First Contact Resolution Is the King of Customer Service Metrics: Here’s Why

First contact resolution (aka first call resolution), or FCR, might not be high on your list of call center metrics. Maybe you’ve never measured it. Or you’re not sure how to define it.

Regardless of your experience with FCR, or lack thereof, it’s time to make it a top priority for your performance management program.

Think of the last time you contacted a brand’s customer service department and the phone call, chat, or email exchange ended before your issue was resolved. What were you left to do? Contact the same brand channel again, or multiple channels? Vent on social media? Throw up your hands and switch brands for good?

This situation was no doubt frustrating for you, frustrating for the agent(s) you encountered, and costly for the brand. You can begin to imagine how a laser-like focus on FCR might have benefited all parties. A perfect 100% FCR rate isn’t possible, but if your customer service team strives for that ideal and continually measures against it, you’ll begin to see some amazing top- and bottom-line results.  

What Unresolved Customer Issues Are Costing You

“FCR is a critical indicator for determining how well your organization is serving the customer as well as how efficiently your operations are running. Both of these goals reflect your bottom line.”

–Raymond Stringham and Matt Cotter, Oracle

Many customer service organizations use high-level metrics such as NPS® to gauge the effectiveness of their performance management efforts. Both FCR and NPS have tremendous value for brands, but FCR is critical for two reasons.

First, customers’ repeated attempts to resolve issues drive up contact center costs. Say you have a team of 100 contact center agents fielding 50 calls per agent per day at a cost of $5.00 per call, for a total of 1.25 million contacts per year. If your FCR rate is 65% (the average FCR rate ranges from about 41% to 94%, with a 74% average across all industries), your agents are handling nearly 440,000 additional calls at an added annual cost of nearly $2.2 million.

A rising FCR rate makes the contact center more efficient, as fewer agents are needed to manage the same number of unique customer inquiries. In the example above, every 1% increase in FCR would equal $62,500 in annual savings. We’ve seen our own clients lower contact center costs significantly—and improve agent performance simultaneously—by shifting the focus of their performance management efforts to improving first contact resolution rates.

Second, customer satisfaction (CSAT) takes a huge hit each time a customer must call back get an issue resolved. This negatively impacts two big revenue drivers: sales opportunities through the contact center, and customer lifetime value.

When first call resolution fails, not only is a cross sell or upsell nearly impossible, but there’s a greater risk the customer will disengage from the brand, spend less over time, abandon the brand for good, and even steer potential customers away.

This graph, which includes data from a 2016 MetricNet global benchmarking study, reveals just how strong the FCR/CSAT correlation is.

Net first contact resolution vs customer satisfaction


Our Stella Connect clients have seen a similar correlation between first contact resolution and the star ratings their agents receive from customers.

Correlation between customer-directed star ratings and first contact resolution - stellaservice.com

Clearly, first contact resolution has big implications for brands. Given the operational and opportunity costs associated with low FCR rates, no customer service leader can afford to overlook this all-important customer service metric.

How Should First Contact Resolution Be Measured?

Calculating gross First Contact Resolution rate is easy: number of contacts initially resolved divided by the total number of customer contacts. Net FCR is a truer measure, however, because it accounts for contacts that can’t be resolved initially:

 

Number of contacts resolved initially


(All incoming contacts – contacts that can’t be resolved at level one)

 

Tracking first call resolution in the contact center can be a bit trickier. FCR is usually measured one of two ways: 1) an internal QA scorecard; or 2) a simple question on a customer survey (“Was your issue resolved?”).

While the QA approach involves a judgment on the brand’s part, the VoC approach relies on the customer’s view of whether an issue was resolved. This distinction is huge. Agents, managers, and QA reviewers might see or hear “case closed” even as frustrated customers continue their quest for answers or help.

Many of our Stella Connect clients include an FCR question as part of their real-time customer feedback requests. The advantages of this method (versus including the question in a traditional CSAT survey) are a response rate that’s 10 times higher and a “yes” or “no” within minutes of an interaction, making contact center performance management easier and more effective.

Improve First Contact Resolution and Save the Customer Relationship, All in Real Time

Knowing within minutes that a customer felt his or her issue wasn’t resolved allows contact center leaders to take immediate action. They can delve into call recordings, chat transcripts, and emails to understand why first contact resolution failed, and they can use micro-coaching to help agents course correct. Micro-coaching is by far the fastest, most effective way to drive up the FCR rate—and along with it, contact center cost savings and service-driven sales.

Collecting FCR responses immediately after service interactions also allows brands to quickly reach out to dissatisfied customers to make things right. This approach works very well for companies like Brooklinen (where agents get the first opportunity to save the customer relationship) as well as for brands with dedicated service recovery teams. Even when FCR fails, with timely feedback in hand, brands have the power to turn unhappy customers into outspoken brand advocates.