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Can You Get That Phone for Me?
By outsourcing your contact center to a partner, you can lower expenses, not to mention your blood pressure. But that's only if you find the right partner. Here's how.
For the rest of the September 2001 issue of CRM magazine please click here
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Outsourced contact centers have become a common feature of the customer service landscape. Since the mid 1990s, companies in many markets have found it easier and cheaper to farm out this vital customer touch point to firms specializing in contact center operations, than to establish and manage a contact center in-house.

But just because your competition might be joining in this trend, does it mean it's right for your company? Not necessarily. If you partner with a host that does not understand your business, your service strategy or your needs, the money you may save by outsourcing will seem like a pittance compared to the money you lose from ineffectual service. Before signing up with the first contact center expert you interview, do your homework. "The decision to outsource has three dimensions: strategic, financial and operational," says Wes Johnston, senior vice president of marketing for Sitel of Baltimore, Md. Sitel manages contact centers for, among others, General Motors, American Express and J.C. Penney.

"'strategic,'" Johnston says, "because we should be able to do it better than your company could internally since that is 'our' core competency. 'Financial,' because we should do it less expensively, allowing a better use of your capital for other projects. And 'operational,' because we should deliver a solution more rapidly and at a higher standard than you could yourself."

As you ponder your outsourcing options, think of Johnson's three "dimensions" as steps to follow toward making the right decision for your customers and your company. If you have not done so already, you should develop a strategy that maps out the role a contact center will play in your overall CRM objectives, and how both in-house and outsourced contact center options fit into that role. With your contact center strategy in place, you should then do the math: Will your company ultimately make more money by outsourcing or by establishing an in-house operation? Finally, you must determine which, if any, outsourcing host firms not only affordably meet your operational needs, but also enhance your service operation.

step 1: Develop a strategy

According to Ken McLoughlin, president of Productivity Associates, Inc. (PAI), a San Diego, Calif.-based provider of contact center services, "The ideal company to outsource a contact center is one that has their act together. They know who they are, where they are and where they are going," he says.

Where is your company going, and how will a contact center help you get there? When you can answer these questions, you basically have your strategy. For most companies, this strategy is part of a larger CRM effort designed to enhance relationships with customers. The starting point for developing a contact center strategy should be identifying customer needs and then determining how contact center CRM technologies can or cannot meet those needs.

If you run a small company with a small customer base, your needs will be relatively simple. A telephone and e-mail-based system will give your customers a way to place orders, ask questions or register complaints. You may also want to consider mobile service options, which increase accessibility. If you run a larger company with numerous customers and product lines, you will almost certainly need a bigger, more expensive system that supports multiple contact channels.

To maximize return on contact center investments, many companies, both large and small, implement technologies that support up-selling and marketing by customer service representatives (CSRs). These technologies allow CSRs to leverage customer data compiled and analyzed by CRM solutions to make special offers, or to give more personalized service.

Finally, if your strategy is simply to reduce overhead costs by automating as many contact center processes as possible (and eliminating inherent staffing and technological support headaches), then determine which contact center touch points are costing the most (CSRs, for example). Then look for specific interactive technologies that can do the job without lowering customer satisfaction levels. "Prioritize your needs and wants," advises Rita Wood, president of contact center host Network Direct, of Friday Harbor, Wash. "This is the perfect time to do a wish list of all the things you would like to have. But remember, every wish costs you something."

step 2: Do The Math

Once you've determined where you're going and how you want a contact center to get you there, the next step is putting a price tag on this strategy. This step, say some in the outsourcing industry, is often a rude awakening. "In today's market there are smaller companies that don't want the infrastructure--companies that don't want to spend a lot of money on phone systems and those kinds of things--and also larger companies whose overhead infrastructure is so large that everything they do has much higher fees associated with it," says Rob Grimes, CEO of Maryland-based Cyntergy, which provides contact center support for the hospitality and retail industries.

Add to this list the ongoing costs of staffing and training, and the in-house contact center option becomes less than appealing. But occasionally, Grimes says, the outsourcing option does not appear much better.

"Many times, when someone decides to outsource, they ask for a different level of service than when they do it themselves. They have people on pagers and beepers with a four-hour response time, but they may want you to respond in 30 seconds. Outsourcing should be cheaper for the same level of service or a better level of service for the same price."

stick to your strategy. Price your equivalent needs in both outsourced and in-house options. You'll never know if the outsourcing option is cheaper if you compare apples to oranges. "A lot of people don't realize what it costs for them to do a contact center themselves," Grimes says. "They have to know their fully loaded internal costs so they can compare financially."

step 3: Find a Perfect Partner

Once you've looked at your company and decided some contact center functions could be more efficiently handled by others, the final step is finding the right contact center outsourcing firm to be your partner. This means determining which firms understand your particular business and can support your CRM strategy. Forget old adages about how opposites attract: From an operational standpoint, it is essential that your outsourcing partner have expertise in your vertical. Otherwise, like a bad marriage, things will sour quickly. "Technology support is a triangle," Grimes says. "One side is understanding how the operation works, another is understanding how the technology works and the third is teaching our people exactly how our customer is going to use the system. Since we support the hotel, restaurant and retail industry, we hire the same type of people--restaurant, hotel and retail managers--our client would have if they were doing it themselves."

While a strong case can be made for turning over these processes to specialists, even outsourcing's most dedicated advocates stress that going into such an arrangement requires not only an understanding of the process, but a commitment to partnering with the contact center host firm as well. It also requires trusting an outsourcing partner to effectively "own" a process that is too expensive to carry out in-house. "There's a difference between contracting and outsourcing," Wood says. "Contracting is just getting the job done. Outsourcing is taking a process, letting that partner own it, improve on it, and bring wealth to the table because they have ownership."

And how do you find an outsourcing partner that can "bring wealth to the table"? "It differs from client to client on how they find the right partner," says Toon Parys, Sitel's senior vice president of business, worldwide. "Some people are just looking up the biggest one and calling them. Other people make up a short list based on their applications."

The best way to find a partner that fits your operation, Parys says, is to look at a prospective partner's current client list for customers operating in your vertical. You can also ask other companies in your industry for references.

In an ideal outsourcing partnership, the outsourcing firm is also looking for a strong partner and, if its management is good, will ask many of the same questions of you that you ask of them. "We have a lot of pointed questions to ask you," Wood says. "What types of problems are you having? What do your customers think about the contact center experience? How much is the average call costing you? What is your annual budget? What are you looking to improve? To change? What complaints are you getting? If they don't know the answers to my questions, we find the answers. If I can't make a recommendation to outsource, I won't, because you're just going to transfer the problem."

McLoughlin takes a similar approach. "We qualify very, very carefully. Is it a good fit? Do we believe in the customer's product? The deal size has to be good and we have to know in advance that we can do a good job for that company, because if we don't have that confidence going in, then we're only destined to fail, and that is in nobody's interest," he says.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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