Marketing round table: outsourced contact centre bosses expect to pick up business during downturn

LONDON - With brands feeling the pinch of an economic downturn, customer-service budgets are under threat. Now is the time for the outsourced contact centre industry to prove that it is more than just a secondary consideration.

When senior agency executives from any marketing sector get together over lunch these days, the conversation inevitably turns to the economic downturn.

However, in the case of the outsourced contact centre industry, the diagnosis is not so gloomy. In fact, there are reasons to believe that business will pick up in 2009, as some brands reduce their internal costs and entrust their customer contact to an experienced partner.

So, when Marketing gathered a group of key figures from the contact centre industry, the expected ashen faces were absent. Instead, there was a sense of guarded optimism.

However, while business may be looking up, the public perception of contact centres is lagging behind. Long waiting times, dreadful music and unhelpful call-handlers are still an issue, as regular readers of Marketing's We'll Call You feature on the back page can testify.

As David Freedman, managing director of Confero, puts it: 'Customers' main perception of call centres is usually in line with their worst experience.'

What is more, the outsourcing of some contact centres to emerging nations, including India and Vietnam, has earned the industry an unwanted reputation for putting cost savings ahead of customer service.

The crux of the issue, according to our panellists, is that consumers have increasingly complex demands when contacting a brand or service provider, which they need resolving quickly and efficiently.

Sadiq Mohammed, business development director at Vertex, says: 'The customer's expectations of when they go into a shop are now exactly the same as when they ring or write in. However, call centre staff don't always have the necessary skills to deliver a premium customer experience.

At the same time, company procurement departments are driving down the price that they are prepared to pay for the service. This leads to a lack of investment in staff and training from contact centre providers and call-handlers who are under pressure to resolve queries quickly - often not to the customer's satisfaction.

Bruce MacLeod, managing director, private sector, at Vertex, explains: 'The gap between the expectation of the customer and the delivery by the industry is actually widening. While we have improved, we are still losing ground overall. We have got an awful lot to do. The industry has got to treat its staff more as individuals.'

Turnaround targets

Vertex's Mohammed warns that too many contact centres are focusing on a three-minute turnaround per call, with the result that customers must call back a second time to get their problem resolved. 'There is too much focus on metrics, rather than first-time resolution,' he says.

This discussion is nothing new to the contact centre industry, but one that is inevitable in the current uncertain economic climate. As a result, our panellists agree that the gap in service provision is widening, and a period of consolidation lies ahead.

On the one hand, there will be the low-cost 'bums on seats' operators, who aim to provide brands with contact centre provision at the lowest cost per handler. On the flipside will be the companies that invest in staff training and aim to satisfy customers at the first time of asking. However, the latter option comes at a price that many brands are reluctant to pay.

Vertex's MacLeod says: 'There is definitely a major polarisation going on. Outsourcers have a choice. They can either slip down the commodity pole, or they hold their ground and create more value-added relationships with their clients.

'The ones that slide down that pole will be consolidated; they won't make enough money to carry out even the most basic training or make investment in their people.

'We have to move our clients away from procurement-driven tender documents that measure on metrics that are 20-plus years old. If you decide you want to go cheap as chips, there is always another India, China or Vietnam waiting around the corner that can do it cheaper.'

The human touch

Rekha Wadhwani, chief executive of the Telephone Helplines Association, provides an alternative perspective on the industry. She works with third-sector organisations, offering advice to their contract clients. 'It doesn't matter whether they are based in England, India or space, because it is about the communication that goes on behind the scenes and how well the operator is trained,' she says.

Wadhwani's organisation offers consultancy services to charities and organisations so that their call-handlers can develop a 'human touch' - something that critics would argue is missing from many commercial contact centres.

The big challenge that lies ahead for outsourced contact centre providers is to convince marketers of the benefits of having reliable and helpful customer-service contact with their most important asset - their customers.

Nevertheless, with more pressure on profits and margins than ever before, and prices being squeezed by procurement departments, there is also a sense of frustration in the air.

Mark Bates, chief executive of LBM, explains: 'Sometimes you have discussions with prospects when they talk the talk, but when it comes to making the choice, they buy the cheapest. Then they complain that [the company they employed] didn't have the additional experience they wanted.'

Need for investment

Dani Muir, sales and marketing director of bss, says marketers are beginning to accept that a premium customer service is worth the investment. 'I am not sure I would lay all of the blame at the foot of the contact centres, because they are the final end of the customer vision,' she explains. 'Brands and marketers are more aware that the customer journey is absolutely essential to retaining that customer, which in the credit crunch is going to be even more important. They have got to think about what the customer is getting, rather than how much money they can allocate to time with that customer.'

However, Bates warns: 'You will have severe difficulty convincing people [of investing in a premium service] because of the economic climate. The economic pressures are immense.'

Much of the frustration comes from the fact that contact centre providers are treated as bottom of the pecking order, almost as an afterthought once the advertising, media and PR ideas are tied down.

Mohammed says: 'Traditionally, service delivery has been the last thing that marketers have thought about. The branding and the advertising was selling high expectations but it was not joined up with delivery. As well as thinking about the proposition, and what message they want to get across, they need to make sure that the proposition and the delivery are absolutely aligned.'

