How do you calculate the cost of failure demand?
Multiply avoidable contacts by average handle time by fully loaded cost per agent hour. Handle time must include after-call work; agent cost must be fully loaded, not base salary. This gives direct handling cost only — a deliberate floor that excludes complaints, goodwill payments and churn.
avoidable contacts × average handle time × fully loaded cost per agent hour
Getting each input right
Avoidable contacts. The hard one. Either sample and code a few hundred contacts against a taxonomy, or classify the whole stream automatically. Asking experienced agents for an estimate is a legitimate starting point and is rarely far off.
Average handle time. Include after-call work. Excluding wrap is the most common way organisations understate this figure.
Fully loaded cost per agent hour. Salary plus employer costs, management overhead, technology, facilities and recruitment. If you only have base salary, roughly doubling it gets you closer than using it raw.
Why to understate deliberately
The estimate excludes second-order costs: complaints generated by the original failure, goodwill payments, churn, and the value demand your agents weren’t handling. Leaving them out keeps the number defensible — and it is usually still large enough to change the conversation.