September 2003

By Martha Lanaghen, Center Partners

Under pressure to strengthen customer relationships and cut costs, most teleservices managers carefully monitor their contact center services. Looking for greater efficiency, they implement new programs and measure the results. Especially during the last decade, techniques and technologies for performance monitoring and analysis have exploded. Even many small contact centers have developed sophisticated programs to detect inconsistency and pinpoint weakness, and they have indeed driven costs down.

But measurement, analysis and improvements in efficiency are not enough to propel an industry forward indefinitely. As time goes on, pressure to achieve a quantum jump in performance is increasing. Small, incremental changes are no longer sufficient, which is why so many contact center operations are coming up short in their search for more performance improvement and cost reduction.

Public Enemy No.1: 'The Way We've Always Done It.'
Whether you rely on outsourced contact center services or prefer to keep your operation completely in-house, if you're looking for a big improvement, it's time for a change, a new perspective. You need creative ideas that can provide an alternative to 'the way we've always done it.'

First, step back and take another look at your own contact center. Ultimately, the success of every contact center operation is limited by the presumptions we ' both clients and outsource vendors ' apply to these relationships. For example: Contact center managers commonly hire outsourcers to handle overnight and overflow call volume, and to provide a secure back-up for their in-house operation. But for other kinds of work, the decision to outsource is usually considered a yes/no choice'all or nothing.

When outsourcers are brought on board, they are usually given explicit goals to reach and protocols to follow. Contracts strain to be definitive and control the future of the relationship ' rather than provide a mechanism that encourages change and drives results to levels we cannot foresee today. They relate performance mainly to static goals and services that are specified in advance.

Most managers who split their contact center activities between an outside source and an in-house operation set boundaries that sharply separate the work of the two operations. Each provides reference data to monitor the performance of the other, but otherwise the goal is to keep the two operations apart. We aim for stability and predictability. When all goes according to plan, this is exactly what we get ' compartmentalized operations and predictable results!

A New Culture That Welcomes Interaction, Change And Improvement
In my experience managing both large in-house contact centers and outsource operations, I have found that the most beneficial strategy is to combine them. Managing an in-house center supported by one or more outside centers can sometimes be a challenge, but it gives you terrific flexibility, plenty of data for quality monitoring and excellent security.

By shifting the cultural gears in your in-house/outsource relationships, you can take these basic advantages several steps farther. More inventive and dynamic collaboration between client companies and their outsource contact centers can produce surprising opportunities for performance benefits, cost reduction and continuous improvement. But this requires a fundamental, cultural shift in the way we manage outsource relationships. We must:

' Dismantle the in-house/outsource barrier.

' Create collaborative interaction between in-house and outside operations on numerous levels.

' Refocus our expectations on a moving target. By making the management process more flexible and creative, we can set dynamic goals and drive continuous improvement in performance.

' Challenge our outsource partners to achieve the goals in new ways, and give them the freedom to perform under their own processes, within appropriate boundaries. Tell them where to go, not how to get there.

Interactive Co-sourcing Begins With Open Collaboration
Both the in-house and outsource operations must adopt a culture that is open and collaborative, not secretive and territorial. This is the first step, and it's one of the toughest.

Most in-house contact center managers are cautious about revealing more to their outsourcers than they 'need to know' to get their jobs done. Virtually all outsourcers complain that their clients cause problems and drive up costs because they don't share information readily. How can we drive insourcers and outsourcers toward a more collaborative relationship? We must start by eliminating the threat that each seems to pose for the other. This requires strong leadership and a lot of candor. From the start, the new relationship must be presented to the in-house staff as a partnership, and it must be fully explained. A comprehensive in-house PR campaign should reinforce the value of this new interactive relationship and set the expectations about collaboration and open communication.

New incentives must be created to encourage managers to welcome creative, unexpected solutions and the risk that always comes with trying something new. Incentives in most contact centers today perpetuate old thinking, because they are based on obsolete presumptions and narrowly defined measurements of success. Managers must be motivated to lift their eyes up from the call center floor ' and all the usual measures of call center efficiency ' and focus instead on their customer and the marketplace outside the walls of the contact center. Measurements like first call resolution and customer satisfaction for example, are far more meaningful than average handle time and after call work. They encourage contact center managers to consider new solutions and goals that relate more directly to the long-term health of their own company and the lifetime value of their customers.

True Partnership Requires Wide-open Communications
To elevate your outsource contact center from the role of a transactional customer care group to that of a strategic partner, you have to give them the information they will need to engage in your business and contribute to your success. Share data on customer behavior. Share revenue data. Make the contact center an active participant in your business by sharing competitive information and marketing strategy.

