Most Effective Outsourcing Relationship
2000 Editor's Choice Award Convergys Corporation/Hallmark Cards
From the Editor:
Outsourcing drove down costs for Hallmark, which was the original intention. At the same time, outsourcing allowed Hallmark to sustain its high quality of customer service and satisfaction. Moreover, it's interesting to see how this relationship grew and prospered over the years. Building on these strengths, the buyer continues to add more and different services to the contract.
More than a marketing slogan for a greeting card company, "When you care enough to send the very best" is also the cornerstone of Hallmark's philosophy in customer relations. Since 1910, Hallmark Cards, Inc. has supplied its customers with words and art that make it easier for people to express themselves.
When Hallmark sought help in 1995 with consumer affairs, it was because the company's phenomenal growth made it clear that the internal group, which had been handling those matters, needed help. Hallmark sought assistance with its retail referral service for the Hallmark Gold Crown stores, as well as its end consumers. When Hallmark decided to outsource the functions of its personal greeters in consumer affairs, the selection of an appropriate supplier hinged on its style of communication. Hallmark wanted a partner that would strive to create the same level of excellence that Hallmark Cards, Inc. displays in the poetic personal messages of its cards and gifts.
Building for Success
Hallmark chose Convergys Corporation to supply its consumer affairs function, says Sonie Wine, consumer affairs manager at Hallmark. "It has been a great relationship," she says. "Hallmark tries to do business with vendors who have employment practices and business philosophies that mirror those of Hallmark. So emphasis is put on exceptional quality in terms of both product and performance, and Convergys is a perfect fit."
The relationship between the card company and Convergys, the leading provider of customer care and billing solutions, began in 1991. Initially, Hallmark shared the consumer affairs' volume with Convergys; but by the end of 1995, Hallmark decided to outsource 100 percent of the department's volume to Convergys. This process includes addressing inquiries, comments and complaints through Hallmark's 1-800 number and through e-mails and letters. All told, this constituted about three million contacts in 1998.
Building strong consumer relations is critical to the program's success. The Convergys staff must be familiar with the entire scope of what the card company does, for inquiries range from how certain holidays began, to how a broken collectible can be replaced, to how one can get an original poem printed on a card.
Convergys also administers the interactive voice response (IVR) prompter, which directs all inquiries to the appropriate source. "Originally it was their referral system that hooked us," Wine explains. "They were the experts, they had the best system; and nine years later we have not found another system that outperforms it. The outsourcing of the computer affairs functionality to Convergys stems from a long-term commitment to our partnership and relationship. We have grown with them, and they have grown with us. That has been key to maintaining the relationship." Convergys also now handles Hallmark's customer service satisfaction surveys and the retail referral service.
"As a personal communications company what we do is communicate. We assist the consumer with personal communications," Wine says, "so it's critical that we handle every personal communication through consumer affairs better than anyone else can." Wine says Hallmark gives Convergys specific goals in order to keep consumer satisfaction at a high level.
First, Convergys' high level of service must come in two forms-general courtesy and service objectives. Measurable objectives are not written in the contract but are set annually and examined quarterly. Second, the Convergys staff must communicate to Hallmark the information that the consumer is giving them. "That consumer information helps us make product development decisions," Wine says. "Inventory decisions can be impacted by the information given to us through those consumer contacts."
Developing the Team
One of the most outstanding aspects of this outsourcing relationship is how Convergys has been able to retain its representatives. Although the telemarketing industry has an extraordinarily high turnover rate, Convergys has a turnover rate that generically, across
their business, is roughly half of the industry standard. "That is phenomenal in itself," says Wine, "but the Convergys consumer affairs group at Hallmark has an annual turnover rate of less than 3 percent." The low turnover rates reflect the commitment that Hallmark and Convergys have made to the relationship.
Wine says Hallmark and Convergys have a great relationship in the development of their team and explains that Hallmark devotes a lot of time and people to maintaining effective communication between the two organizations. The greeting card company makes sure that the appropriate information is available to the Convergys representatives, who hear from Hallmark directly. Wine also points to the personal relationships that Hallmark develops with the 60-member team.
Management of the outsourcing relationship is structured around three conference calls each week with different departments within the two organizations. Included in the calls are account management, operations and, sometimes, the entire team. Additionally, there is a weekly meeting when the whole team gets together. Hallmark also monitors the representatives on a daily basis.
Reaping the Benefits
Wine says that the relationship is beneficial in many aspects. First, Hallmark saves over $1 million in payroll per year--a figure that does not include the capital expense of the call center's infrastructure. Second, Convergys handles all of the forecasting, staffing and managing, which saves a substantial amount of time for Hallmark.
Third, Hallmark depends on the expertise of Convergys in the field of customer service. But the real benefit of a world-class supplier goes beyond reliability. "They are always offering up new ideas and better ways of doing things," Wine says. "Not only have they delivered everything that we have asked for, but Convergys often shares the cost of the new product or service. They definitely listen to their clients."
Lessons from the Outsourcing Primer:
- Do business with a supplier who has similar employment practices and business philosophies.
- Chose a supplier that can grow with you and who is willing to share the cost of any new product or service.
- Outsourcing can mitigate high employee turnover problems.
- Set specific times to examine measurable objectives. But they don't have to be written into the contract.