to oversee the workers. And so on.

All totaled I don’t think the quoted cost is unreasonable at all.

5

What you need to look at in terms of cost to value is generally based on two things:

  • Quality
  • Service level

I’m not sure how small the shop is that you’re dealing with but those are fairly standard. In certain cases you can have other metrics, e.g. in a sales line, number of calls vs conversions to sales, and that sort of thing, but it sounds like your needs are a bit more basic.

The first sounds simple but may not be. If they’re a small shop, do they have any type of quality procedures in mind? Are you going to tell them what is a good call vs a bad call? How will success vs failure be measured? Generally, the better quality of representative and the more strict the requirements, the more you pay.

Service level is usually stated in X% of calls answered in Y amount of time. For example, a service level might be 80% of calls answered in 20 seconds. The greater the percentage and the lower the time, the more expensive it is. Keep in mind that this is a significant way that customers will gauge you as a company. 80% of calls in 20 seconds might sound fine, but you’re presuming that most calls might just be slightly outside of that. What if 80% of calls are in 20 seconds, but 20% of calls include some callers waiting for 40 minutes? It’s all part of the consideration.

The higher that percentage gets, though, the more astronomical the cost becomes. For example, I knew someone who worked at OnStar. Because of the nature of their business, the service levels were extremely strict – something like 100% of calls answered within 10 seconds, or something like that. This was very expensive because they basically had to pay a lot of people to sit around and do nothing for substantial periods, just in case a peak occurred. They had to have elaborate systems in place for monitoring so that if they got close to maximum, other staff members (e.g. supervisors, trainers, managers, QA staff, people in other departments who were cross-trained) would drop what they were doing to man the phones to avoid missing that metric. Usually, missing a service metric had contractual consequences, often a loss of revenue or up to loss of a contract.

6

Anyway, to sum up, OP, to know if it’s a good price or not, I need to know what you’re getting. A “customer service representative” is practically meaningless; people working on the phone could be anywhere from minimum wage to $30+ per hour, depending on the complexity of tasks and the location (e.g. Boise is going to cost a lot less than Los Angeles). Knowing the average across the entire nation and across all skill sets is essentially meaningless data. You’re going to pay more per minute than a Fortune 100 company based on volume alone.

What specifically are they offering you? What do you know about them? Did they just mention an hourly rate and nothing else?

7

That doesn’t sound unfair to me. I work in a call center (customer service and claims service for an insurance company). People working in call centers generally get a benefits package on top of the hourly, since it’s a white collar job. My starting pay was 12.50 an hour and full benefits–2 years ago when the minimum wage in my area was (I think) $7.50. I get paid more than that now. A portion of the health benefits come out of my paychecks, of course, but the employer pays for a significant amount of them, too.

If you want to go “on the cheap” for this service, then hire your own phone person and pay them minimum wage (7.25 now) without benefits, 40 hours a week=$290 weekly regardless if you get 100 calls or zero, not counting the insurance liability of an added employee or the computer or the bathroom breaks or the phone. That’s generally a part of what you’re paying for when you outsource, as well as the power consumption and the physical hardware/real estate (cubicle, phone, computer) that you don’t have to worry about adding. The fact that they will bill in 5 minute increments sounds incredibly generous.