Feature Story

The History and Advancement of the Contact Center and the Customer Experience

By Paula Bernier, Executive Editor, TMC  |  August 03, 2012

This article originally appeared in the July/August issue of Customer Interaction Solutions

This year marks the 30-year anniversary of Customer Interaction Solutions magazine. Well, that’s not altogether accurate. What 2012 actually marks is three decades of TMC, our parent company, covering the call center space.

I make this distinction because the magazine now known as Customer Interaction Solutions haschanged over time as the call center, and the customer experience, have themselves evolved.

TMC got its start covering the call center space in June 1982 with the launch of Telemarketing magazine. In January of 1996, we expanded the title to Telemarketing & Call Center Solutions. TMC dropped the telemarketing part in July 1998 and went with the broader handle: Call Center Solutions. Then, responding to the rise of CRM, TMCin January of 2000 officially broadened its coverage and title again to Call Center CRM Solutions. And the first issue of Customer Interaction Solutions magazine hit the street in December of 2000.

This latest title clearly put the customer first, as businesses across every industry began to understand that adopting new technologies could enable them to better and more efficiently target, engage and deliver products and services to the customer – and in the process deliver more value to their own businesses. And the spotlight on the customer only continues to get brighter with new developments such as the rise of social media, the mobile boom, big data and analytics.

And while telemarketing and the call center/contact center weren’t even recognized industries before TMC launched its first magazine in these arenas, today they consist of a plethora of revenue-generating businesses big and small, and are considered key employers.

There are approximately 3.02 million agent positions/seats in the U.S. contact centerindustry, accounting for approximately 4.9 million U.S. jobs, according to ContactBabel. The industry is growing at an annual rate of 0.5 percent in terms of jobs, and accounts for an estimated 8-10 million seats worldwide.


Teleservices, CRM and Predictive Dialing

As the name of TMC’s first magazine in this space indicates, it all started with telemarketing.

Mary and Gary West, which head up the business now known as West Corp., were pivotal players in the formation of this industry. In 1973, Mary established telemarketing service agency Mardex, and in 1978 she founded WATS Marketing of America. A year later, she hired on her husband, Gary, as chairman, president and CEO of WATS, for which Mary West was vice president of finance. They sold WATS to First Data Resources in 1980. And shortly after that Mary went on to start yet another firm in this space, this one called West TeleServices.

The following years saw the rise of more teleservices outfits, including Sitel.

TMC’s own Rich Tehrani notes that “state-of-the-art technology in the early days was a Rolodex or index cards with customer names on them.”

But early PC software like Salemaker and TeleMagic enabled telemarketers and other salespeople to track their customers and prospects. These solutions were precursors of what is now known as customer relationship management or sales force automation software. Tom Siebel and his company of the same name popularized CRM software in the mid 1990s. Oracle (News - Alert) later purchased Siebel, among others, in this space.

“CRM provides important insights into what customers actually do, what specific actions they take,” notes Andrew McInnes, director of product marketing at Allegiance Inc. “This is now being combined with what customers think, their perceptions and desires, which allows companies to predict future actions. This provides predictive and actionable data that companies can use to improve their operations. It goes beyond answering what to understanding why.”

Another early innovation in the days of telemarketing was the predictive dialer. These solutions, which came into use in the eighties, allowed a computer to make rapid-fire phone calls and detect a human answer from a busy signal, fax machine or answering machine, notes Tehrani.

“This dramatically improved the productivity of call centers,” he says.

The 1980s and ‘90s were generally good times for telemarketing/teleservices firms, the tech space, the stock market, and the economy in general. And, starting in mid 1995, several teleservices firms went public. But then, as noted on the website of West Corp., things started to stall. Too many players caused an oversupply in the call center space, some large companies decreased their business with teleservices firms, and teleservices stocks began to trade below their IPO prices.

In any case, despite some tough times, teleservices pioneers like Sitel and West moved forward and expanded into new areas. Sitel today is a top call center outsourcing provider. And West, now known as West Corp., offers a wide variety of voice solutions to major companies around the world.

