Optimize Your Investment In Financial Services Outsourcing
BY KAREN BECK, SKY ALLAND MARKETING
Call center outsourcing is changing the way financial services companies communicate
with their customers, and ultimately, the way they optimize customer loyalty. Properly
managed outsourced call center relationships are enabling companies to shift from
vertically isolated program "islands" to integrated dialog channels that produce
valuable and profitable customer communication data. Selecting, organizing and managing
these call center relationships is a demanding but rewarding process.
The right call centers can offer customer relationship management services that meet
the specialized needs of banks and financial services companies. Financial services
require industry-specific customer relationship management expertise, in part because
banking does not revolve around product delivery as much as other businesses. And since
the contact and relationship with financial customers is different, a well-chosen
outsourced call center will provide the ability to address every channel that may touch
financial customers, from customer service to credit and collections.
While the financial services sector faces some unique considerations in outsourcing its
customer communications needs, many of the success factors leading to the decision to
outsource call center needs are shared by most vertical markets. "A critical measure
of success in outsourcing is the ability of the client and provider to discuss and create
a shared vision," according to Frank J. Casale, executive director of the Outsourcing
Institute. "From that foundation, the success of outsourcing lies in the hands of the
people managing the relationship. Cooperation, flexibility and the pursuit of excellence
will give the financial services companies involved in outsourcing the opportunity to
achieve their goals and move forward with success."
Know What You Want To Achieve
Outsourcing must be done carefully, systematically and with explicit goals.
Companies that rush into outsourcing without fully understanding what they hope to achieve
often face budget overages, difficulties with their chosen outsourcer and
less-than-optimal results from a marketing perspective. Sensible reasons to consider
outsourcing include both strategic and tactical concerns on both a departmental and
For example, outsourcing might be justifiable for a financial services department with
high costs that cannot be reduced through internal cost-cutting measures or a lack of
competency in specific areas. Organizational needs that generate consideration of
outsourcing include the ability to profitably compete in the marketplace or relief from
financial pressures achieved through immediate cost savings. The primary business needs
for financial services call center outsourcing include lead management, customer
satisfaction, channel management, churn management and cross-selling.
Outsourcing these critical business service components offers financial management the
ability to stay on top of the customer communications process by reviewing and analyzing
the essential data extracted to make sound management decisions. This is a key strategic
advantage, significant management time saver and a cost saver. Some outsourced call
centers can offer financial services companies experience and expertise in their vertical
market (including customer relationship management and customer database optimization),
which, when applied to specific programs, can lift acquisition and retention rates
substantially. Furthermore, up/cross-selling experience/expertise is important,
particularly in financial services with the emphasis on retention.
In one example, Sky Alland, a customer loyalty management company, was hired to
conduct welcome calls for a major national issuer of credit cards. New credit card holders
received an initial call from Sky Alland designed to establish a relationship and
stimulate account activity. In an effort to quantify the impact of the calls, Sky Alland
worked with its client to compare the activation rates and the account activity of
contacted customers versus a control group of not-contacted customers.
The welcome calls chart demonstrates the power of customer-contact calls
in Figure 1. This client was able to increase first-month credit card activations by 250
percent and first two-month account balances by 27 percent. Moreover, the credit card
customers who received the welcome calls wrote more checks off their credit card accounts
and withdrew cash more frequently at ATMs both attributable to the effort to
increase awareness and establish customer relationships right from the start. Based on the
incremental profit from contacted customers, and the cost of the calling effort, the
credit card client realized a 500 percent return on investment in the first 90 days of
The red equals contacted customers while the blue equals customers not contacted for the following time period: transactions over a 30 day period; and account balance over a 60 day period. Transactions had an increase of 250% while account balances increased 27%.
Top 10 Reasons Financial Services Companies Outsource1
- Reduce and control start-up and operating costs,
- Improve company focus on core competencies,
- Gain access to world-class capabilities,
- Free up internal resources for other purposes,
- Resources are not available internally,
- Ability to ramp up and down quickly important if your marketing campaigns are not
evenly spread throughout the year,
- Function difficult to manage/out of control,
- Make capital funds available,
- Share risks,
- Cash infusion.