You will also share procedures for such functions as training and nesting. At first, this sounds like nothing new. After all, clients commonly provide outsourcers detailed instructions, SLAs and training prior to start-up. The difference in the new co-sourced environment is that the development and communication of these protocols is a two-way process. Both in-house and outside operations must be challenged to improve current programs and to transfer what they have learned to their counterparts.

Interactive co-sourcing capitalizes on cultural differences. Interactive co-sourcing makes many promising functions possible because it promotes greater cooperation and creative thinking. It encourages growth and welcomes change. But it also acknowledges that outsource and in-house cultures are fundamentally different ' and it turns those differences to your advantage.

Outsource contact center people live with change all year long. They are accustomed to changing clients, products and procedures, often with little notice. At the far end of the personality spectrum, in-house people resist change. To them, change is unnerving because it signals instability and uncertainty. Once a change has been made, reversing course can be a nightmare! Because of cultural differences like these, many kinds of programs are best developed and refined in an outsource environment, then imported to the in-house operation after they are proven winners. A premiere customer care program provides an excellent example.

Premiere customer care. For any high-value customer care program to succeed, it must be fundamentally different than the program that serves customers in the general queue. Otherwise, customers will recognize that their 'premium' service is really nothing special. This requirement is extraordinarily hard to achieve within an in-house contact center, where policies and procedures are deeply entrenched. The pressure to avoid changing key elements ' such as compensation plans, training programs, marketing incentives and price promotions ' is enormous. Once the new program design is finally ready to pilot, the politics become even stickier. Which employees will be chosen to participate? Will their compensation change? If it does, will it change back if the program is unsuccessful and discontinued?

Of course, every pilot program must meet its goals to justify a rollout and ongoing support. But in the real world of in-house contact centers, plum programs like this are often hard to shut down. Mired in political issues, they drag on despite evidence that they are not meeting performance and financial goals.

An outsource contact center does not suffer from these political obstacles. This is the ideal location to reinvent the customer care program, experiment with such variables as compensation and training, and produce something truly different.

After the program's value has been proven, you can easily import it into your in-house operation. For your outsourcer, the assignment must include responsibility for documenting the program and thoroughly training the in-house crew to take over. With a high level of cooperation and cross-training, this kind of transfer is feasible, fast and productive.

Training programs. The task of developing and testing new training programs also lends itself to interactive co-sourcing ' especially if you hire an outsourcer with strong capabilities in e-learning. You can develop an unlimited variety of knowledge management applications and other desktop support tools, product training and sales training programs in the outsource environment. When you introduce the fully developed programs in-house, you will create no more than a ripple in your in-house operation.

The key to building training programs outside your in-house contact center is to define the goal but give the outsourcer the freedom to define the training method. Allow the outsourcer to be inventive. Set your sights on faster speed to competency for new hires, for instance, but impose no other presumptions.

Monitoring the results. When you start thinking outside your corporate box, you will have to re-think the tools you use to measure success. Low-level measurements like average handle time or average hold time yield only near-sighted assessments. They presume that the right goal is to reduce time on each call and move through the queue faster.

Sure, simple gauges like hold times and basic quality scoring have a place in the performance equation. But in most contact centers today, even 'quality scoring' is an ironic misnomer. Most quality evaluation forms evaluate such parameters as the agent's adherence to the script and her use of the appropriate opening and close. In other words, they are designed mainly to reward consistency. They generally have little bearing on the customer's perception of the call ' and the customer's resulting inclination to return for another purchase or upgrade.

Your in-house and outsource managers must all focus on the future ' on the lifetime value of each customer relationship. Emphasize the greater importance of measurements that relate directly to the customer experience. Cost per call, first call resolution, frequent issue, cost to serve and lifetime customer relationship value all represent goals that are truly in tune with the ongoing health of your business.

Some of these higher-level measurements require sophisticated (and expensive) technology to execute effectively. So, this is another place where the outsourcer can contribute great value. Most substantial outsourcers have applied economies of scale to invest in such technology.

The Future Of The Outsourcing Relationship
Many managers of in-house contact centers are over-cautious and preoccupied with profitability and risk-aversion. They are so focused on maintaining profitability that they decline to accept risk unless profitability is virtually assured. The result, of course, is that they make only small, careful changes and never achieve quantum improvements in performance and profitability.

The best way to improve the performance of your in-house contact center operation is to hire an outsourcer and create a relationship in which they work together. The future of the client/contact center relationship is an open, dynamic and adaptive collaboration that yields enormous performance gains ' instead of ever-shrinking improvements ' in efficiency without fundamental change.

Challenge your outsourcer to find better ways to do what you do. Challenge your in-house staff to embrace change and risk, and to welcome ideas from an outside source. The long-term value of interactive co-sourcing is well worth the effort.

Martha Lanaghen is vice president of marketing for Center Partners (www.centerpartners.com), a contact center outsourcing company that specializes in delivering customer care for complex products and services. Contact her at [email protected] or 800-519-3532.

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