Rise of the Call Center

But while some teleservices companies themselves did just fine, by the 1980s the word telemarketing fell out of favor. By then, many people had come to view the term telemarketing unfavorably, relating it to the unpleasant experience of being interrupted by the phone during dinner. As a result, many in the industry shifted their terminology from telemarketing center to call center.

Whatever you call them, call centers first became recognized as a distinct function for organizations in the 1970s. According to most reports, the call center space cemented itself as an industry starting in the early 1980s. But, as our mid-1990 magazine refreshes demonstrate, the term call center didn’t become popularized until the 1990s.

That’s when things really started to take off, as organizations of all sizes established call centers to address customer service requests, billing inquiries, and the like. Some companies ran call centers internally, others outsourced them to call center specialists, and others did a little bit of both.

Delivering a quality customer experience that addresses the needs and preferences of the individual customer, and that builds loyalty and provides upsell opportunities, are important themes relating to the customer today. But many of the early technological innovations related to the call center had more to do with helping organizations improve efficiency and manage their customer care expenditures than anything else. Indeed, this is a theme that understandably persists to this day.

Intelligent Call Routing and the ACD

Ask just about anyone who’s spent any time in the call center space, and they’ll tell you that one of the most important innovations on this front was the invention and adoption of the automatic call distributor, or ACD. The job of an ACD, as you probably already know, is to filter and assign incoming calls to the best available agent.

“Certainly the widespread adoption of ACD-based customer service in the 1980s and 1990s, and web-based customer service, are two of the most important developments in customer interactions,” says Turgut Aykin, president and CEO at workforce management outfit ac2 Solutions, and a former member of technical staff at Bell Laboratories, Lucent Technologies, and IBM (News - Alert) Global Services. “These enablers have changed how customers interact with businesses drastically, making access and information readily available.”

But Michael Runda, the new senior vice president and president of Avaya (News - Alert) Client Services, says the adoption of the ACD had both benefits and fallbacks. On the upside, it enabled call center organizations to spread the workload between call center agents, he says. On the downside, he adds, it prevented callers from forming connections with particular agents and getting the person al touch for which companies today strive.

Rockwell is widely credited with the invention and installation of the first ACD in 1973. The company developed the solution for Continental Airlines. The first Rockwell ACD was called The Galaxy. The company later introduced an ACD called The Spectrum; this second solution, which came out in the early 1990s, leveraged computer telephony integration.

Hopes are High for CTI (News - Alert)

Computer telephony integration, of course, enables people to use their PCs to get information about and control phone calls.

John Fike, director of the Center for Telecommunications Technology Management at Texas A&M University, in a November 1999 Scientific American article explained that with CTI “the computer can answer calls, play recorded messages, re-route calls, recognize incoming callers (using caller ID or similar services) and bring up screens showing callers' accounts, order status or any other information in the database. Then the operator (customer service representative, order taker) can converse with the customer and have all pertinent details at his or her fingertips.

“Systems that perform these functions in order-processing centers, reservations centers and so forth are called automatic call distributors, or ACDs,” he wrote. “CTI allows less expensive computers to perform many ACD functions, thus opening up the technology to much smaller firms.”

IBM connected to Rolm to deliver an early CTI solution, notes Tehrani. “For around a million dollars you had screen pops when callers called your call center,” he says, adding that was “a huge deal” as at the time calls could cost more than 20 cents per minute[RT1] . “So shortening the time on the phone by pre-populating data fields had a rapid ROI,” Tehrani explains.

Then, in the mid 1990s, Microsoft (News - Alert) and Novell provided computer telephony interfaces, allowing companies to inexpensively connect computers to telephone systems. These were called TAPI and TSAPI, respectively.

While CTI drew great interest upon its introduction, and the concept of allowing people to manage calls from their computers is a popular one today, reviews are mixed as to the success of CTI in the call center.

Serge Hyppolite, vice president of product management at Aspect, says that CTI “has transformed the way customers are processed and triaged because agents know ahead of time who is on the line. This has generated a whole industry of systems integrators and service providers around bridging information from these telephony networks to PCs.”

