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WOW, What A Year 2003 Was!
As we begin a new year, it's time to assess the state of
the industry by asking the following questions: In the aftermath of the DNC
regulations, '
Q. Where is CRM going?' The NEW direction.
Q. Who will profit the most in CRM?
Q. Who are the winners and losers?
Q. How has the industry been affected?
Q. How have the FCC regulations become a blessing in
disguise?
Q. How have predictive dialer manufacturers been affected?
Q. Who will gain market share?
Q. Who will lose market share?
Q. What were the offshore disappointments?
Q. What are the onshore growth predictions?
Q. What lies ahead?
Offshore
Q. Why did Dell Inc. pull out of India?
Q. What does it mean for the rest of offshore outsourcing?
Q. How can domestic establishments beat very low-cost and
poor-quality offshore at their own game?
Q. How are Canadian, Caribbean, European and Philippine
offshore outsourcers different?
Q. What are the predictions for offshore outsourcing?
Having covered the contact center, call center and CRM
industry since 1982, when this publication laid the foundation for what is now a
multibillion-dollar industry, and as the owner of the registered trademark for
Telemarketing, I have had the great pleasure of watching and helping the
industry grow from the ground up for the last 23 years!
The Basic Facts About Telemarketing
If you take the telephone out of any organization, the
result would be as follows:
1. No company can exist without outbound and inbound
telemarketing.
Without the telephone, there will be:
' No marketing,
' No sales,
' No collections,
' No customer service.
Therefore, the company will go out of business.
2. Why telemarketing is unique.
Long ago, I defined telemarketing as 'people-to-people
interactive communications.' As such, telemarketing is unique and it should not
be confused with tangible products such as computer and auto parts, sneakers,
software, etc., which could be outsourced to offshore with no apparent problem.
You simply cannot easily blend people of different backgrounds, cultures and
languages without corresponding challenges and problems, not to mention
inexperience, embedded cultural rudeness and ignorance of FTC regulations and
fines.
Indeed, I have heard of many problems relating to the above
and no doubt, some or all of the above may have contributed to Dell's 'mounting
customer service problems' and eventual departure from India.
Having said all of the above, I would like to focus on the
questions stated at the beginning of this editorial.
In The Aftermath Of DNC Regulations' Where Is CRM
Going?' The NEW Direction.
Over the last several years, this publication has written
dozens of articles covering every aspect of CRM applications. We have clearly
indicated the right way and the wrong way as well as the reasons for significant
CRM implementation failures. As a prerequisite, we urge you to read the
following references in order to better appreciate the significance of doing the
right thing when it comes to implementing CRM: Publisher's Outlook June 2003 (http://www.tmcnet.com/cis/0603/puboutlook.htm
); Publisher's Outlook July 2002 (http://www.tmcnet.com/cis/0702/0702po.htm);
Publisher's Outlook August 2000 (http://www.tmcnet.com/articles/ccsmag/0800/0800pubout.htm);
Publisher's Outlook October 2002 (http://www.tmcnet.com/cis/1002/1002po.htm);
Publisher's Outlook November 2000 (http://www.tmcnet.com/articles/ccsmag/1100/1100pubout.htm);
Publisher's Outlook May 2000 (http://www.tmcnet.com/articles/ccsmag/0500/0500pubout.htm);
Publisher's Outlook February 2000 (http://www.tmcnet.com/articles/ccsmag/0200/0200pubout.htm).
Having read all the above, it should become clear to you
that 'one size fits all' does not work well for CRM application development and
execution. It seems to me that the most effective way to profit from CRM
implementation is to develop tailor-made software for each and every different
application. The user groups and availability of user input and related surveys
will help you immensely in developing the appropriate CRM software, not to
mention successful implementation of any given CRM technology.
Therefore, in my opinion, the new direction for CRM
applications for 2004 and in the foreseeable future will be the development of
customer-specific application software.
Who Will Profit The Most In CRM?
