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Self-Service and Outsourcing
Two approaches to optimizing service delivery.
Posted Sep 1, 2006
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As customer service organizations continue to look at ways to reduce operational costs, drive greater productivity, and enable users to help themselves, many businesses have made the adoption of customer self-service a key priority. At the same time the economics of outsourcing remain compelling, especially in countries like India and the Philippines, where labor costs continue to be significantly lower than in the United States, Europe, or parts of Asia, such as Korea.

But can companies make up for the potential loss of customer intimacy if clients are helping themselves online, or chatting with other users in a forum, rather than interacting with the firm's agents? If a business chooses to outsource and another company is answering the client's phones (or emails or chats), does that enterprise face the same risks? And what about political issues? Is it more acceptable to replace staff with a support portal versus an offshore call center?

Self-service and outsourcing are two approaches to optimizing service delivery. And in most cases, both approaches will play a role in your multichannel support delivery. How to choose each approach, provide visibility into performance and effectiveness, and manage customer expectations is key. So is understanding the drivers, impacts, and potential pitfalls of both models.

The Outsourcing Option
Some factors to consider when outsourcing include political issues (both internal and external), as well as how to best manage your vendor and ensure accountability. In fact, cost savings may be partially offset by the team structure needed to manage the vendor on both an operational and contract basis.

The question of what to outsource is perhaps the most significant question to consider. In a way outsourcing is a form of lending customers to a third-party service provider. Does a business want to lend all customer contacts, or just certain ones? Is it the low-value, high-cost-of-service contacts? How about the customers who are consistently late in paying their bills? Or is it the ones who contact you more frequently than average?

At the same time, a number of outcomes--some unintended--may also result from this approach to customer service. One critical issue is the potential negative impact on customer satisfaction when certain clients feel as if they have been pushed to an outsider who does not understand them (figuratively, not literally). Others include loss of customer insight and the loss of sales opportunities.

The Self-Service Alternative
We believe self-service is an alternative to accomplishing some of the same goals of outsourcing, although the payoff may occur more gradually. Like many technology-driven innovations, the growth of self-service is a result of both consumer demand (pull) and business goals and initiatives (push). Consumers who pay their bills online or check in at the airport at a self-service kiosk are much more likely to try online support or embrace an employee portal at work.

When deployed correctly, using customer self-service models can put the customer in the middle of the process and can deliver significant benefits for users and the organization. Various studies have shown that answering a question online can cost between four to 40 times less than in the call center or help desk, and in some cases even generates higher customer satisfaction scores.

But just as outsourcing is not a "one size fits all" proposition, not all issues or all customers can be served via self-service. And then there is the issue of losing touch (or even becoming commoditized) if your Web site becomes the primary point of interaction with customers. Fortunately, with an investment in customer analytics, the active deployment of surveys and feedback forms, as well as the ability to track question or chat logs, there is a potential for self-service solutions to actually deliver greater insight than other channels.

Two Approaches, One Solution
Both outsourcing and self-service strategies are derived from the same basic premise: how to drive costs out of the business and provide consistent service. However, both don't have the same longevity. With outsourcing the organization can see the cost benefit almost immediately, but later may experience issues with consistency of service, loss of customer insight, or even lost sales opportunities--whereas with self-service, it may take longer to implement and therefore the payback is longer, but the longevity of the benefit is well worth the time.

While quick wins like posting an FAQ or enabling online password reset bring immediate benefit, an issue to consider with self-service is that adoption can be a long time in coming. Customers have to get used to the idea of helping themselves (of course some never will), and need to have faith in the technology and the answers they are getting.

Regardless of the actual channel or device, it's a safe bet that outsourcing and self-service will have a place in customer service, and in our global marketplace. While each can provide cost savings, they can also have very different impact on you and your customers. For those tasked with optimizing the service delivery, we recommend looking at potential benefits and pitfalls--and how you might implement these two options to help achieve both near-term and long-range business objectives.


Allen Bonde is senior vice president of strategy and marketing at eVergance. ( www.eVergance.com)  Alan Winters is president and founder of The Winters Group (www.thewintersgrp.com).

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