Wednesday, October 29, 2008

Outbound, Outsourcing and the New World Order

Outbound, Outsourcing and the new world order

With the introduction of the Do Not Call (DNC) list most people both within the call and contact centre industry and those outside of it, assumed that this would be the death knell for outbound calling. The DNC eliminated huge volumes of people who you couldn’t phone and while there are exemptions and exceptions it forced many firms and organizations to change the way they did business.

Telemarketing or outbound calling was once the primary activity of call centres. Companies employed outbound telemarketing because it works; thirty years ago people often were genuinely happy to receive a call from hundreds or thousands of miles away. Over time more and more companies and organizations began to use to outbound telemarketing themselves or contracted with a third party outsource agency to place call on their behalf. The introduction of predictive dialling greatly improved the number of calls that an agent in a call centre could make and the number of calls soared. Pretty soon consumers were receiving two, three five calls a day and their frustration with telemarketers calling to ‘sell them something’ became common.

Enter the Do Not Call list and the frustration with telemarketing calls crystallized into 150 million Americans signing up. In Canada a DNC list has just been launched and on the first day the number of people calling overwhelmed the operator. It is likely that we will see more than half of all Canadian phone numbers registered under the DNC.

According to Contact Babel Legislation has had an impact on outbound telemarketing activities “14% of respondents said that their outbound calling had greatly
reduced due to legislation, although 56% said that it had reduced in some way (which is up from 41% last year)”. This reduction of outbound activity has been seen over the past decade from approximately a 50/50 split between inbound and outbound to today only an estimated 18% of call centres would define themselves as exclusively or primarily as outbound.

So with fewer people to call what are companies and organizations doing? Perhaps surprisingly they are still calling. Sales calls to new customers are still the number one activity even though the universe of ‘call-able’ numbers has been greatly reduced, cross selling and customer service activities represent other significant segment of outbound telemarketing.

Increasingly companies and organizations look at outsourcing and off-shoring their outbound calling requirements and much of this activity is provided through third party outsource agencies. There are a number of reasons for this:
Outsourced firms tend to cost less than completing the work internally (much less if an offshore provider is employed),
Access to skills, staff and technology that the company may not possess internally,
Compliance issues related to legislation (DNC)

Outbound calling completed by third party firms will generally be completed on a cost per hour basis, on a dollars per sale basis, often called ‘pay for performance’ or P4P, or on a base plus bonus structure. These rate structures reflect risk and which of the parties (outsourcer or client) is accepting the risk. As expected cold call selling is often outsourced on a P4P model as it does not cost the company any money unless the outsource firm actually makes a sale. Of course this is not completely true a company the sponsors high volume P4P campaigns does run the risk of eroding Brand value due to the volumes and/or quality of the calls. Hourly rated programs tend to be service and customer satisfaction type of calls and Upselling, cross-selling and renewal activities are often structured on a base plus bonus basis.

There is a high correlation between P4P programs and offshoring. A casual study completed by the author found that more than 75% of P4P program opportunities reviewed were targeted to offshore firms calling into North America. The reason for this is cost. While it is virtually impossible to make a cost comparison on P4P activities as the unit price varies by product and/or service it is possible to look at hourly costs to establish as baseline. A recent survey completed by The Taylor Reach Group, Inc. found that hourly rates varied across Canada from a low of $20 per hour to a high of $32 per hour for outsource firms located in Canada. Generally Toronto (and other major urban centres) had the highest rates and more distant and/or rural locations had the lower rates. This compares with hourly rates in the $12 to $14 dollar range offshore.

There are challenges and risks to bear in mind before you rush to offshore your outbound telemarketing activities. From an effectiveness perspective these include; language issues, geography issues, inflexible scripting , issues understanding the product or service if it is not prevalent in the culture of the off shore location and issues of context if the offshore agents are not familiar with the culture in North America. There are also risks from a financial point of view; the stated rates do include the cost to source, vet, negotiate nor contract with an offshore service provider, nor do they include the 20%-30% premium to manage an offshore partner. Lastly offshore outsourcers generally have a lower sales conversion rate due to the challenges above. Once these considerations are taken into account to costs offshore become similar to those onshore.

If you are presently completing outbound telemarketing outsourcing to a third party firm should certainly be considered, but you need to ensure that the rate structure is appropriate to the type of calls you wish to have placed (sales, service, satisfaction services etc) that the technology employed is appropriate (predictive, progressive or preview dialling) and that you risks related to legislation are mitigated through a compliance program. The first organization to be fined for violating the US DNC was AT&T, through one of their outsource partners. This is not what you want to have happen.

Outbound telemarketing is not going away any time soon. Companies and organizations that employ or wish to employ outbound calls will need to be vigilant and know and mitigate the risks. Third party outsource firms have developed compliance programs to ensure that their actions are compliant with the rules. Outsource firms have significant risk to their livelihood if they are not operating under the rules, far more than most of their clients would have. And as a result these companies will have and continue to invest in maintaining their compliance.

Tuesday, October 7, 2008

Incentives in your Centre, What is right for you?

Incentives in your Centre, What is right for you?

How do you motivate your call or contact center agents? I have been asked this question hundreds of times. The questions keep coming up because centers are constantly struggling with how to engage their staff. Engaged staff is more productive, has lower attrition and positively impacts the overall center morale.