As for who will profit the most in CRM, it should be simply
stated that companies that comply with the above suggestions and the users who
use tailor-made CRM products and services will make the most profits.
Who Are The Winners And Losers?
The winners are the companies that have upgraded technology
and have acquired a full and complete understanding of all federal, state and
local regulations pertaining to the do-not-call regulations and have the ability
to implement and abide by the law 100 percent.
The losers are obviously those that are not equipped or
knowledgeable enough to fully comply with all of the relevant regulations,
thereby subjecting themselves to a $11,000 fine levied by FTC per violation. As
stated in previous editorials, 91 violations is equal to 1 million dollars worth
of fines. Obviously, in larger in-house operations where the likelihood of
making considerable unlawful calls is greater, the fine could be in the millions
of dollars and that could be devastating on the company's existence, not to
mention the bottom line.
How The Industry Is Affected And How FCC Regulations
Were A Blessing In Disguise
Obviously, and as stated in previous editorials, many
smaller to medium-sized outsourcing companies that were unable to fully comply
with FCC regulations actually went out of business and thus created tens of
thousands, if not hundreds of thousands, of unemployed agents. On the positive
side, however, by putting people who in fact do not want to receive any
unsolicited incoming phone calls on the do-not-call list, the regulation has
actually increased the return on investment on the calls made to those people
who actually received such calls. In other words, a greater percentage of the
calls are now resulting in sales because such calls are not considered by the
recipients as nuisance or intrusive calls!
How The Industry Is Affected Further
The extremely complicated FTC ruling has literally shifted
the industry from in-house call center support to outsourced call center
support. In other words, many companies simply do not
want to bother to understand or take the responsibility for compliance and,
therefore, they are outsourcing more and more to reliable, high-quality and
compliant teleservices outsourcing companies. In plain English, this has
resulted in a significant improvement in domestic sales for outsourced
teleservices agencies.
To the extent that the FTC regulations have helped to
increase sales results per call, this phenomenon can be considered a blessing in
disguise.
How The Predictive Dialer Manufacturers Were Affected
Prior to passage of the FTC ruling, practically everyone in
the industry was extremely worried and afraid of what regulations might do to
their businesses. However, to the extent that existing predictive dialing
equipment was unable to comply with the FTC regulations, this fact has created
substantial new business for virtually all predictive dialer manufacturers. I
made it a point of talking to the CEOs of the top predictive dialer
manufacturers and each and every one expressed complete satisfaction for
significant new sales from call centers seeking new technology to upgrade their
existing dialers so that they could be DNC compliant.
Who Will Gain Market Share?
Obviously, companies that fully understand federal, state
and local regulations and have the know-how and the technology for
implementation of compliance within their call centers will indeed be the market
share gainers.
Since many small to mid-sized companies have gone out of
business, their customers are now looking to outsource to remaining companies
that are a.) fully compliant with FCC regulations and b.) deliver extremely
high- quality customer service. The above is true provided that the companies
seeking to expand their market share are fully committed to implementing a
comprehensive, integrated and multi-media marketing program, thereby convincing
customers through effective differentiation. Such companies can literally expand
market share overnight.
Who Will Lose Market Share?
Simply stated, companies that are unable or unwilling to
undertake what it takes to succeed, as indicated in the above section, will
definitely lose market share. This also applies to companies which primarily use
price (not quality) as the main criteria for outsourcing.
Domestic Outsourcing Growth Predictions
Back in October 2003, I contacted several CEOs of
outsourcing companies at a given trade show and asked them point blank, 'how is
business?' Without exception, everyone was satisfied with the new growth and
dynamic market share expansion by their companies. When I asked, 'to what do you
contribute the increased business?' the responses varied, but the following
seemed to have the greatest support for the reason behind the new growth:
1. To the extent that several small to mid-sized companies
have literally abandoned the industry and laid off thousands of people, their
customers are now seeking new outsourcing vendors for CRM, and many other
inbound and outbound contact center needs. Therefore, approximately 25 percent
of the growth is created as such.
