Successful call center technology

Offshoring can cut costs in call centers but history shows this is not necessarily the recipe for building long-term market share, says David Butler, National Association of Call Centers.

From the mid 1990s to the present, companies leveraged the ability to move calls around the world almost instantly with little cost. Companies learned to take advantage of low cost English-speaking peoples around the world for call center support known, popularly as offshoring. Considering that call center labor costs account for almost 70 percent of the total operating budget, finding substantial savings in labor can significantly reduce the overall costs of operating call centers for a company.

Evidence is now mounting that suggests that the formula of inexpensive overseas labor for financial services call centers is less tolerable to the average consumer than was once believed. Though companies saved money with overseas financial services call centers short term, the response by the customer has been at best lackluster. It was originally touted that customer service would be equal to or exceed that provided within the United States. This has not proven to be the case in most instances. Not only has the demand for labor increased offshore which has stretched the capable phone representatives available, but the same forces have increased turnover rates offshore and driven up labor costs removing much of the expected savings from being located offshore. Additionally, customers serviced by offshore labor have become tired of the endless effort it takes to communicate simple items that a native would understand instantly and the lack of empathy associated with good customer service. Through customer service surveys and customer satisfaction feedback, customers have offered their feedback to the parent financial services firms. Most recently they are threatening to take their business to another company that serves their customers with locally grown call center agents.

Local advantage
In multiple calls to financial services providers that I use, the call center representatives have begun to answer the call in the following manner: “Hello, this is Jen in Phoenix, how can I help you” or “Thank you for calling XYZ Financial, this is Matt in Colorado what can I do for you today?” Having financial services call center representatives give their geographical location illustrates that there are enough customers who have voiced their dissatisfaction toward the offshoring of financial services. It highlights the new competitive reality that banks are using geographic location as a tactical weapon to attract customers that are looking to move their accounts because of a bad experience with offshore call centers. In this new competitive landscape, companies have found it to be advantageous to mention their location within the United States to ensure that the customer is comfortable and secure with an American based call center agent when it comes to their financial services needs.

These events do not indicate that the formula for the offshoring that was espoused in the 1990s did not work. In fact, it worked very well. The problem with the formula was not in the execution of the process but in the strategic outlook of the company. Just because you can route a call around to the world to someone in a distant land with a labor savings of 50 percent or more does not mean that you must do it or should do it. The problem is that long-term market share costs were not examined. Executives and managers bought into the idea of replacing the service with a lower cost alternative while keeping the same level of satisfaction and service. The problem is that often you get what you pay for and the unwillingness of many financial service companies to pay for domestic labor that is both knowledgeable and empathetic has cost them long-term revenue due to market share loss.

Moreover, often contracts to third party offshore providers do not allow the disclosure of the location of the call center agent. This can result in attempts to mask accents and create false identities, and there is no message to the customer that the savings attributed to the offshoring of call center labor was being reinvested in such a way to either keep costs lower for the customer or to offer a wider range of services. Due to these and other problems, customers have started to rebel and executives have started to pay attention to their financial services call centers once again.
New technology

As the charts indicate since 2005 there has been a high level of volatility within the financial services call center sector as these companies seek to find the right formula to meet customer expectations. To find this right formula contracts with overseas third party call center providers are cancelled or not renewed, existing small call centers within the US are closed and existing call centers are expanded to meet the new call demand, or a totally new call center is created in a new market to serve the growing need.

So where does this leave us? Back in the 1990s at square one? No, actually there are new technologies and processes that are coming to market that allow the introduction of new services to the customer-self service solutions. This promising new recipe of advanced information technologies combined with a back up domestic call center support may be just the right formula for the next decade if implemented correctly. Just as in the offshoring case, many self-service technological solutions are available now to the customer. Past companies who have attempted to force customers with a stick to use self-service tools, like the offshore call center, learned quickly that the customers prefer choices in their services options. Carrots and education rather than sticks and ultimatums, draw customers into the self-service realm. As more channels and technologies come available, financial services companies need to offer to the customers a host of tools to allow them to provide themselves service.

As the baby boomers age and demand higher levels of service from their financial service providers, having creative and flexible solutions that meet the customer’s needs while holding down costs will be essential. Not only do self-service solutions save money by outsourcing the labor costs to the customer, they also build a short-term comparative advantage to companies who first move with this solution. The domestic call centers will always be needed as some people prefer it as the main communication channel. However, its new role can and should be expanded to teach the customers how to use these self-service tools to their own benefit saving everyone time and money.

David Butler, PhD is Executive Director of the National Association of Call Centers. He can be contacted at David.Butler@nationalcallcenters.org.