But when asked what have been the most important developments in the call center space in the last decade, Blair Pleasant, president and principal analyst at consulting and market research firm COMMfusion LLC, responds “I wish I could say computer telephony integration and the ability for agents to access information about the caller via screen pop before the agent answers the call. Unfortunately, too few companies are using CTI, and customers are still asked to repeat their account information even after they’ve entered it in.”

Self-Service and the IVR

Interactive voice response systems, however, have seen much more widespread adoption, says Pleasant. But she adds that’s not necessarily a completely good news story.

“The interactive voice response system – allowing for customer self service... changed the industry for good and bad,” she says. “It allowed for 24x7 service, but it also took away much of the personalization. It made our lives easier, but more frustrating in many respects.”

Frustration over IVRs that require customers to endure a labyrinth of commands to get to the correct person or resource remains a common theme of these solutions today. But when designed correctly, IVRs (many of which now feature speech recognition) can get customers where they want to be more quickly, and enable efficiencies for the companies serving those customers.

As noted in last month’s Customer Interaction Solutions magazine, JR Sloan, product director of portfolio management at Enghouse Interactive, says organizations just need to make sure they don’t go overboard in leveraging IVR-based self service. If they do, he says, they will risk frustrating current and potential customers, and negatively impacting their own businesses. IVR is not a customer avoidance tool, he adds, saying that businesses that use it as such may get their wish and keep customers away.


The Internet and IP-based Networking

The rise of IP-based communications, the Internet and broadband networks have also had major and wide-ranging impacts on the call center to date, and continue to alter customer interactions and the customer experience.

 “VoIP technology has dramatically changed the contact center industry,” says Annie Weinberger, vice president of promote solutions at Autonomy, an HP company. “Perhaps the biggest driver is that it allows for the centralization of telephony services while supporting greater distribution of clients. And, therefore, it is less expensive to deploy and maintain if a contact center has more than one location. So, most contact centers are embracing VoIP because it makes financial sense while offering a big step forward in available features and functions. 

“For Autonomy, one of the greatest benefits is that now, because of VoIP, contact centers are able to more easily capture 100 percent of their interactions,” she adds. “This massive corpus of customer conversations is a very rich source for analytics. Of course, the contact center benefits from analysis of recorded calls, but so do many other parts of the organization including marketing, sales and even back-office functions like finance/billing, etc.” 

Ken Condren, vice president of technology, at C3/CustomerContactChannels, points out that the rise of IP-based networks also was a major factor in the globalization of contact centers throughout the world.

“IP-based networks, and the ability to ensure quality of service, resulted in tremendous cost savings that were unattainable in the traditional TDM networks,” Condren says. “Contact centers could now maintain a domestic PBX presence, convert the calls to compressed data, and route them over redundant circuits anywhere a data network termination was established. A secondary impact was the ability to now service any mode of communication across the same infrastructure including web services, e-mail, chat and most recently social media.”

Jon Arnold, principal at J Arnold & Associates, adds that because IP networks are able to support more intelligent routing and allow contact centers to distribute calls more effectively across global operations, they opened up the call center space to a much broader base of potential employees.

“Now, when a customer calls and needs to speak to someone in a certain language or with a highly specialized skill set, businesses can draw from a much broader pool of talent that can be efficiently connected with an IP network.”

Outsourcing and Offshoring

In the 1980s and 1990s, most call center outsourcing was done in the U.S. – generally in Iowa and other locales where land was cheap and unemployment was high, says Tehrani. In fact, he calls the window from about 1991 to 1995 the golden age of U.S. site selection, saying that U.S. municipalities at that time fought for business and gave call center outsourcers millions of dollars so they would open centers in their regions.

Somewhere in that same time frame, however, Ireland (which had a state-of-the-art fiber optic network), became a big international outsourcer. In its wake, we saw outsourced call centers spring up in addition locations in Europe and the rest of the world.

