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In-House vs. Outsourcing
Do You Dare to Do-it-Yourself?
For the rest of the October 2002 issue of CRM magazine please click here
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When it comes to call centers, size matters--in more ways than one. Companies looking to integrate call center operations need to assess their own size, the size of their potential solution provider--whether it be an outsourcer, a software vendor, or an integrator--and the size of their customer base. Calling on an Outsourcer With per-hour costs of up to $27, small and midsize businesses may find it cost-prohibitive to start a call center in-house. SMBs also face the problem of being too small a customer to get the full attention of a call center solution provider. Yet, sometimes only the robust technology and services of a big outsourcer will do--despite the high price tag. Such was the problem faced by CCB Paris, a French cosmetic company that does largely phone and catalog sales, and which is trying to increase its brand recognition and market share in the United States to equal that of its operations in Europe. "In the past I've worked with larger integrators, but this time I thought they might not be the right option, because we would be a little fish in giant pond," says Kevin Donohue, director of operations for CCB's New York organization. Despite his concerns Donohue still wanted to use an outsourced call center, largely because his three-person New York outpost didn't have the wherewithal to house and fund the relatively large-scale call center needed to support a catalog/phone--based business. CCB's first partner was a smaller outsourcer that used Mail Order Manager and a separate fulfillment company to ship orders. Within two years call volume--and the CRM information it generated--became too great for the old system to handle. In Europe the company has its own system, with the ability to generate hundreds of special offers to customers at any given time, but CCB New York's supplier limited call center reps to a mere 24 offers. Call backlog was also a problem. "We were constrained by our system," Donohue says. "My marketing team was going crazy, because they'd have a great idea based on the data we collected, but which we couldn't do because of technology limitations." Although still only a 13-person business, CCB USA found it needed the services of a big integrator. Ultimately the company moved its call center operations to New Roads, a Greenwich, Conn.--based integrator. New Roads has a more flexible proprietary system and an XML-built Web interface that will allow for better interactivity between call center reps and Web customers in the future, including the ability to push back order status, shipping, and tax information to users. The New Roads system also seamlessly integrated CCB's existing use of QuikPak, its mail processing and fulfillment program. And New Roads uses redundant call centers in Georgia and Tennessee, so call backlogs would not occur.
"They were making the envelope bigger without making us feel small. It was the right size and mix of system and service for us at the time, and we are very pleased," says Donohue, who also says that despite outsourcing its call center, CCB still has a high level of control over operations. "Our business has its own model and unique issues that creates functions that have to be acted upon immediately," Donohue says. "There are also business-specific questions that integrators may not be able to deal with immediately, because they haven't experienced them before--but the point is they have to be willing to learn." Donohue also advises that before choosing a call center provider, decision makers should make frequent visits to the physical site of the call center. They will learn about the site itself, but also will learn about the area it is in."Our call center is in an area of Georgia with a lot of service industries--hotels, car rentals, and the like. It's a great location, because you're pulling from an employee base that has a lot of experience in customer service," he says. Making the Switch For The Maids Home Services, a home cleaning company based in Omaha, legwork was what made the company forgo outsourcing after a trial run and turn to an in-house call center despite higher costs. The company sought to create a call center through which local sales calls and outreach could be made for the benefit of its countrywide franchisees. The real test was to determine if local sales calls could actually be made from thousands of miles away. "The call center company we chose did a great job. It is a company that has two national customer service centers that take more than 1,000,000 calls per year. We didn't know how much dealing with a local person played into being able to make sales, and they helped us determine that it was, in fact, possible take sales out of local arena and move it someplace else," said Margee Virant, executive vice president of operational systems for The Maids. What the company was not good at, Virant says, was quick problem resolution and using incentives to convince call center reps to be fully invested in making the sale on behalf of The Maids. "They did a great job of hiring salespeople and scheduling, but ongoing training wasn't great and the sales reps told me that they felt they didn't have a home, since they didn't belong to our company," Virant says. "And, because the call center manager was on salary for the solution company, there were times when that person was called away to do other jobs, so our issues went unresolved." These problems led The Maids to set up a call center in its headquarters, a difficult task that required the small IT staff to ramp up very quickly. But struggles and higher cost aside, Virant anticipates that the new center, which will start out with four to six agents, will ultimately be worth the effort. "Having those folks on-site means they can be trained as needed on our products, and be brought into the company culture. We believe that will engender deeper commitment and ultimately more sales," she says. All in the Family Immersing call center employees in the company culture is nothing new at Myfamily.com, a company that has offered genealogy services for 20 years, expanding to the Web six years ago. Today the service is largely online and has 10,000,000 unique visitors yearly and 800,000 subscribers--a rich mine for customer data collection. Its call center, also six years old, initially started out as sales, tech support, and billing operation, but today has expanded into a key cog in the company's CRM wheel. "Because our call center is in our main offices, PR and marketing folks can go and listen to calls every week, which is much more valuable than reports, because they get to hear what concerns customers firsthand," says Jared Richards, manager of call center operations. "Our reps' salaries are also based on meeting goals in more than category, one of which is customer feedback." Like Kevin Donohue of CCB, Richards credits the local environment from which Myfamily.com draws its call center team. "We are in a big college area," says Richards of the MyFamily offices in Provo, Utah. "More than eighty-five percent of our reps are in college and the rest have already finished college. These are intelligent people who are serious about their careers versus just doing a job," he says. Despite these positives, cost was an issue, and last year the company did consider outsourcing its call center. Richards and his team decided to take the challenge and turn the in-house, proprietary system that uses some out of the box software like Right Now for intelligent FAQs, into a money-saving proposition. The group pushed costs down to $21 per hour--substantially less than the average $25 for an outsourced center. How do they do it? By getting around the impersonal service and higher cost that outsourcers provide, Richards says. "Our in-house call center support staff are experts on product because they are not taking calls from other clients, so any problems are addressed immediately--with less 'billable' hours," Richards says. "And from an operational standpoint we have more control over who and when we hire rather than working through a middleman who gets his cut as well." Today, MyFamily.com wouldn't dream of parting with its in-house call center--largely because of the customer relationship tools it provides. "Our call center is a flagship part of our company, because it provides immediate customer feedback--especially in the Internet world, where you can do a marketing campaign and know how it worked immediately, because reps get the response calls within hours," Richards says. "We can see how campaigns are performing in real time. Every week we can say what worked and what didn't work and why."
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