Metrics & KPIs
August 10, 2022

Understanding First Contact Resolution - The Leading CS KPI


FCR is the leading CS metric that not only incentivizes agents to provide outstanding and effective customer service which result in win-win-wins for client, agent, and brand, it also ensures a healthy culture within the CS organization. 

Although it is not always easy to measure, let alone improve, with the right systems and procedures in place FCR can be the blazing torch that leads both agents and customers to delightful and efficient interactions.

What is Customer Service FCR?

First Call or Contact Resolution reflects the percentage of inbound customer service inquiries that are resolved upon first interaction with the CS organization. 

The FCR metric originated over two decades ago in call centers and hence the original meaning of the ‘C’ was ‘call’. Today however, as omni-channel CS and self-serve support become ubiquitous, ‘C’ increasingly means ‘contact’ and FCR takes into account multiple channels available to customers. Because of this ‘confusion of Cs’, some now prefer the term One Contact Resolution (OCR).

Why is FCR important?

The reason FCR has become one of the most important CS metrics is because it is a single, easy to grasp indicator with direct correlation to quality and efficiency of service, and a strong influence on other fundamental CS and business metrics. Research consistently shows that FCR is the single most important KPI impacting satisfaction (CSAT), usually with a 1-to-1 correlation. Better FCR rates result in improved retention, reduced churn, higher Net Promoter Scores (NPR), and more referrals.

Source: SQM

Take a moment to let this sink in. With customer acquisition costs (CAC) and competition rising steadily, resolving issues better can make your existing customers cheaper to retain and new customers cheaper to obtain. Almost magic.

It's simple - solving customer pains is why almost every business was established. Besides creating the core product or service to do so, solving a customer's pains about the product or service is equally as important.

Improving FCR rates has a direct influence on the efficiency of business operations and costs, too. Low FCR means more followup calls, requiring more agents. When multiple channels are available, low FCR will result in an unresolved or untrusting client opening multiple tickets for the same issue on different channels, straining the whole system. A high FCR on the other hand will result in efficient use of every agent’s time and increased organizational productivity. 

Interestingly, high FCR rates also influence employee satisfaction. Agents are (hopefully) passionate about helping clients, but if they can't help, whether individually or as a team, they will be frustrated by the lack of success and barraged by unhappy customers. That’s why empowering agents with intelligence, systems, and authority to resolve issues from start-to-finish is so important. Put differently, FCR is an indicator of how well you’ve trained and tooled your agents. 

And now for the icing on the FCR cake - profits. It turns out that when a customer call is resolved, it's easier to cross-sell; 20% percent easier, in fact. When your clients trust you to take care of them, their apprehension for further purchases is dissolved. 

At Interai, we have a gold standard - The Trifecta. If an agent manages to resolve on the first contact, mitigate a future issue, and perform a cross-sell - we’re golden, and the agent is commended and awarded for it.

Source: SQM

What’s a Good FCR and How to Calculate It?

For most industries, the average FCR is below 70%; scoring above 80% is considered ‘world-class’. 

In the multi-channel CX era, it is useful to measure overall FCR, or OCR, as well as measure FCR by contact type and per channel, gaining insight into how each channel performs. According to Statista’s 2021 survey of FCR by channel, ~63% of businesses in the US report a Live Telephone FCR under 50%, and ~88% of businesses report a Live Chat FCR under 50%. When looking at reasons for contact, inquiries and account maintenance have higher FCR rates, while claims and complaints have very low FCR rates. 

The FCR formula itself is straightforward and divides the amount of customer inquiries that were resolved on the first contact by all incoming tickets. The question you should ask yourself is: ‘how do I determine these two parameters?’

Some organizations distinguish between Net and Gross FCR. While Gross FCR divides by all incoming tickets, Net FCR will first reduce the tickets that ‘simply could not be resolved’ at the first agent. At Interai, we’re not fans of Net FCR. If an issue couldn’t be resolved at level one it means that we haven’t empowered or tooled our agent with the right intelligence and authority. No use kidding ourselves. 

When it comes to measuring FCR, there are numerous methods. Internal indicators include agent reporting or an automated count of tickets with ‘no repeat contact’ from the same customer ID within a given timeframe. The prevalent external method is customer reporting via survey. This is considered by CS leaders to be the real source-of-truth, after all, it's the customer who has to determine if their issue was resolved.

Combining FCR With Other Metrics

FCR is an important metric, but to gain non-trivial insights one needs to see the full picture. Within the context of other metrics the revelation power of FCR is compounded. In addition to CSAT, Retention Rates, Churn, and NPR, another customer service KPI to consider is Average Handling Time (AHT).

Low FCRs with Low AHTs usually means something is wrong–either with the product or with the CS–warranting further investigation. Beware, however, of the drawbacks of AHT. While AHT will incentivize your agents to have quicker calls, it is also likely to result in unsatisfactory service, repeat calls, and lower retention. Focusing more on FCR is a results driven approach that fosters a healthy organizational culture. 

A good CS intelligence layer will have a clear management dashboard that pools from all your back office systems to calculate and display the chosen KPIs in a way that delivers actionable insights.

The Top 5 Reasons for Low FCR Rates

As quality guru James Harrington says:‘If you can’t measure [it]... you can’t improve it”.  Once you have your FCR rates you’ll probably want to improve them. SQM defines three overarching problems that result in low FCR rates: bad policies or procedures (49%), agent errors (38%), and miscommunication by the customer (13%). 

Going deeper, these are the top 5 reasons experts cite for low FCR rates:

  1. Agent lacked data, knowledge, or authority to resolve
  2. Issue not resolved promptly or at all, so customer re-contacts to checks the status
  3. Long hold times and disconnections
  4. Complex IVR and chatbot menus
  5. Customer was turned over to 3rd party

From our perspective this is all great news! If 87% of low FCR is due to internal reasons, it is totally within our control to improve.

Improving FCR With Powerful Platforms and Empowered Agents

Technology is the backbone of every CS organization around which great agents with proper training operate. Your tech platforms should empower agents with insightful data, comprehensive client-specific knowledge, and optimal courses of action to help them resolve on the first strike.

To improve your customer service organization’s FCR - start by tracking it. Those who track FCR usually see a 1-10% FCR improvement which impacts their business as a whole. 

Then, empower CS teams with complete customer intelligence, real-time suggestions, and the authority to not just resolve but completely delight with personalized retention remedies. Make sure your platform provides agents with playbooks tailored to as many client-specific situations as possible, and the option to A/B test the performance of different plays. When great agents improvise, encourage them to standardize next best actions for these newfound outliers into your intelligence platform. 

Finally, constantly monitor and optimize omni-channel resolution. Efficient call routing systems and automated conversational bots should be able to lead users to intuitive self-serve portals for most tasks, and if needed - get them to the right agent who will solve their issues completely and quickly.

Not sure where to start? Interai can help. 

Book a demo today

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