“Without a doubt, the most dramatic development in the contact center arena has been the globalization of delivery centers,” says Andy Lee, CEO, chairman and founder, of enterprise applications and infrastructure at contact center company Alorica. “The ability to tap into talented labor pools across the globe to serve U.S. consumers changed the landscape very quickly. The fact is, there are thousands of contact center and back office agents in countries outside the U.S., like Philippines, India and the Dominican Republic.” 

The practice of offshoring outside of the call center industry has been around for a several decades, he says  However, in the call center industry, several key contributing factors helped with the evolution of offshoring in the later ‘90s early 2000s, Lee explains.

“Countries like India and the Philippines built an education system which supported, and encouraged, the development of an English-speaking workforce,” he says. “We encountered the Y2K scare, which created a sudden demand for IT talent from all over the world – and therefore a level of comfort with this talent. At the same time, the world experienced the explosion of the Internet, along with a boom in telecommunications capacity and capability that made offshoring much cheaper and communications between the U.S. and offshore locations much more efficient. The confluence of available workforce, first-hand experiences, global connectivity, and stable and willing governments made for the perfect environment.”

Mike Garner, chief customer officer with Cicero Inc., conveys a personal experience about when call center offshoring exploded in the 1990s.

“I was at Smith Barney, then Verizon,” he says.” I remember IT outsourcing to places like India was huge, and the call center work followed totally based on price per interaction and backed up by a marketing umbrella of TQM/Six Sigma/CMM, etc. saying that APAC was better at following processes than say, North American workers. The difference in cost per call wasn't small either. It was sometimes as much as three to five times difference: 1 to 2 pennies per second of handle time in the U.S. versus .2 to .5 cents per second in India or the Philippines.”


While offshore call centers are alive and well, many sources indicate that the tide may be turning on the push to take call centers overseas. This is happening as unemployment has risen in the U.S. (although this has been improving lately), costs have increased abroad, and many customers have become frustrated with trying to communicate with agents for which English may not be the first language.

Mariann McDonagh, chief marketing officer at inContact, says that the movement of work to offshore locations “took hold of the collective conscious in the United States as customers began to experience difficulties in communicating with contact center agents, and offshore services experienced customer backlash that was embraced by popular media.”

Movies and television shows such as “Offshore” and the Conan O’Brien segment where he sent an employee to India to have his computer serviced in person reflected the consumer irritation over offshore services, she adds.

“Contact centers have responded in several ways,” she continues. “Some are now offering domestic support at a premium cost; if you don’t want to pay the premium, you stay with the offshore support. Others are leaving their back-office work and non-voice communications in the offshore centers and are bringing the voice calls back to the United States. Still others are working to bring language skills and American culture to their offshore contact center agents to break down the perceived communication barriers. And, of course, some are completely bringing their outsourced business back to the United States.”

Some U.S. politicians are trying to help along the onshoring trend by introducing legislation to encourage businesses to keep their call centers at home.

For example, in December of 2011, U.S. Reps. Tim Bishop (D, NY-1) and Dave McKinley (R, WV-1) introduced a bill that would punish domestic companies that locate their call centers overseas. Those companies, according to the bill, would lose the ability to get federal grants and loans, would be kept on a list at the U.S. Department of Labor, and would have to be able transfer callers to onshore call center representatives upon customer request.

Kevin Childs, practice leader and contact center lead at Manpower, a few months ago commented that 10 to 15 years ago many people thought contact centers had seen their best days in the U.S., because at the time many contact center work was moving overseas. But that’s no longer the case, he indicated, adding that in the U.S. Manpower employs 10,000 contact center reps and provides contact centers to more than 3,500 companies.

Pointing out that Consumer Reports recently reported that consumer satisfaction is at an all-time low, Childs added that using U.S.-based call center reps – at least for high-value customers; doing performance management; and leveraging state-of-the-art contact centers solutions that don’t remove the company’s line of site to the customer, could help turn around low customer satisfaction scores.

Remote Workers

Leveraging the domestic at-home workforce can also help call centers increase customer satisfaction, adds Michele Rowan, CEO of AtHomeCustomerContacts.com.