Our panellists agree that while some brand promotions are enticing to consumers, they can fall flat if the customer-service department is unable to deliver on enquiries. Worse still, a bad contact centre run-in can turn a clever promotion into a negative brand experience.

Confero's Freedman points out that he would love to know whether a brand is having a PR push or product launch so that agents can be suitably prepared, but too often this does not happen. 'The simple message I would have for marketers is to think of their call centre as part of their own business,' he says.

MacLeod adds: 'I have seen unbelievable examples of companies that want to launch services, who have done the marketing bit, but the customer service delivery has got blanks everywhere, and you know the launch is going to be an unmitigated disaster.

'Most companies that I come across are quite dysfunctional because they operate in silos - procurement, marketing, finance - and they don't have the weave between one silo and another. Until companies fix that dysfunction, I can see us still having this debate in five years' time.'

Muir suggests that more marketers should visit a contact centre to find out how it works. 'If you have a contact centre of 200 people who are talking hour-by-hour to your consumers, these people have all sorts of information that you can be feeding back into your marketing,' she points out.

Vertex has started seeding people, on secondment, within its clients' businesses in a bid to build a greater level of understanding.

The outsourced contact centre industry is fighting not just against budget cuts and a perceived low priority in the minds of marketers, but it must also justify its benefits above and beyond what companies can achieve with an in-house operation.

Only about 12% of staff work in specialist agencies, according to research by MBD, with the rest working directly for brands.

Vertex's Mohammed claims some clients 'just want to outsource their mess for less', and it is fair to say that, in general, outsourced centres are more cost-effective because they have economies of scale, but other factors come into play in this important decision.

BSS's Muir says: 'Outsourcing should be cheaper, because when you have  people doing more than one thing, you can save money. If you are trying to do something in-house, it can be very difficult for you to keep up to date with the technology.'  Mohammed adds: 'It's not about outsourcing, it's about best practice, getting a more quality operation and giving a better customer experience.'

Vertex's MacLeod believes that some companies keep their customer service in-house because of a belief that 'no one can look after our customers better than us'.

However, he adds: 'Outsourcing your best consumers to a specialist is a very shrewd move. Not only do you keep them but you leverage much greater benefit as a business. The outsourcer is a commercial body that needs to make a profit. You get a much sharper commercial focus in an outsourcer than you can ever see in an in-house operation.' The real cost of employing agents in-house can be up to three times more expensive, he says.

Service division

It seems, then, that, the contact centre industry may become divided based on the type of service that is required. For example, more transactional enquiries, such as someone who wants to top up their mobile phone, can be dealt with by an automated service, whereas the sophisticated end of the contact centre market will serve more complex enquiries. For this reason, the commodity, three-minute deadline operators may find themselves stuck in the middle.

Our panellists agree that if they are to stay at the premium end of the market (where they consider their agencies sit), investment in people will become an absolute necessity.

Roger Hughes, operations manager at Confero, says: 'As outsourcers, we are stuck between a rock and a hard place. We are trying to meet the clients' expectations, the customers' expectations and the agents' expectations. Where we fall down every time, and where we still don't do enough, is giving the agents the right tools and the right motivation to do a good job.'

MacLeod concurs. 'But we don't do it as much as we should because so many contracts are thin on margin,' he adds.

Another issue that could potentially have an impact on the sector is new legislation. High-profile cases involving premium-rate phone line abuse has turned the spotlight on telephones as a communications tool.

Bates says that crackdowns by the likes of Ofcom will put more pressure on the bottom end of the market. 'We will be up against people who claim to have ticked all the boxes, but, in fact, haven't,' he says. 'That will drive a lot of the bargain-basement suppliers out, because they just can't comply.'

Despite the poor reputation of the sector, and the continued threat from commodity service providers, the outlook for outsourced contact centres, according to our panellists, is one of tentative optimism.

MacLeod explains: 'Because of the financial climate over the next few years, more people will come to outsourcers asking for our service to reduce costs.

'That will force many down that slippery pole - bums on seats and so on - faster, and it will allow some of us to hold our ground so that we can have a more complete customer-centric solution.'

Bates says that debates about consolidation and industry reputation are important, but adds: 'Sometimes we are a bit hard on ourselves. This is a very successful industry.

If it didn't work, it wouldn't happen.'

Nearly an hour-and-a-half of open, frank discussion later, our panellists went their separate ways. Read on to find out some of their 'top tips' for marketers who want their customers to have an improved customer service experience.

Marketing's round table was attended by seven leading players from the contact centre industry. Their experience covers everything from charities and helplines through to handling telemarketing for major international brands.

Mark Bates is chief executive of LBM, an integrated agency that specialises in contact centres and direct marketing.

David Freedman is managing director of Confero, which offers UK-based call centre services. Roger Hughes is the firm's operations manager. Confero has worked with clients including Audi and Pizza Hut.

Dani Muir is sales and marketing director of bss, a not-for-profit outsource multi-channel contact centre  provider, working primarily with the public sector.

Bruce MacLeod is managing director, private sector, at Vertex, a global customer management outsourcing business, and top-ranking agency in Marketing's 2008 Contact Centre Leagues. Sadiq Mohammed is business development director.

Rekha Wadhwani is chief executive of the Telephone Helplines Association, offering specialist advice and consultancy to non-profit helplines.

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