TMCnet - World's Largest Communications and Technology Community



puboutlook.gif (1628 bytes)
October 1998

A New Business Model For In-House And Outsourced Teleservices


Excessive competition has forced the unfortunate occurrence of price erosion within some sectors of the teleservices industry, which can only hurt the quality of service and disappoint outsourcing clients. After all, unless a business can maintain a reasonable profit margin, it cannot provide the quality of service customers expect. This principle applies equally to in-house call centers and outsourced teleservices agencies.

Before I embark on presenting a solution to price erosion and lower profit margins that affect the operations of call centers, first, let's look at some of the problems plaguing us. As you'll recall from my Publisher's Outlook in the August issue that presented the findings of our Rising Stars award survey, our industry - though it continues to grow - is growing at a slower rate than previously. Why aren't we continuing the growth rate we enjoyed during the last two years?

The Nature Of The Beast
We saw that the most obvious problem was the lack of qualified, experienced teleservices reps as well as supervisors and managers. Companies that charge unreasonably low prices cannot afford to hire and train high-caliber personnel, let alone hang on to these people long enough to provide a career path into management. Price erosion, as I've said before, is our industry's number-one enemy. It is limiting our growth. (As Howard Glass, president of I.R.T. and who contributed greatly to this outlook, said, "Price erosion is scary.")

What is needed is a new business model to be followed by every business that operates a call center. We need to form an alliance to improve the condition of our industry. For this worthy purpose, we need to close ranks and work together to slay the dragon: price erosion for outsourced teleservices, lower profit margins for in-house teleservices.

In trying to come up with a sound and workable list of guidelines, I called a few executives from leading call centers. They helped me compile a "How-To" list for setting up call center services - many points apply to both outsourced and in-house teleservices. Those of you who provide in-house teleservices exclusively may initially think many of the principle don't apply to you, but I say, why not? After all, every business has its slow periods, whether due to the cyclical or seasonal nature of the business or some other reason. I say, why not capitalize on the investment you've made in your call center, and its people, and market your services to outside parties in an effort to increase your company's profit margins?

I think the principles I present here are very sound. While I would not advise all companies to adopt the entire list indiscriminately, I would recommend you consider them.

Defining A New Business Model
1. Create a dedicated staff for your clients. Have TSRs focus exclusively on one company (perhaps one product or one type of client if yours is an in-house call center). One rep, or one group of reps, services Company X and only Company X - they know so much about that company and relate to it so strongly, they feel like they are Company X's employees as well as yours! Their loyalty to Company X will result in high-quality service, which will translate to more profits for your teleservices agency.

2. For teleservices agencies, set up a "pay-for-performance" policy. This has numerous advantages, such as: (a) it shows that your teleservices company has the confidence in its performance to charge its clients a percentage of sales generated, and (b) it allows the client to increase its volume of business to the teleservices company because it results in a WIN/WIN situation.

3. Offer "turnkey" services. This will offer numerous advantages, as follows: (a) it gives true meaning to the term "outsourcing," (b) you can attract considerable global business, and (c) you can charge much higher rates with much healthier profit margins.

4. Remember that if you help your client's company grow, you can charge higher premiums - and be better able to afford to pay your reps what they're worth.

5. As well as seeking new clients, work at strengthening your relationships with your current clients: find new, innovative ways to help them grow their business. For example, Martin Cohn, vice president of Precision Response Corporation, told me about a product his company developed. It's called Precision Resolution and it uses the Internet to automatically update customer information in a client's database. So when a TSR helps a customer, he or she has the most current name, address, etc., making the customer feel respected and valued. This improves business all around.

6. Invest in technology to serve your customers or client as well as possible. To be competitive, you need to incorporate CTI, Internet-based customer service, faster computers and maybe even Internet telephony into your call center.

