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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.

Revenue Generation: Profit from Pain

Revenue Model- Profit from Pain

One of the biggest challenges facing contact centers today is supporting Managements’ goal to shift the contact center from a cost center to a profit center. This can often be akin to pushing water uphill for Center managers who are under resourced and lack an understanding of the basics associated with up-sell, cross-sell and ‘save’ campaign effectiveness.

The following article sets out the parameters, drivers, sequence and value associated with the model hierarchy and its development.

There is a progression and hierarchy associated with the implementation of a revenue generation process within any call or contact center. This progression or process must begin by identifying where the center is, what the drivers for change are, the pre-requisites and sequence in which those activities must be accomplished and what the impact is of those activities have on the success and profitability of the revenue generation initiative.

Broadly stated the drivers would include:

Staffing:
Adequacy of current staff,
Availability of current staff,
People;
Skills & Competencies related to sales versus customer service,
Level and type of training received,
Competence or proficiency level,
Process:
The complexity of the processes required,
The speed of process completion,
Replication and error rate of the process,
Technology:
Database access, vision and robustness,
Scripting and sales support tools,
Virtual agent,
Offer:
Relevance to customer
Affinity to customer,
Perceived value & relationship,

These broad areas will each perform at differing levels dependant upon the combinations of the above in relation to Offer percentage (the percentage of callers that receive an offer) and conversion percentage (the percentage of callers that agree to an additional transaction). The Offer percentage in most contact center is controlled by the agent or CSR: they determine if it is appropriate to extend and offer to a customer. The latter point will be influenced by the offer the affinity to the customer and the perceived value by the customer.

The following chart illustrates the sequence of activities related to maximizing revenue generation.

Each of these elements builds upon the previous ones. It is possible to operate without following this hierarchy, but the results will suffer.

Against this hierarchy we can classify operations across four bands, which we have categorized as: Base, Level 1, Level 2 and Level 3. These bands represent and categorize the activities and results achieved in the center related to the progress achieved moving up the hierarchy.

The following table illustrates this progress:


As shown above at the Base level the existing staff is generally customer service staff that has been hired to handle customer inquiries. These staff members in service focused centers often were not selected or assessed based upon their sales focus or sales (potential) competencies. The staff will have often received little if any training opposite up-sell cross-sell activities and as a consequence they rate 1-3 on a scale of 1 to 10.

The organizational processes have in most cases been designed to process orders and sales in a one-off fashion removed from the call/contact center. There may be no processes in place to manage add on orders or shipments within the fulfillment operation. In some cases no policy exists for partial shipment rules (ship partials versus hold for complete). The processes are adequate and effective for the business as it has operated but are not optimized, nor necessarily aligned with supporting an up-sell cross-sell environment. The processes at the Base level are generally in 3 – 5 range on the 1 to 10 scale.

Technology in most organizations has not been designed to support up-sell and cross-sell initiatives. Often it is campaign centric and not customer centric. The systems have been designed to support mass selection of names for mailings or other campaigns and not on an individual basis. The result is the database can often not display much detail regarding the actual customer: their history likes/dislikes or affinities. Similarly most inbound customer service support applications feature access to customer records for billing and account status inquiries, not to offer or support specific scripting for offers etc. As a result technology suitability for up-sell, cross-sell initiatives in the Base band is generally between 2 to 4 on a scale of 1 to 10.

As staff selection improves: skills, competencies and sales ability the base values for staffing and People improve. The addition of specific and detailed sales skills training, role playing and use of the existing technology improves the values for Training. As does refining and aligning the operational processes to support up-sell and cross-sell activities also improves the Process values.

As the elements outlined as Drivers above the overall scores will improve. With the skill/competency improvement the center will see improvements in both the Offer % and the Conversion %.

As outlined on the table the Conversion % in most centers converting from a customer service environment will be in the 3-5% range and suffers from a low Offer % as well. In these centers the decision to offer or not to offer an up-sell/cross-sell is usually left to the discretion of the agent. It is common that their fears, concerns, lack of training, knowledge of the customer and support negatively impacts their perception of up-sell cross-sell programs and leads them to find reasons to rarely offer the up-sell.

A structured, planned and consistent approach can move the center up the effectiveness curve and begin to achieve superior results is required.

The proof is in the results, employing this approach has already helped a number of organizations move from cost focus to revenue success. This is always a challenging journey, but can be the difference between success and failure for the center manager.