Motivation in many centers is a purely tactical activity; Tactical, short term programs and incentives. Other centers take a more strategic approach with over arching incentive, compensation and recognition programs. Tactical programs are generally implemented to drive productivity increases, strategic programs drive productivity, quality and compensation alignment.

There are number tactics and tools employed in both tactical and strategic programs. In this article we examine theses options to provide an overview to what works, what doesn’t and why.

The choices are almost endless: cash, coupons a multitude of gift cards, recognition and rewards schemes and programs. But what are the most effective programs to put into place and what will work best in your center to help you achieve your goals and objectives?

First let’s divide incentives into groups of similar types of incentives: Cash or similar, Travel, recognition and hybrid programs. Cash and similar programs are by far the most popular form of incentives. They are employed both in tactical short term programs as well as on-going and strategic programs. Cash program employ actual money, similar programs employ rewards that are tied to money, but are not cash. These would include gift cards (Amex or Visa cash cards, Retails cards: Best Buy, Sears, Wal-Mart etc., coupons or passes for Restaurants or movie theatres. The most prevalent form of agent incentives is still cash. As the old saying goes “it is always the right size and color”. Cash programs are the easiest to implement, no issues or discussions are required to determine if your staff will be able to use the reward and it is easy to budget and track. Though always welcomed cash incentives can present a number of challenges. These challenges can include the appropriateness of the level of incentive: if the cash level is too low, agents may feel that the incentive is not worth seeking or may even feel insulted by a $0.25 incentive which will actually erode morale in the center and can depress rather than incent improved productivity. In setting a cash program there is instant transparency regarding the value of the incentive a dollar is a dollar, unlike other programs where the value or perceived value may be unknown or variable. So it is critical that the incentives be targeted appropriately to incent the actions or behaviours you wish to reward and not be set too high or too low. At both extremes agents may not be motivated as they perceive the targets to be unattainable or to require too much effort for to little reward. This can be a particular problem with short term tactical programs, strategic programs often are geared to permanent change of behaviour and as such are often commission based or structured on a similar model. These commission models are less incentives and more part of the compensation model.

Gift cards are employed by many centers and this type of incentive often is perceived to be more effective than cash as it the reward doesn’t get frittered away. In the hands or pockets of most agents cash incentives vanish, the money just get spent with no attributable purchase or result. Gift cards and coupons on the other hand generally result in some specific purchase or event being associated with the reward: a book, CD, DVD, dinner out etc. The connection with a tangible purchase or acquisition positively reinforces the value of the incentive each time the agent thinks about what they did with the incentive/reward.

As outlined above caution must be taken in developing the criteria for the reward and specifically with gift cards and coupons the suitability of the incentive to your staff base. For example in a center where the staff earns minimum wage and incentive usable only for electronics may be less well suited to staff that are having trouble buying groceries and cash or grocery gift cards may be better suited to your staff.

Travel incentives are generally employed in long term or on-going strategic programs. Often they are structured to reward the top X performers with a trip to a nice destination (resort or similar). Suitability and appropriateness for your staff is critical in programs of this type. Common in sales call centers travel incentives generally require longer periods of time from start to finish and can be challenged to retain relevance throughout the program. If the trip is for the top sales person and the same person wins each time, other staff will quickly (and sometimes instantly) lose interest in the program as they do not feel they can win. This perception can be a challenge with any ‘all or nothing’ program structure.

Studies regularly inform us that agents value recognition equal to or above cash compensation. As any centre manager will tell you it is important to recognize achievements by agents if you wish to keep your staff motivated. There are too many recognition programs to address all of them individually here but some of the most common programs would include: Employee of the month awards, choice parking privileges, choice of shifts, choice of lunch or break schedules. Some of the most interesting programs can involve contact centre radio stations where the reward is selecting the programming and or coaching the CEO or similar senior executives as they take calls for a day.

Hybrid programs will involve one or more of the above incentive models. These are often structured to reward points for various achievements and performance results. Hybrids can incorporate short term incentives for tactical objectives within the overall point structure. Hybrids can be extremely effective as they can evolve constantly so they are never perceived to be boring or mundane. As they can reward various activities sales, volume, most up-sells, highest customer satisfaction, peer mentoring etc. they hold a broader appeal to agents versus an ‘all of nothing’ incentive. This said Hybrid point systems require more design and management time to build and operate these programs.

So which type of program is right for your centre? Incentive and reward programs can be wonderful tools for centre management to get more from their staff when properly implemented, but they can also increase costs, reduce efficiencies, increase staff turnover and erode employee morale when they are poorly conceived and executed.
While there is no one-size fits all solution, the following checklist can help you to determine what will work best for you in your centre.
Analyze your staff and the suitability of reward types,
Align the objectives of the reward program to centre objectives,
Determine if you should employ a tactical or strategic program,
Identify the behaviours you wish to incent and improve,
Quantify how you will measure these improvements (always employ objective over subjective measurements),
Quantify the impact of the program on the centre, what will we realize as a result of the reward program,
Assess the amount of time it will take to build and manage the program,
Quantify the costs to operate the reward program (hard costs: the rewards themselves and Soft costs: management and reporting),
Develop a Return on Investment (ROI) model for consideration by management.

Whatever programs you choose to implement consult your staff in the development of any program, it the agents after all that you wish to engage through the incentive program.