Customer relationship management (CRM) outsourcing dynamics are showing signs of a detectable shift away from a primary concern about cost, acording to a growing number of independent analysts, clients that outsource their CRM, and even outsourcing firms that provide those tasks.
CRM was a prominent part of the first wave of offshore activity; companies began to outsource CRM in 1999 because of dramatically lower expenses surrounding the same tasks here in the US. Labor arbitrage became the buzzword and virtually the exclusive advantage of offshore CRM and help desk providers for several years.
However, about a year ago, the dynamics behind the decisions leading to CRM outsourcing began to show a subtle change: fed by the American political climate as well as business factors that mitigated, and, in some cases eclipsed, the lower expense that offshore providers offer.
“We’re seeing less of a correlation of where the contact center is; it can be anywhere. The most important thing is becoming how it’s managed and the results it generates,” says Chris Selland, Vice President of Sell-Side Research for Aberdeen. “The bottom line is that customers want to solve the problem and get off the phone as quickly as possible.”
Tim Houlne, CEO of Working Solutions, a remote agent CRM outsourcer, agrees, and says this very point is a prominent reason why firms like his that offer their services at a price that falls between onshore and off, continue to gain share in the competitive world of CRM outsourcing.
“With recent advances in call center management technology and more practical communication, the drivers are now service agent quality and the ability of that agent to fulfill the call center’s mission, especially the more sophisticated tasks,” he says. “The recently publicized corporate repatriations of complex CRM transactions [like Dell, Capital One, and Shearson Lehman] because of growing customer dissatisfaction with offshore providers, proves that price alone is no longer the prominent reason for outsourcing. It’s about results and compatibility, not only between the partners but also with the customers.”
Erin Kinikin, Vice President and Research Director at Forrester, underscores Houlne’s observation. “Cost savings continues to be important when it comes to meeting service levels,” she says. “There are a lot of different ways to reduce costs, beginning with better one-call-and-done service. The emerging competitive advantages are expertise and customer value.”
Compatibility: The New Driver
Belle Kulick is the Vice President of Operations for Fremont, California-based Everdream, which offers an aftermarket outsourced hosted solution for desktop management. The firm recently repatriated its outsourced CRM from Costa Rica. One of the primary reasons was compatibility.
“The employees at our nearshore outsourcer were highly educated and very professional,” she observes. “But their ability to move ahead as productively as an American counterpart turned out to be much slower due to cultural dissimilarities and an overall lack of familiarity with how some technology is used.”
She said that when Everdream was considering where to outsource its CRM prior to sending the work to Costa Rica, price was not the major factor as long as it didn’t exceed what it was costing to perform the duties in-house.
“As we looked at possible outsourcing firms and did our due diligence, we discovered, with respect to offshore, there seemed to be a lack of understanding of what was really needed in the delivery of a premium service. Detailed discussions with these firms revealed a mismatch in fundamental procedures and policies within the help desk environment. Since Everdream is an aftermarket service and does not have a captive audience, it was essential that any outsourcer be able to embed its employees into our model and culture in order to deliver customer service in the same manner we did,” she continues.
Aberdeen’s Selland offers an even more poignant example of this need. “A firm I know in the roadside assistance business outsourced some of its agents to India. But customer satisfaction declined because so few of these agents owned a car and therefore couldn’t empathize with Americans calling from a broken down vehicle on the side of the road half a world away. They couldn’t understand the emotional angst. When you get into more complex or visceral environments, shared experiences between agent and customer become important.”
Today, shared experience between agent and caller is another reason why companies are beginning to place greater emphasis on compatibility issues when doing diligence in CRM outsourcing.
Buyers Must Speak with One Voice to CRM Outsourcing Providers
Incorporating new ideas in the world of CRM tends to come later rather than sooner due to the traditional nature of the industry and how executives of the buying organizations view it. “Upper management wants to run CRM economically and at the same time generate revenue, whether it’s in-house or outsourced,” says Aberdeen’s Selland.
Forrester’s Kinikin attributes how such fractured thinking has emerged. “Travel, financial services, and retail companies are transforming the call center from strictly a cost center to a revenue center. This means coordinated cross-sell across product lines and differentiated service to promote retention,” he says. One of the big reasons is the Do Not Call registry, which is now US law. “If you can’t reach out to your customers, you’ve got to do a better job of offer optimization when they contact you. We’re seeing call center metrics evolve to reflect this, with offer acceptance rates and offer value becoming an increasing part of agent payment incentives.”
But can’t this lead to the CRM outsourcer having more than one strategic master?
“Absolutely,” Aberdeen’s Selland adds. “You hear a lot of companies say they want to think out of the box. But the reality is that many corporate decision-makers still view the call center from a conservative, non-imaginative perspective.”
Hence, the absence of strategic clarity: Marketing departments want the call center outsourcer to help sell: even if the default mission is to field as many calls and solve as many problems as possible for the least amount of money.
“Determining where the buyer’s customer draws the line could be a pretty important element in outsourced call centers of the future,” says Selland, “especially the ones where marketing has greater influence in how customers are handled.”
Emerging Customer Satisfaction Metrics Part of the Strategy
Companies that outsource CRM and help desk are often those whose customer interactions are tactical and transaction-based. The bottom line, for example, at Dell, which recently repatriated some of its complex CRM duties, is that helping a consumer figure out how to connect a printer to the PC is probably not a significant revenue opportunity.
But helping a corporate customer get the first of several hundred PCs to work correctly does offer a lot of value. Firms make the decision to outsource on a fairly granular level: by customer type, product line, transaction type, and perceived value for the company and the customer, Forrester’s Kinikin observes.
“The bottom line for most customers is that they want faster answers the first time. The opportunity for the buyer and its outsourcing partner is to look at the 20 percent of the questions that happen 60-80 percent of the time and determine how to answer a portion of them without getting a live agent on the phone,” says Kinikin. “Technologies that can be outsourced like self-service, IVR (interactive voice recognition), and speech pattern recognition are being used to meet customer needs more cost effectively. And this is having an impact.”
Banks are proving why their online customers (who understand the complex nature of those services) are actually more loyal than those who visit the bank. “The challenge is to think differently and deliver what the customer wants,” says Kinikin.
Everdream’s Kulick says her company hasn’t dismissed the possibility of finding the right CRM partner at some point in the future.
“We see the outsourcing market maturing, both in the US and overseas. We’re certain one day we may find the right company and the right model that suits our needs. However, even if we find an outsourcer, we will always want to maintain a help desk within Everdream. The scale and scope of our help desk is growing, and the provider market is moving closer to our needs. One day the two paths may intersect.”