How to Calculate the ROI of Knowledge Management

How to Calculate the ROI of Knowledge Management

knowledge management roi

Finding a reliable method of calculating the Return on Investment (ROI) for a contact centre when changing or choosing a knowledge management software is an issue many professionals struggle with. The difficulties come down to the many variables and metrics each business uses to measure the financial impact of knowledge management software on a certain initiative. 

There are many reasons why you would want to measure the ROI of your KM software, but the main one is to decide if it can compensate for itself in the long run and help you cut contact center costs while driving revenue to the business. This process provides your business with insight into reduced costs that come with the use of a KM solution. 

Let’s take a deeper look into what some of these could include: 

  • Reduced customer churn – influenced by better customer experiences, quality conversations, and quicker contact resolutions. This metric may only be partially influenced by your KMS but the dollar value is usually significant. 
  • Improved staff engagement and productivity, achieved through less time searching docs and struggling to work out complex answers or processes (Workers spend about 19% of the workweek tracking internal information, while data professionals lose 50% of the workweeks, 30% gathering data, and 20% duplicating data- Mackinsy)
  • Better compliance and risk management through controlled knowledge, user visibility, and process guidance
  • Reduced overall costs as a result of reduced training times, fewer refunds & complaints, improved productivity, and less staff turnover

Despite the complexity of the process, having a clear metric system to calculate the ROI in your contact center is an important factor in making your knowledge management software successful. 

This article aims to provide you with a pragmatic approach in determining which metrics matter and which ones are primarily influenced by your KM-Software when calculating what your contact center is saving each year. We will also touch on how you can utilize livepro’s Knowledge Management ROI Calculator to speed up the process and access a quick snapshot of your potential savings. 

Understanding contact center KPIs & how they relate to Knowledge Management

Understanding contact center Key Performance Indicators (KPIs) is vital in getting good ROI calculations for your Knowledge Management initiative. Contact center KPIs refer to units of measurements used to determine the effectiveness of an operation. Most of the KPIs span across three major types of ROI that can be achieved; efficiency, effectiveness, and innovation. Most of the ROI that comes from implementing KM software in your contact center is in soft numbers. This is a good reason to find the right KPIs. Some of them include;

First Call Resolution (FCR)

First call resolution is a vital performance metric used to gauge a call center’s ability to satisfactorily resolve a complaint in one call. Good agents with a reliable knowledge management system have higher FCR. This improves customer satisfaction rates, motivates agent productivity, and reduces escalations, which cuts operating costs. 

Average Handle Time (AHT)

Average Handle Time (AHT) is the amount of time between the call pick up and the disconnect. The AHT depends on agent performance, instant access to knowledge, and the complexity of customer queries. In fact, according to Gartner (2014) improved delivery of contextual knowledge to contact center employees or customer reduces a provider’s answering time by 20% to 80%, raising competency and satisfaction. 

Average Hold Time 

True to its name, this KPI is used to measure the amount of time a customer is put on hold. A higher hold time on a call negatively impacts the customer experience and satisfaction as it shows that the agents are not well informed, or lack the resources required to answer customer concerns. This can be solved with a good knowledge management system that gives the agent instant access to information required to help the customers. This helps reduce the Average Hold Time and contact center operation costs while developing an adaptable workplace. 

Transfer Rate

This is the number of calls an agent forwarded to another person, mainly their superiors. There are many reasons why this happens, but the main one is the lack of experience or access to information required to resolve customer concerns. Ideally, this rate should be lower than the FCR.

Measuring the ROI of Your Knowledge Management System

Those are just a few KPIs that you can include when developing a framework to help you measure the benefits of your knowledge management system. It is also advisable to include a way of calculating both the tangibles and intangibles because not every KPI can be translated into a dollar value. 

This is why a cost/benefit model works the best when working with KM software initiatives. This model divides the benefits into two main categories; tangible benefits, and intangible benefits. Tangible benefits include those that can be tabulated, including, software, hardware, improved access to knowledge, increased quality & reduced timelines, improved estimate accuracy.

