October 2000

BY ED PENNINGTON, ONE NORTHEAST

Today's call centers are, in many cases, international, multichannel and media- and service-provider-dependent. The importance of today's call centers makes it crucial to take the proper steps to ensure that they are established correctly. This article highlights the issues involved in the establishment of a quality, cost-effective and low-risk international call center.

From a corporate point of view, businesses need to identify a low-cost, low-risk and high-quality location to provide a strong foundation for the newest member to their corporate facilities. This decision will, however, be pushed in different directions by certain drivers the company will view as desirable or wish to avoid. Cost, the local government and competition will all have a profound effect on this entity. A certain location may have benefits such as a friendly government or be close to market, but be so rife with competitors that poaching of staff or overheating makes it impossible for the business to run.

Following are some important considerations when expanding operations abroad, and advice regarding how to maximize the security of your business.

Market Approach
An international call center can approach the market locally, nationally, regionally, pan regionally or globally. Whichever of these or combination of these is the most important will set many of the priorities in terms of detailed location factors and security. As a consequence, the size of international markets and national markets served, language capabilities, cultural affinity, call center economics and business strategy thrusts will have greater or lesser importance.

All companies in the 21st century will need to be both global and local (or "glocal") at the same time, but not to the same extent for all industries and not in the same proportion for all aspects of a given business. The key to success is to learn how to balance global and local requirements simultaneously and across all aspects of the business segments, activities and international borders.

Obstructive Marketing
Obstructive marketing¹ is a term that identifies those barriers that international companies encounter, primarily when moving their businesses abroad. These barriers manifest themselves in four basic forms: competitive, criminal, cultural and casual.

In the call center arena, there is always competitive pressure, but the issues that tend to stop a call center operating effectively are more likely to be casual (which includes accidents), cultural and criminal (which includes hacking) issues.

The counteraction to these forms of "obstructive marketing" are advanced information security, constructive operations and business information security, where the first protects the IT infrastructure, the second is a risk-based approach to the company's corporate plan and the third is a holistic approach to running a business.

Key Success Factors In A Risk-Based Approach
The problem with traditional risk models is that they tend to be prescriptive, when the need is often to construct a risk model that reflects the reality of a particular situation. In conjunction with our work on obstructive marketing, we developed a risk-based approach to locating overseas. The heart of this model cites the four main reasons for business failure abroad.

We saw these as:

• Management tension or disagreement with the head office,
• The sales and marketing plan falling through,
• Lack of or insufficient financing, and
• The business picked the wrong region in which to locate.

A region must be able to sustain investment and be able to grow along with the constant growth of the regional infrastructure. It is crucial for a call center operator to consider a region with respect to these key factors: labor, infrastructure and cost.

With regard to labor, the key issues are churn rate, training and attitude. Churn rates vary from over 50 percent in parts of the U.S. and Canada to less than 10 percent in parts of Europe.

Training is increasingly important for call center staff: the better trained they are, the more money they earn. Currently, in the U.S., training for business skills is now running at more than twice the rate of technical skills.² Low churn rates and good training lead to a better attitude and permit higher pay structures achieved through the savings on churn.

Infrastructure in terms of fiber availability, bandwidth availability, independent switches, satellite alternatives and disaster recovery also play a big part in the success of a modern call center. As multimedia inquiries and responses become more common in all types of centers, the ability to transfer, combine and separate one medium from another becomes "mission-critical." Few countries and regions have the ability to do this successfully; fewer still have the support services to ensure the infrastructure stays up, the staff are trained and disasters can be recovered from.

Total cost-per-seat is partly dependent on the previous two factors, but also on property costs and other regionally based costs.

These are the critical aspects of locating a call center, and care needs to be taken when addressing them because call centers tend not to move once they have been established. The reasons are varied, but are usually based on labor, infrastructure, the rise of local suppliers and, most important, the needs of the customer base. The moral of this story is to get it right the first time.

Contingency Planning
On April 13th 1998, 6,500 AT&T customers who leased a frame relay service lost access. This incident affected many more people than just the customers and, in some cases, lasted for a number of days. Customers who had put a hold on implementing a backup system suddenly realized it was necessary.