7. Tying into point no. 6, harness the power of the Internet as a customer-service tool. E-mail can be a fast, efficient and powerful means of communications. It is estimated, however, that the average response time to an e-mail message is 17 hours. Such a time lapse should be unacceptable in your call center. E-mail messaging should be interchangeable with other types.

8. Look for accounts among smaller to mid-sized companies. Working with a smaller company, you're more likely to be able to talk person-to-person with the CEO to establish a business relationship with the decision maker.

9. Look into setting up accounts among niche-market companies that allow you to charge higher fees.

10. For service agencies, make sure your sales and technical support staffs are informed on every aspect of the company they're servicing. This ties into the above points on creating a dedicated staff and ensuring good training.

11. Don't lower your standards of quality in the TSRs you hire. You may well have to pay them more, but this will benefit you in the long run. If the service of your call center reps is keeping clients and customers happy, this will go a long way toward winning you bigger and better clients and more customers. For teleservices agencies, your satisfied clients will not only give you more business, but they'll pass on your name to associates needing call center assistance. Satisfied customers will do the same for companies with in-house teleservices.

12. Heed the call of clients and customers for improved quality. With the high level of modern technology today, your clients and customers are demanding the highest-quality service possible.

13. For outsourced teleservices providers, focus on high-end technology, value-added companies that are very strong in their particular niche. These are the companies that will make excellent business partners. They attract a high volume of business and satisfy their customers with the quality of their products or services. They will not only keep your TSRs busy, they'll keep their morale up as well. After all, customers already satisfied with what they've purchased from a company are going to be much more pleasant and upbeat in dealing with the company's TSRs. These TSRs will be proud to represent a company of such high caliber. In turn, they'll be much more motivated to help the customers with their inquiries, orders or problems.

14. Stick to your core competencies. This ties into the dedicated-staff idea, but goes further. Don't dilute your energies by servicing too many different types of businesses. Focus your company's training dollars and energy cost-effectively.

15. Train your TSRs well! Expect the cost of training to be high - keep in mind that it sometimes takes six months for initial training, not to mention essential ongoing training. Still, you owe it to your business - if you are interested in making a profit - to invest in training your reps to handle your call center activities in a professional and consistent manner. As well as providing them with basic guidelines, train them in customer retention skills. This is where real skill will be required, the type of skill you can't expect from someone who is unmotivated by a poor wage structure. (This month's issue features two very helpful articles on training in the Human Resources Development section: "Training Virtual Call Center Reps Is Difficult - But There's A Solution," and "Training CAN Produce Better Reps!".)

If we look over the above list, several themes stand out. The foremost is the need to maintain quality. As Ron Weber, president of Ron Weber & Associates, said, "There is no substitute for quality." Mr. Weber declared, "I see no price erosion." This is true for those who resist the temptation to lower their standards. This was Martin Cohn's sentiment, too. You need to keep your quality standards high, he said - you need to do what it takes to keep your client/partner happy. This brings us to a related theme, the need to make investments of money, energy and time in your call center services. You need to invest time in training, money in equipment and wages, and energy in workingon your relationship with your valued client or customers. It's not an easy task to follow through on such a course, but with dedication and strength to stay the course in spite of temptations to yield to the easy way out, we can bring the teleservices industry back to higher levels of profitability.

The Need To Continue The Quest
While this is a good, sound list of practices to adopt for your successful call center or teleservices outsourcing company, it is by no means a complete list. More input is needed, which I invite you, our valued readers, to provide. What practices would you add to the list? Do you disagree with any of these suggestions? Contact me with your responses. I'll gladly compile a Part 2 of this listing if sufficient input is received. This will help us join together to promote the growth of our valuable industry.


Nadji Tehrani
Executive Group Publisher

Technology Marketing Corporation

2 Trap Falls Road Suite 106, Shelton, CT 06484 USA
Ph: +1-203-852-6800, 800-243-6002

General comments: [email protected].
Comments about this site: [email protected].


© 2024 Technology Marketing Corporation. All rights reserved | Privacy Policy