Why You Need to Evaluate Your Hours of Operation

A customer service leader recently told me about a demotivated employee on her small team.

He was the first person scheduled to work most days. By the time he got settled in at his desk and turned the phone system on, he would be crushed by an avalanche of calls.

The employee would regularly spend the first hour of his day struggling to keep up with the volume until other coworkers started to arrive. By then, call volumes typically diminished and his colleagues enjoyed a more relaxing start to their day.

The customer service leader recognized this employee was one of her best. She also sensed he was getting frustrated. What should she do?

The solution may seem obvious in hindsight. It was time for this leader to evaluate the hours of operation and her staffing levels throughout the day.

Here's why you might need to do it, too.

 Sign hung outside a business that reads "Come In, We're Open."

The Impact of Operating Hours

There are two dimensions to operating hours and staffing.

  • The hours and days you are open for business
  • Your staffing levels at various times during the day

Both have a significant impact on service quality and profitability.

For example, the customer service leader I described earlier likely had customers who were frustrated by having to wait when they called first thing in the morning. Angry customers tend to take longer to serve, which lengthens the wait time for the next customer.

Over the long run, those customers might take their business somewhere else.

I suggested that she review her schedules and consider having more staff available at a slightly earlier time of day. She could shift a person or two to an earlier start time so her total hours would remain unchanged. This would help prevent her employee from feeling so burned out. It would likely also prevent customers from having to wait.

 

Case Study: Independent Retail Book Store

Hours of operation and staffing levels are critical decisions for small businesses. Let's look at an example for an independent retail book store.

According to Womply, a company that provides customer insight data to small businesses, the average independent retail bookstore does 5.5 percent of its total weekly business on Sunday.

 Bookstore revenue by day of the week. Image source:  Womply

Bookstore revenue by day of the week. Image source: Womply

The national average weekly revenue for this type of business is $4,334, so a 5.5 percent share means a typical Sunday clears $216.70 in sales.

Here are the big questions:

  • Is it worth it for this business to be open on Sundays?
  • If so, what hours should it be open?
  • And if it's open, how many employees should be available?

Let's tackle the first question.

According to multiple sources, including this one and this site, the average gross margin for a bookstore is 40 percent. This is the difference between the price the bookstore pays to acquire the books and the price the bookstore sells them for.

So 40 percent of $216.70 in revenue leaves just $86.68 in gross profit. That gross profit has to cover the wages of employees working in the store, along with fixed costs such as rent.

Here are a few rough calculations on the cost of employees for that Sunday:

  • $10.89 average wage (source: Bureau of Labor Statistics)
  • 16 hours (2 employees working 8 hours each)
  • $174.24 hourly cost of labor (16 x $10.89)

The $174.24 is actually low, because it doesn't include the "fully loaded" costs associated with paying employees, such as payroll taxes, insurance, etc. 

But the math alone on this is pretty clear. The store will lose $87.56 by being open on Sunday.

Let's look at the other two questions:

  • What hours should the store be open?
  • And if it's open, how many employees should be available?

There may be other times when it may be a good idea to be open longer hours or have more employees on staff.

Let's say the bookstore normally closes at 8pm on Saturdays. It happens to be located in a busy part of town with several restaurants that draw large crowds.

The store might benefit from staying open until 10pm on Saturday if it can make some sales to the after-dinner crowd.

Imagine the store does an experiment and finds a way to average $150 in additional sales from 8pm-10pm on Saturdays. At a 40 percent gross margin, that leaves $60 to pay employees and other expenses. So two employees working two additional hours at $10.89 each (2 x 2 x $10.89) would cost $43.56.

Having the right number of people on staff is also essential. Too many employees is a waste of money, but so is having too few.

Here are just a few ways that being short-staffed could hurt the bookstore's business:

  • Customers may walk out when the line is too long
  • A helpful salesperson could have suggested more sales
  • Inventory gets moved out of place and needs to be re-shelved

Making small adjustments to the hours of operation and staffing levels could mean the difference between the bookstore losing money or making a respectable profit.

 

Take Action

Your business may have software to help you track your volumes throughout each day. A few examples include:

  • Phone system
  • Email, chat, or other messaging volumes
  • Customer service ticketing software
  • Point of sale software
  • Business insight software like Womply

Start by pulling a historical record of the data for the past six months and compare it to your employee schedules.

Look for situations where you are either understaffed or overstaffed and try to determine where your schedule needs adjustment.

Don't be afraid to try small experiments where you extend or shorten hours of operation or add or subtract staffing levels at various times of the day. Whether you manage a contact center, run a small business, or oversee a large enterprise, having the right staffing level is critical.