How to Start a Call Center

Part 1 - How to start a Call Center business - Background

Call centers are often outsourced by smaller businesses to meet their customer service needs without setting up a new department. Agents must be highly adaptable because call centers may handle multiple companies simultaneously. Call centers can either charge per call or per hour, which ‘bakes in’ the price of all overhead (wages, rents, equipment, etc.)

Our guide is in 3 parts:

• Part 1 - How to start a Call Center business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

What are the costs involved in opening a call center?

The cost of opening a call center can be quite high, and 33 states also require a license to open one. Licenses may be free in one state, and several thousand dollars in another, so be sure to check with your state. Lease agreements may be as high as $12 per square foot, and workstations can cost up to $1,250 each to update with the right furniture, cables, and equipment. Annual costs for taxes and utilities will likely be around $6 per square foot. The good news is there are hundreds of abandoned call centers throughout the US, and they typically come with (sometimes heavy) discounts for new start-ups. You can often use the equipment that’s left behind too.

Alternatively, you may want to convert a standard retail space, which will save up to half on rent. However, it will cost you more to equip (up to $2,000 per workstation). Generators can also cost up to $200,000 if your building doesn’t come with one. Average wages for call center employees are around $9-12 an hour, but you may want to consider investing more, as the quality of the workers will reflect heavily on your company and on the image of your clients. Labor will likely be about 80% of your budget.

What are the ongoing expenses for a call center?

Much of your spending will be done at the beginning, but you should keep the following costs in mind:

• Employee salaries

• General office supplies (including equipment replacement)

• Utilities and building fees

• Travel costs to persuade new clients

• Upgrading equipment (e.g., VoIP technology, etc.)

Who is the target market?

Call centers are looking for companies who don’t have the resources to start a call center on their own. Between equipment costs, hiring employees, and managing high call volumes, most companies aren’t prepared to run a call center the way it needs to be run. Their needs are best left to a company that specializes in providing high-quality service that will boost their revenue and retain their customers.

How does a call center make money?

Call centers need to determine whether to charge per staff hour or per call. Because call times can be erratic, it may be best to structure it per staff hour. A call center company may take the wage of their workers, and multiply that number by four to estimate the cost of equipment, lease payments, etc. Typically, international companies may charge $.35 per call or $8 per staff hour, while US companies may charge closer to $1 per call or $25 per staff hour.

How much can you charge customers?

It depends on the type of industry you’re targeting. General customer support for a clothing company will require a very different skill set than selling high-end equipment to orthodontists. You can charge more for highly specialized labor, and you can justify your rates if your company is effective. Do not necessarily look to undercut your competitors if it means sacrificing on quality.

How much profit can a call center make?

According to firstresearch.com, US call centers bring in a total of approximately $21 billion annually, with an average revenue of $4 million.

These exact numbers are based on the margins of the contracts you bring in, but typically you can expect to start building profit after you’ve secured several major clients. Remember that this is a competitive industry, and you will need to be able to offer something special in order to gain a competitive edge.

How can you make your business more profitable?

Adding more services is the best way to bring in profit. Consider selling further services to clients, such as video, targeted campaigns or additional support calls.

Day-to-Day and Growth

What happens during a typical day at a call center?

At first, owners will likely be heavily focused on advertising and finding new clientele. There will be a decent amount of cold calling and networking. As clients build up, owners will be able to focus more on ensuring clients are happy, hiring the right managers and agents, and looking for cost-effective ways to hit goals.

• Find and maintain an inexpensive space

• Buy all relevant equipment

• Write scripts for agents

• Handle client complaints

• Listen to calls for quality assurance

• Create schedules for employees

• Determine what markets to target next

• Stay ahead of emerging technology

What are some skills and experiences that will help you build a successful call center?

The biggest skill an owner requires is the ability to foresee their clients’ needs before they realize they have them. Owners will need to have some experience in sales and advertising to get more eyes on the call center’s services.

Owners need to be upbeat and enthusiastic even when under pressure, and quick on their feet to put out fires throughout the day. They should also be interested in new technology that comes out in the market, and open to integrating new services (meeting software, video technology, etc.) into their platform if it will improve customer experience.

What is the growth potential for a call center?

Call centers have the potential for unlimited growth when they provide valuable service to customers. Call centers may choose one particular niche of the market (such as high-end shoe sales), or they may open themselves up to something more general, like healthcare marketing. A call center business must establish their name as the go-to source for educated agents who can handle tough questions and situations.

What are some insider tips for jump starting a call center?

Owners should already have some ties to the industry they’re hoping to break into, as networking will be crucial to the business’ success. Many call centers fail because they’re venturing into a saturated market. There will likely be a lot of slammed doors at first, so having a strong sales mentality is really necessary to survive.

You may want to offer potential clients the chance to see what your agents can do by staging fake calls. Give your best agent a day to learn more about a particular company, and then let the owner pretend to be a general consumer who has some fairly difficult questions. This is no doubt time-consuming for everyone, but the payoff can be worth it.

Finally, choose software that is fluid in case you decide to offer further services. Your programs should aid in general tasks, like note-taking and call-making, but also be customized to do everything from general sales to highly specific surveys.

How and when to build a team

The best way to attract new clients is to increase either sales or your customer satisfaction levels. When talking to potential clients, use real-world examples when speaking of your accomplishments. You can even let new clients listen to previous calls, to see how agents handle complex situations without relying on transferring the call to the manager.

In short, no one can run a call center alone. Your strength as a company will rely largely on the quality of your team.

Read our call center hiring guide to learn about the different roles a call center typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.

Part 2 - Is a Call Center business the right fit for you?

Part 3 - Action plan to launch your Call Center business in 90 days