April 2002

Small Town Strategy

By James Beatty, NCS International

Last month I talked about four strategies one could employ in choosing a new location for your call center. To refresh your memories, those were Small Town, Hub and Spoke, Urban/Inner City and Global. This month I will focus on the Small Town strategy and in subsequent months on the other strategies. The Small Town strategy is one in which you make a decision to focus your search efforts in areas or regions that are less than 50,000 in population. For argument's sake you could increase the number to 100,000, but the fundamentals in rationale remain the same.

Ever heard of Hays, Kansas, population 17,767 with 7,770 families? How about Aurora, Nebraska, population 3,810 with 1,588 families? Surely, Sandpoint, Idaho, population 7,000 with 2,451 families! Come on, Camden, Maine, population 4,022 with 2,010 families! Does Dodgeville, Wisconsin ring a bell, population 3,882 with 1,573 families? Okay. Where is Woodward, Oklahoma, population 12,340 with 5,616 families?

Well, Sykes Communications, SITEL Corporation, Coldwater Creek Catalog, MBNA Credit Card, Lands' End Catalog and Mutual of Omaha, respectively, sure have. They each have their call center, customer service or headquarters operations in these communities. I have also had the pleasure of having visited each of these communities in my travels as a site consultant.

Take a look at the following chart:

With 500 employees in a town of just under 18,000, it means that 1 in every 35.5 persons works for Sykes in Hays, Kansas. In Aurora, 1 in every 39 worked for SITEL (the teleservices operation is now owned and operated by Hamiliton Communications and is no longer affiliated with SITEL).

One in 22 in Sandpoint works for Coldwater Creek. An astounding 1 in every 12.7 people in Camden works for MBNA. Try 1 in every 9.7 working for Lands' End in Dodgeville and 1 in every 25 working for Mutual of Omaha in Woodward.
Why are these call centers located in these small communities? To be balanced, I should note that in each of these communities, the population figures increase if you drive 15 to 30 miles. In some cases even doubling or tripling, but still not even coming close to what many would consider to be metro areas, which is my point. While many call centers are located in metro areas, it is not an absolute necessity to do so unless there is a unique skill set required, such as persons having a Ph.D.

These communities and their surrounding areas consistently display the kind of attributes any reasonable employer needs in order to grow: first, a loyal workforce with minimal competition from similar employers; and second, reasonable costs of doing business, especially in wages and salaries. While not one to sell the workers short, I must point out that in a 100-person call center where just 50 cents an hour can be saved in wages in a small town market versus a metro market, over $1,000 annually per worker can be saved, resulting in almost $100,000 a year to your company. How much effort would your firm have to expend in order to produce an additional $100,000 in new revenues? This kind of saving cannot be ignored!

What about the cost of space? Try $10 or less per square foot annually, which is not hard to find based on my experiences. How much is space in larger metro markets? Conservatively $15 to $20 per square foot. Obviously, annual savings of 33 percent and higher can be realized. This adds up quickly. If your operation uses just 10,000 square feet, I would figure the savings at $50,000 to $100,000 annually, and on a five-year lease, that amounts to $250,000 to $500,000! That could pay for a lot of phone charges.

Speaking of telecommunications, many of these small towns have services that would rival and/or equal their metro counterparts. Yes, fiber optics, SONET rings, digital switching and DS1 through DS3 provisioning are available because in many cases the telecommunications service is provided by a company that is locally owned and the owner, president and general manager are all available and anxious to serve you. In many cases their home number is even on their business card. Your operation becomes one of their larger if not largest users overnight. Many of these hometown telecommunications companies will even help you lease your call center equipment, hardware, software and even the workstations. They will work closely with the economic development organization serving the area, which will save you more money in lower interest rates and favorable terms, making more operating dollars available to run the operation.

Remember that in these communities having 50 to 100 employees or more makes you a major employer. The economic case for these communities can be made in quantifiable measurable terms, which must lead you to consider these areas.

Is every small town a candidate location for your next center? Absolutely not! I can only hope that you will consider many more of these small towns now than you would have last month.

E-mail me with your questions, comments and experiences at jbeatty@callcentersites.net and I will respond personally or in future articles. Also, for the latest information on call center locations, visit www.callcentersites.net.

James Beatty is president of NCS International, Inc., which specializes in corporate site selection, community analysis and marketing.

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