Outsource For The Right Reasons
Financial services managers tasked with assessing outsourcings potential
benefits often make the decision for cost reduction, cash infusion, increased
satisfaction, and other effectiveness and efficiency improvements. Most important, if the
outsourced function is not a core competency, then the energy applied to it can be
redirected to more results-oriented financial services tasks. Potential disadvantages
include outsourcing for the wrong reasons, losing control of the resource, losing
personnel who have been trained in the organizations particular business practices
and have become a part of the organizational family, and the risk that the outsourcing
vendor may not be able to achieve the desired benefits or may fail in providing critical
Financial services companies best suited to outsource are those with a relatively high
volume of customers (250,000+) and branches (200+). Financial service companies that staff
a large number of employees to make phone contact on a manual basis are also good
candidates for call center outsourcing; thats because they can realize tremendous
time and cost efficiencies with the benefit of automated call center technologies (e.g.,
predictive dialers, automatic call distributors, telebusiness software) and most
outsourced call center providers have already made the investment in these technologies.
Automated dialer and call center technologies are evolving rapidly and it is expensive for
the financial services company to frequently upgrade these technologies, whereas the
outsourcer can better leverage the investment.
Along the same lines, outsourcers can offer state-of-the-art database management
systems, including relational databases and relevant reporting systems, which are
expensive to purchase, maintain and upgrade. This is particularly relevant today given the
trend in financial services channel management an area traditionally associated
with large, expensive database constructs.
Call center candidates who can most benefit from outsourcing include banks, brokers,
credit card issuers and automatic direct payment providers. Typical outsource programs for
financial services include the following categories.
- Lead Management, Order Entry And Fulfillment. The call center identifies and
distributes leads generated through inbound 800 number contacts to the appropriate
distribution outlets, fulfills information requests and conducts outbound follow-up to hot
financial prospects in order to improve sales effectiveness. Product/service orders can
also be accommodated, including credit card processing, online inventory management and
fulfillment either full department handling or in an overflow capacity. This
program works especially well for both short-term and long-term advertising campaigns.
- Customer Satisfaction Measurement/ Management. This popular program facilitates
communication with customers to evaluate the performance of the financial services
organization and its channel members in key areas affecting customer satisfaction. By
providing feedback in real-time, advanced call centers enable clients to react quickly to
customer concerns and correct operational shortcomings.
- Cross/Up/Next Sell. This service offers a chance for clients to maximize and
optimize the call center scenario by seizing opportunities to cross-sell related financial
services to target customers. A technically advanced call center with a strategically
networked database can mean the difference between modest profits to an astounding leap in
call center productivity.
- Relationship-Building/Churn Management Contacts. The emphasis of
the retention marketing call is not to interview customers, but to provide and collect
information key to building the customer relationship. Examples include welcome calls to
new customers and renewal contacts to high-value customers facing re-enrollment decisions.
Starting A Call Center Relationship
Finding a call center that specializes in your business needs is an obvious but
often overlooked factor. The company philosophies and chemistry must create synergy and it
must share your vision and goal. It is critical to measure the depth of a call center by
assessing its interpretation of customer loyalty management. It is also not out of the
question to assess the employee profile of the customer relationship associates, including
average years of experience and education backgrounds.
Once the decision is made to outsource, it is essential to identify the right person(s)
who will be given responsibility for oversight and management of the outsourcing
arrangement and vendor relations after the contract is signed. Their inclusion is critical
for several reasons. First, there is no better way to understand the issues involved in
outsourcing than to be involved in all aspects leading up to the deal. Second,
relationships with call centers start at the moment discussions begin. Being on the ground
floor and having continuity in the relationship with people in the vendor organization
contributes to success.
1Survey of Current and Potential Outsourcing
End-Users. The Outsourcing Institute Membership, 1998.
Karen Beck has developed customer retention strategies for many Fortune 500
companies during her nine-year tenure with Sky Alland Marketing. She joined Sky Alland in
1989, during the early years of the companys development. She is responsible for
building many processes and systems currently employed by the firms clientele. Karen
has held several marketing and client services positions at Sky Alland, and she currently
heads up sales efforts in the mid-Atlantic region.