General Semiconductor (GS), an international manufacturer of rectifiers, voltage suppressors, signal transistors and diodes, survived in good shape thanks to an ISDN backup system. With a committed frame relay information rate of 32Kbps for each of its three private virtual circuits (PVC), it managed to switch instantly to its ISDN backup system for international data communications. GS works round-the-clock with network nodes spanning most of the world's time zones. Downtime would have been costly in terms of lost revenues and productivity. The company was down for eight hours.

The company ran AS 400s spread at various locations -- essentially a star topology with a central corporate and processing headquarters. They also ran a substantial private voice network because phone charges throughout the various worldwide facilities would have been quite expensive on a public phone network.

GS backed up its international frame relay service with ISDN and realized a return on their investment for the whole system during the eight-hour outage.³

Compare this with the recent large-scale "denial of service" attacks that brought down the e-commerce Web sites of eBay, Yahoo, Amazon.com, Buy.com and CNN.com by overloadeding the sites' servers with an inordinate number of data requests. The perpetrators apparently hacked into hundreds of computers and planted a software program called a "zombie." The "zombies" were timed to go off simultaneously and began sending data packets to one or more servers. The data mimicked legitimate users, but were designed for no other purpose than to overload the system, preventing the companies from responding to legitimate user requests.

From these examples we learn two distinct factors relating to call center security. The first is that a backup system reduces the over-reliance your call center may have on its singular service provider, and when one starts to combine approaches or communication channels, the risk of a failure or problems actually increases rather than decreases.

Customer Relationship Management (CRM)
In 1997, CRM was worth $1.2 billion. By 2002, it will be worth $11.5 billion.⁴

The growing need to handle a large number of multimedia inquiries is a practical reality facing call center managers. The volume call center's biggest problem has always been handling peaks and troughs, but the new-style CRM call center is moving to be a broader "response center" where query routing, resolution and monitoring are fundamental factors in ensuring call-handling quality. Today, the biggest concerns for the U.K.'s top 300 call centers are staff skills and retention, but the implication is that the focus will shift from people to software over the next few years to solve the problems of running multichannel centers. A survey to test how well this approach was being adopted found that the best prepared companies were the low-value, repeat-purchase consumer goods companies, followed by the financial services companies, with telecommunications companies at the bottom of the list.⁵

It has been suggested that the three key areas for a CRM manager to understand are:

• An accurate prediction of the likely call types has to be carefully constructed,
• The software must allow fast adaptation to incorporate workflow for unexpected queries as they arise, and
• The staff must be well trained and helpful.⁶

Ideally, this requires follow-up, which few are good at. In 1998, two-fifths of 4,700 sales and marketing directors admitted their organization had no centralized procedure for sharing information gathered by the service staff and sales force.⁷ Another recent survey found that while nearly 90 percent of all firms believed that customer information was vital to success, less than 50 percent did anything about it.⁸ There must to be a culture of customer care for a call center to succeed.

Business is increasingly global. As market familiarity consequently decreases, market risk increases. Global businesses face increasingly unknown competitive, criminal cultural and casual challenges, which can be managed by new types of risk models. All these will have an impact on the call center's quality/ cost/risk equation. These are driven by location factors particular to the industry.

New developments and issues continue to modify the picture. Disasters happen regardless of the medium being used. Guidance is continuously updated to combat any new threats. Customer relationship management, however, gets more and more demanding -- and success, in the end, is determined by customer satisfaction and the bottom line.

¹ The Journal of Industrial and Business Marketing, Vol.12, No. 5, pp. 339-343, 1997.
² Source: International Data Corporation, 1999.
3 Source: Communication News, 1998.
⁴ AMR Research
⁵ Readycall UK: Surveyed advertisers offering a single telephone number. Covered advertisers of financial services, automotive, telecommunications, office equipment and consumer goods, Fall 1999.
⁶ Best Practices in Call Center Man-agement. Marketing Today, March 2000.
⁷ Saratoga Systems, 1998.
⁸ KPMG, 1999.

Ed Pennington is vice president of Inward Investment for the Chicago offices of ONE NorthEast and responsible for assisting telecommunications, call center and back-office facility investment into the region. ONE NorthEast is the economic development agency for the North East of England. The North East of England is home to more than three hundred U.S. company expansions and over $3 billion of investment in the past three years.

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