More than 300,000 home-based agents will be working in the U.S. by 2013. And four in five contact centers with home agent programs currently in place plan to continue steadily adding virtual staff over the next two years. While the contact center industry is growingat an annual rate of 0.5 percent in terms of jobs, it’s declining by 0.3 percent annuallyin terms of physical contact center sites, according to ContactBabel.

“Analysts report that growth of home working exceeded growth of offshoring for the first time in 2011, propelled by a highly skilled, educated U.S.- based workforce, unprecedented employee satisfaction levels, and reduced facilities and operating costs,” Rowan adds.

Cynthia Phillips, vice president of marketing of Alpine Access, which uses home-based agents exclusively, says the education and quality of the Alpine Access call center reps is much higher than reps at competitors’ brick-and-mortar call centers because it can recruit from a much broader base of job candidates. She adds that Alpine Access also has older reps (which typically means more work experience) than is the norm in the industry and low employee turnover. Some of company’s employees have been on the job for eight or 10 years. Many of these folks also have industry-specific expertise that Alpine Access matches up with the special requirements of its clients.

The Multichannel Movement

Another change that the rise of the Internet – and, more recently, the mobile boom – triggered in the call center arena was the move to multichannel communications.

“Multichannel became a hot buzzword in the early 2000s as video and chat came onto the scene,” says Tehrani.

Companies increasingly were realizing they can no longer rely solely on voice communications to interact with customers. They needed to communicate with customers how and when the customer chooses.

“The call center has evolved to become the contact center, and customers now have an increased choice in how they communicate with vendors, including by voice, e-mail, fax, SMS, web chat/callback, and now social media,” says Joe Staples, chief marketing officer at Interactive Intelligence.

McDonagh of inContact adds that the multichannel movement is another indicator that customers not only need to be catered to on a more individualized level, but that they expect quick action.

Thirty years ago, companies had more than a day to respond and customers felt that their needs were met,” McDonagh says. “However, now customers are barely willing to wait a few seconds to have their question answered. That means it’s more important than ever to be available for your customers when and in the channel they prefer.”

Laura Bassett, director of customer experience and emerging technologies at Avaya, considers the multichannel movement the fourth phase of what happened when customer interaction and the Internet collided.

“The first phase was about creating websites for customer awareness,” she says. “The second phase enabled self-service transactions on the web. The third phase has been taking the web on the road by refactoring it, and bringing it to smartphones and mobile devices.

“The fourth phase – the consumer communication phase is the most recent development, which is still under way,” she continues. “It is about allowing customers to communicate in their preferred manner, from their laptop or mobile device, or via social media connecting with companies or other customers. It is moving real-time customer interactions to the Internet, so that the Internet instead of the PSTN becomes the primary real-time chat, voice, and video network for customer interactions.”

Social Gathering

As Bassett and Staples note, social networking has become a major part of the multichannel puzzle. But it’s not your run-of-the-mill piece.

“Social media’s impact is huge,” says Staples of Interactive Intelligence. “It isn’t just another media type. It’s a different media type with such broad adoption. Companies have to pay attention to it or risk losing their customer base. On the positive side, it also provides vendors new and creative ways to reach their customers.”

Indeed. But when it comes to social media, companies and contact centers need to listen carefully, and move quickly or risk being run over or missing the next great marketing opportunity.

Musician and one-time United Airlines passenger Dave Carroll’s now-famous YouTube music video titled “United Breaks Guitars” is just one cautionary tale to the first point. Although he initially used the normal channels in an attempt to get compensation for his broken guitar, United only offered to pay to repair his instrument after the YouTube video went viral and United Airlines sprung into damage control mode.

The Bottom Line

But whether social media, e-mail, chat, text, voice or any other form of communications is involved, the bottom line is customer satisfaction, notes Steve Brubaker, chief of staff at InfoCision.

“Trends come and go, but one constant that has always risen to the top is cultivating relationships,” he says. “Even though the way marketers are forming and maintaining relationships is continually evolving, delivering an extraordinary customer experience is still the goal.”

Edited by Stefania Viscusi