June 1999
Co-Sourcing: A Winning Alternative To Outsourcing Call
Center Operations
BY FRANK L. FUHRMAN, TELERX
We've come a long way from the early days when "customer care" simply meant
"complaint department." Surviving the transformation from a drain on the
corporate bottom line to a profit center, customer service departments, as we know them
today, are an integral part of the marketing mix. Companies now rely on their customer
care professionals to expand their businesses by satisfying customers' needs,
strengthening their repurchase intent, nurturing long-term relationships and fostering
loyalty.
In turn, many companies outsource this function to specialists. Outsourcing relieves
corporations of the need to develop and maintain internal resources and helps assure
all customer contacts are handled with the utmost quality. After all, the negative impact
a less-than-top-notch interaction can have on business can be significant. Studies
indicate that customers whose issues are not handled sufficiently tell eight to ten people
about their negative experiences twice the number they would tell if their
experiences had been positive.(1) This can create
serious market damage for any company.
However, many companies are hesitant to outsource this mission-critical function. They
fear a loss of control and confidentiality. They maintain this effort in-house, even if
they have to struggle to provide the high-quality service levels, professional staff and
state-of-the-art technology service agencies can offer.
Co-sourcing is a winning alternative that offers the best of both worlds. Yet, handling
some elements of a customer care program in-house and outsourcing others is an
option that has long been overlooked. According to DGY Associates' 1997 call center survey
of Fortune 1000 companies, only 7 percent of 228 respondents had an internal call center
and outsourced.(2) Typically, most companies either
handle all of their customer care contacts internally or outsource them all.
Co-Sourcing Offers Many Benefits
Yet, co-sourcing is gradually gaining acceptance as an excellent option for many
companies. Sharing the responsibility for customer contacts allows companies to focus on
their core competencies while remaining intimately involved in their customer care
programs. It permits them to retain control, one of the biggest fears many companies have
with regard to outsourcing.
A co-sourcing partnership offers many additional benefits particularly in the
areas of staffing, technology and the bottom line. Co-sourcing can effectively expand an
existing workforce without the costs and hassles associated with recruiting and retaining
qualified professionals. It can also free internal resources to do more data analysis and
serve as a vital market intelligence source.
Many companies find co-sourcing beneficial when their programs require highly
specialized customer service representatives such as health care professionals or
individuals with other special skills such as floor installers and licensed agents. They
tend to outsource the handling of more complex interactions, deferring the task and
expense of retaining and training specialists to their co-source partner. An added value
is the exposure internal customer care representatives gain from the knowledge and
experience of call center industry experts.
In addition, with two complementary teams, there is always back-up support. Recently,
when an insurance company was hit by a severe snow storm, all calls were rerouted to its
service agency partner in another part of the country. The teleservices agency mobilized
its team. Reps were asked to arrive early and stay late to help handle the extra load.
Seamlessly, the majority of the additional customer calls were answered without any
negative effect from the storm.
In another case, when a major manufacturer of consumer products had an internal
customer service department meeting, all calls were transferred to the service agency to
allow meeting attendees to concentrate on the agenda and eliminate interruptions.
Similarly, co-sourcing benefits businesses that are affected by seasonality and
experience an ebb and flow in call volume. For example, with a manufacturer of air
conditioners, normal call volumes are experienced during eight months of the year. With
co-sourcing, the manufacturer need not staff up during the four warmest months when call
volumes soar.
The same applies to a coffee company whose call volumes escalate during the winter
months, and for a major beer manufacturer whose call volumes soar during the summer
barbecue season.
Additional Reasons To Consider Co-Sourcing
Co-sourcing also allows companies to take advantage of emerging technology without the
capital expenditure. Most service agencies maintain the state-of-the-art structure needed
to support it. Clients are able to benefit from enhanced technology for a fraction of the
investment that would be required for them to maintain the technology in-house.
Last, but not least, co-sourcing can have a significant impact on the bottom line. In
addition to controlling costs and offsetting internal charges, the DGY Associates' study
shows that companies that partially outsource claim the highest average percentage return
to investors on an annual basis.(3)
How Co-Sourcing Works
Co-sourcing arrangements come in all shapes and sizes. Often, both partners handle the
same level of contacts and just split the load in half. In other cases, the service agency
handles specific types of calls that are more or less complex than those going to the
in-house team. A company may opt to outsource its tier-one calls (basic name/address
capture and basic questions/requests) and tier-two contacts (more complex customer service
interactions). The internal department may choose to retain the most difficult customer
contacts those that require a high level of expertise and years of experience. Or
vice-versa. The simplest contacts may remain in-house and the more complex ones referred
to service agency specialists.
According to the DGY Associates' study, companies that use a combination of internal
and external centers are more likely to outsource inbound functions. Companies new to
outsourcing are expected to retain exclusive control over inbound sales. They are most
likely to outsource inbound service and support as well as outbound sales and service.(4) The flexibility co-sourcing affords allows the mix of
responsibilities to change as needed.
Deciding the best way to configure a co-sourcing partnership depends on many issues.
First and foremost, the corporation's mission must be clear. What is the goal of the
customer care effort? Is it to augment marketing activities, satisfy and retain loyal
customers or provide the first line of defense? Is customer care viewed as a cost center
or a department that can make a difference in the long-term growth and profitability of
the company?
What are the corporation's competencies? Is there in-house capability to run a call
center? Is the infrastructure to deal with the associated staffing, systems and training
issues in place? Are the systems year 2000 compliant? If not, what role can a service
agency play to ease the transition to the new millennium?
What is the comfort level of company executives? Do they feel more secure dealing with
confidential matters in-house or does the expertise and experience of a service agency
handling more complicated interactions put them at ease? Answers to these questions may
depend on the nature of the customer contacts. Often, those with potential medical
ramifications or legal liabilities as well as those that deal with sensitive issues
are handled internally. The remaining call types (which can represent as much as 95
percent of the total call volume) can then be handled by the co-sourcing partner.
When these questions are answered and the direction for co-sourcing is clear, it is
imperative that the right service agency be brought on board. Make sure the agency has
experience with co-sourcing. Understand its focus, core competencies, corporate values and
goals. Penetrate its organizational structure and learn what it is really like on the
inside. Establish relationships with the professionals who will be involved in the program
and evaluate their ability to be cooperative, influential team players and business
partners who can add value.
Once the best-suited partner is selected, design a true partnership where both parties
are equally important. The success of the program hinges on mutual respect and
responsibility. Have clearly delineated goals and roles and a defined process and
methodology in place. Make sure each party understands the tasks for which it is
accountable and be sure to monitor the situation on an ongoing basis. This way, roles and
responsibilities can change as needed.
In addition, if calls need to be transferred between the in-house team and the
co-source partner, be sure a system is in place to eliminate lost or misdirected calls.
Assure that every piece of technology that interfaces with the customer care program
both the company's and the service agency's is Y2K compatible. Then, repeatedly
test the systems to assure they all work as planned.
When all systems are up and running and the partnership is moving ahead the
benefits of co-sourcing will likely be evident, and the missing link to providing
high-quality customer care that addresses the ever-increasing sophistication of today's
customers and consumers will have been found.
(1) "The Information Challenge," General
Electric 1982.
(2) "Survey Analysis 1997," DGY
Associates, p. 9.
(3)Ibid p. 6.
(4)Ibid p. 31.
Frank L. Fuhrman is vice president of sales and marketing at Telerx, a service agency that specializes in call center
solutions for customer care. Frank has more than 15 years of experience helping major
national companies clarify their customer care goals, set objectives and design strategies
for delivering quality customer communications and managing critical information. |