Call centers have become essential to the marketing and customer care strategies of many businesses over the past 30 years. But our experience shows that most of these facilities don't maximize their usefulness. No one can argue with the need to keep a firm grip on costs, but indiscriminately moving customer traffic to a company's Web site or haphazardly outsourcing call centers can make them less rather than more effective. The key is to develop a customer service strategy that successfully balances costs, revenues generated, and quality. Only then can companies transform their call centers into strategic assets that provide a competitive advantage and promote growth.

Companies that get the most from their call centers act on three imperatives. They define a customer service strategy that goes beyond merely providing good service at low cost. To deliver their strategy, they put in place an infrastructure that uses outsourcing and technology in a judicious way. And they ensure the best possible execution by their agents in all interactions with customers by investing time and money in coaching and in performance-management systems. These companies can reap big benefits: increasing revenue from call centers by 20 to 35 percent, cutting costs by 15 to 25 percent, and improving the quality of service.

Get the full story at The McKinsey Quarterly (free registration required)