​The Value of Call Monitoring

question 58

Essay

​The Value of Call Monitoring
Comcast's call center had a problem with unresolved incidents.Customers who called in for technical help often had to make follow-up calls because the first recommended solution did not work.Since the call center staff were expected to handle an average of 10 calls per hour,Comcast suspected that calls were being terminated before the complaint had been resolved.As a possible solution,they hired supervisors to randomly listen into calls so as to better monitor inappropriate call terminations at a cost of $8,000 per month.This cut down the need for follow-up calls and,more importantly,increased customer retention.The number of customers who called in a complaint and would terminate services within three months was cut from 150 to 130.How large must the present value of a retained customer's contribution margin be for additional monitoring to be profitable?

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Definitions:

Work in Process Inventory

Goods and materials that are partially completed in the manufacturing process but not yet ready for sale.

FIFO Method

A inventory valuation method that assumes the first items purchased or produced are the first ones sold, standing for "First In, First Out."

Equivalent Unit

A measure used in cost accounting to represent a portion of a product in terms of a completed unit.

Cost Reconciliation

The process of analyzing and adjusting the differences between reported costs and actual costs, ensuring accuracy in financial reporting.