The Secret to Outsourcing Customer Care Operations Smartly


How do you outsource customer care operations to maintain high levels of customer satisfaction and retention? This is often the biggest question and/or tradeoff when executing an outsourcing strategy in the business process outsourcing (BPO) realm. Traditionally, the marketing executive will view BPO as a sacrifice of long-term retention revenue and customer satisfaction for short-term operating income. The operations executive will view BPO as a cost-reduction opportunity and won’t always see the value of long-term customer satisfaction. Truth be told, BPO can provide big wins for everyone by aligning your outsourcing strategy to include a marketing operations function within your business that increases satisfaction and reduces cost.

In my experience, marketing groups tend to be focused, organized and driven with customer acquisition strategy. Advertising programs are designed and targeted to solicit new customers or prospects. Most companies are brand- and product-based, and when a decision is made to outsource customer service departments, marketing professionals tend to feel there is a lack of integrated marketing strategy with the operations team.

To create a closed-loop marketing process, especially with your outsourced customer care operations, executives must champion an effort to build a greater customer service and retention strategy that reinforces the value proposition of your company’s product offerings. By reinforcing product value, you can enable your company to grow its brand equity while reducing operational costs with outsourcing relationships.

To accomplish the task of integrating marketing with operations, there are several things that need to happen to gain value with your outsourced relationships. Marketing operations groups need to have clear metrics of customer attrition, customer satisfaction and effectiveness of messaging from the BPO teams. Additionally, the enterprise needs to focus on the service provider relationship to ensure the new developed marketing operations team is empowered to address problems as they are presented. A paradigm needs to be implemented where the marketing operations team is leveraging the cost savings associated with outsourcing to proactively hold on to customers.

What will success require? The enterprise marketing group needs to adapt to the outsourcing model and identify strategic plans for customer retention and satisfaction when using service providers. In turn, the operations group needs to enhance technology tools, implement a reporting infrastructure to measure success, create feedback channels from the BPO teams and ensure there’s collaborative management structure between marketing, operations and the service providers. By proactively responding to customer needs and operational efficiencies, a company can objectively quantify the success of using a service provider to increase satisfaction and reduce operational cost.

Let’s drill down into proactive methods you can use to establish a successful integration among marketing, operations and BPO service providers.

Establishing Marketing Operations Metrics

In my opinion, the single most important metric that enables a marketing group to maximize long-term satisfaction and revenue is a lifetime value or loyalty metric. While this may seem intuitive, I have found it hard to determine how much a customer can be worth to any business because each is unique. It often takes a PhD in applied mathematics to develop an algorithm, and while there are off-the-shelf CRM products that attempt to calculate this metric for you, there will always be a level of customization necessary to correctly calibrate the final value. That being said, your company needs to spend time developing this metric. Marketing needs to know how to segment the customer base to work with operations to manage costs by creating an efficient servicing cycle.

Once this metric is developed, it needs to be incorporated into the service tools so the operations groups can follow processes for servicing and processing customers. For example, a customer with a high lifetime value metric needs to have high service levels, increased benefits, increased customer incentives and further communication around product value for future revenue.

Customers with lower lifetime values need to have less all around effort to be retained as a customer because the revenue they produce will not be worth the cost. Outsourced agents need to understand this value to assess how to manage average handle time (AHT), sales metrics and proper messaging to keep the cost center at an optimal efficiency level.

The second most important metric that marketing and operations need to understand is a customer’s behavior of purchasing in a transaction model or the persistency of membership in a subscription model. By leveraging interactive marketing methods, your team can identify conversion rates for new marketing campaigns. By understanding customer persistency, your team can develop the correct communication points in the membership lifecycle where reinforced value-messaging can be targeted. From an operations perspective, all this predictive data needs to be correctly included in a forecasting model to ensure your service providers are leveraging workforce management methods to staff customer contact volumes properly. Everyone needs to be in synch to ensure customer satisfaction increases, operational efficiencies are optimized and your vendors perform to the correct level of expectations.

As you develop this process, service providers need to provide input and feedback from each campaign. BPO groups should be able to segment agent level performance by gender, geographic location, messaging and/or scripting and English assessment scores. This feedback is essential to identify the success of each interaction and campaign targeted at your consumers. Marketing and operations both need this to understand what was most effective and how to increase performance for future campaigns. For example, if a transactional campaign is executed and male service agents in Costa Rica delivering an assumptive language script had the highest conversion, you need to make sure your operations staff understands this for proper staffing against those campaigns. If you know that female agents in Manila using tailored value scripting are best at retention, you need to staff those queues with those types of service agents. Your vendors need to work with your company to develop the right profiles for the right servicing campaigns so you reach optimal revenue and customer satisfaction while taking advantage of the reduced costs to increase margins.

Enhance Value Statements and Messaging

Historically, it has been my experience that customer service operations have a reputation as being a burden of doing business. The constant struggle and daily battle for increased budget to service customers can take its toll for many operations executives, and I affectionately refer to this philosophy regarding customer service as the “beaten step-child” of an organization. However, in all seriousness, this philosophy of doing business causes a lot of operations groups to focus on driving down cost by sacrificing customer satisfaction. While there is an attempt to try to provide the best possible service at the lowest possible price, companies focus on AHT to service customers as fast as possible. In turn, marketing starts learning about reduced satisfaction and lower retention sales, which then prompts the cycle to shift back to ‘caring’ about customers. It seems as if there’s a pattern in business to drive goals toward sacrificing service for operating income.

If anyone has followed the path of Dell Computer over the last few years, you will have noticed its market-cap drop of $20 billion. One of the issues that caused this rapid decline was the implementation of a BPO strategy to drive down costs that ultimately led to poor customer service. The company lost a lot of marketshare, and poor service seems to be one of the important inputs that caused this problem. At the time of this writing, Michael Dell has promised to get its service group back on track, and Dell is also looking to streamline its supply chain to increase their operating margins. Hopefully, this strategy will lead to greater customer satisfaction in both servicing and product fulfillment. If that happens, Dell will get right back on track to where it was in the “glory” days.

To be successful with BPO, there needs to be a compromise between marketing and operations to ensure customer satisfaction. This can better position a company to have greater long-term financial benefit. In my opinion, this can be accomplished by changing the messaging structure of your service organization. Additionally, there needs to be a mechanism established for your BPO partners to execute on scripting changes. Messaging needs to be tailored to different customer types where the value of the interaction and the products are always reinforced. Think about changing the experience on certain call types to offer a value statement of the company or products that were purchased. Segment the customer base to target specific messaging for customers with different lifetime values. Enhance the self-service components in the interactive voice response (IVR) to provide information faster without incurring live agent costs. Increase the time you spend assisting customers that are loyal and important for your business.

There are several options and strategies that can be implemented. The goal needs to focus on proving the value of having marketing and operations work collaboratively to demonstrate the value of providing quality service and proper messaging to your customers.

The Goal is in Sight

In this article, I’ve discussed the importance of integrating marketing, operations and your BPO vendors to ensure your company reinforces the value proposition of your products, to help drive brand equity and to ensure your service providers are set up to succeed. The tradeoff of reduced cost for lower customer satisfaction isn’t necessarily a paradigm that should be settled upon. By developing a marketing operations group within your company, opportunities to lower operational costs and increase efficiencies while improving customer satisfaction are definitely viable. The goal is to define the right metrics, deliver the right messaging and ensure the right feedback channels are implemented. With the right mechanisms in place, your company should feel that launching BPO operations was the right decision.