The intangibles (soft benefits) on the other hand are those that have a huge impact on general KM initiatives but have no place in accounting books. Some of them include staff empowerment/motivation, improved collaboration, innovation, and risk mitigation. 

Measuring ROI of your KM System Using livepro 

Now that we have a good understanding of the main KPIs to look out for, let’s see the inputs and assumptions used in the livepro ROI calculator. Most of the inputs used in this calculator are considered tangibles, hence easy to obtain data required in the ROI calculation. The data should be well-researched, accurate, and consistent with the end goals of the campaign. 

  • FTE Annual Cost
    This is the average annual unloaded cost of an agent. (We add a conservative 20% loading to the calculation).
  • Average Calls Per Month
    The total center calls in an average month.
  • Average Cost Per Call
    The average cost per call in the contact center.
  • No. Of Inductees (p.a.)
    The total number of new inductees per annum.
  • Induction Training for Each Inductee
    The number of training days per annum for each inductee.
  • Ongoing Training p.a.
    The total number of budgeted ongoing training days for the entire center.

Whereas in the preceding section we described important inputs and assumptions going into the calculation, in this section we’ll show the steps taken to arrive at the total savings of a KMS.

There are two ways to achieve this. The manual way, or the automatic way. The manual way includes crunching the numbers using a bunch of formulas. We may share these formulas with you in upcoming articles. The other way is the automatic way, using our knowledge management ROI calculator

In this article, we are going to use the ROI calculator because it’s accurate and doesn’t consume a lot of time. 

  •  Step 1; Decide on the inputs as discussed in the previous section. These inputs may vary depending on several factors including the industry you are in, or the size of your business. 
  • Step 2; Input the variables you have come up with and feed them into the KM ROI calculator. 
  • Step 3; The ROI of your knowledge management system is generated immediately.

Knowledge Management ROI Calculation; A Case Study

To provide you with a practical example of how livepro’s Knowledge Management ROI calculator works, here is a hypothetical case study involving a new money-lending app called ‘Lend X’. We have outlined the current situation for important key metrics in their contact center and the main objectives of initiating a KM campaign. They are a startup, hence don’t have a knowledge management system in place. 

Current State

  • The FTE Annual Cost is $60,000
  • The average Calls Per Month is 6,000
  • They are growing rapidly
  • Higher turnover rates
  • First call resolution is below 70%
  • The Average Cost Per Call is $35
  • No. Of Inductees (p.a.) is 20
  • Induction Training for Each Inductee is 36
  • Ongoing Training p.a. Is 14

Main Objectives

  • Decrease agent turnover rates
  • Decrease training costs
  • Increase first call resolution
  • Decrease training costs
  • Decrease average handling time
  • Improve customer satisfaction
  • Call volume reduction
  • Improve staff engagement and productivity

Summary of Savings

  • Productivity improvement- $180,000.00
  • Ongoing training reduction $55,172.00
  • Ongoing-training reduction $1,159.00
  • Call volume reduction $54,0000

Total Savings: $290,000.00

livepro’s Knowledge Management System ROI Calculator


Calculating the ROI of a KM initiative is not an easy task. It depends on many factors, including your current state, the framework you select for the calculation, and the objectives you need to achieve. However, using tools such as the livepro ROI calculator helps ease the process by providing clarity of savings expected on a certain KM initiative. The more complex the business, the more you are required to be relentless in your pursuit of finding a framework to help you calculate the ROI of your Knowledge Management System.

It is advisable in some contexts to accept soft indicators that knowledge management is working, instead of demanding numbers. But, if you are interested in the numbers, feel free to book a demo with us so we can provide you with a blueprint on how to do that successfully. 

Knowledge Management ROI Calculator For Your Contact Center

Knowing your knowledge management ROI is important in unlocking your true potential. Discover how the livepro ROI calculator can help you get started with that. 

Contact us today at; [email protected] 

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Shannon Turner
Shannon Turner


Tue, Jan 4 2022

11:36 AM

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