2. To the extent that many in-house call centers simply do
not want to bother with the highly complicated new FTC rulings, not to mention
state and local regulations, they have decided to simply outsource their CRM and
other call center needs to a fully compliant, high-quality outsourcing
teleservices company. This accounts for another approximately 25 percent of
growth in demand.
3. The third new source for new business for domestic
operations is a return of the companies that have outsourced to offshore
companies and are fully disappointed with the quality and lack of performance of
the much cheaper offshore teleservices companies. Such new business accounts for
an additional 25 percent of the growth. An example of that is the computer
giant, Dell, the world's largest personal computer manufacturing company. Let it
be known that Dell is NOT the only company that is dissatisfied with offshore
performance.
Improved economy is also cited for another 25 percent of
growth.
Offshore Status And Predictions
' Why Dell pulled out of India.
According to an article in the Washington Post dated
November 24, 2003, Dell pulled out of India for the following reason:
'After an onslaught of complaints, direct sales computer
king Dell Inc. has stopped routing corporate customers to a technical support
call center in Bangalore, India.'
I urge all of our valued readers to refer to my Publisher's
Outlook in the August 2003 issue of CIS titled, 'Offshore Outsourcing In
Perspective, The Good, The Bad And The Ugly' (http://www.tmcnet.com/cis/0803/
0803puboutlook.htm). In that article, I clearly pointed out that indeed, when
business conditions were substantially superior to what they have been after
9/11, local outsourcing companies were unable to hire the necessary labor in the
U.S. at an affordable price. At that point, offshore outsourcing seemed
attractive because of the substantially cheaper labor cost. As I expressed
concern in that editorial, which should be a must- read for anyone planning to
go offshore, I was concerned about the lack of quality and quality control and
appropriate training when the relatively low labor costs are gradually forced to
go down even further to remain competitive. Therefore, the quality must have
been non-existent. As a result, problems will arise from time to time.
Obviously, the pull out of computer king Dell from India
does not speak well for further outsourcing of telemarketing services to some
areas. As the saying goes, 'yes it will cost you substantially less to go
offshore, but you will always get what you pay for.' If the computer king could
not offer high-quality technical services offshore, how can smaller companies do
so?
How To Beat Very Low-Cost And Poor-Quality Offshore
Outsourcers At Their Own Game
It has come to my attention that some leading companies in
the U.S. are currently working on a few new business models, which would offer
high-quality teleservices at substantially lower costs domestically. These
companies are not prepared to provide us with full detail at this time. However,
when they are, I assure you we will be first to announce it.
How Canadian, Caribbean As Well As Firms Located In The
Philippines And Europe Are Different
Here is a brief country-by-country accounting of relative
experience and perceived quality:
1. Canada ' Canada has been conducting telemarketing
and teleservices businesses for practically as long as the United States has.
Therefore, several of the Canadian companies are known to offer excellent
quality outsourcing teleservices.
2. Caribbean ' The Caribbean offshore companies,
although new, offer close proximity and understandable spoken English. Their
close interaction with the U.S. mainland has helped them to offer satisfactory
performance in teleservices.
3. Europe ' Europeans have also been conducting
teleservices and telemarketing for at least 15 years and perhaps more. They seem
experienced and among the leading European countries, one might mention Ireland,
Great Britain, France and the Netherlands.
4. Philippines ' As far as the Philippines goes,
although I don't have personal experience regarding the quality and the nature
of the operations in outsourcing companies there, we have heard several
satisfactory comments about Philippines operations, particularly in the
back-office customer service cases.
In all the above cases, we strongly suggest due diligence
before you select an outsourcing partner.
As always, I welcome your valued comments. ([email protected]).
Please read about where the industry is heading on
the following page.
Sincerely yours,
Nadji Tehrani
Executive Group Publisher
Editor-in-Chief
For information and subscriptions, visit
www.TMCnet.com or call
203-852-6800.
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