How to Select an Outsourcing Partner

By Donna Loyle

Before Sherry Comes outsourced contact center duties for her online business, she tried to keep operations in house, with reps answering customer calls only from 8 a.m. to 5 p.m.

"But customers started saying, 'Come on. You're an Internet company. You should have longer call center hours,'" recalls Comes, president and founder of CoffeeCakes.com, a purveyor of gourmet baked goods.

So Comes decided to outsource all of her contact center operations, including 24-hour order-taking, customer service, outbound telemarketing and conference calling. The outcome, she says, is that her business has been able to grow without adding staffers to the payroll.

Outsourcing your contact center operations — whether it's for overflow/after-hours or 24/7 — is a decision that should be made with great care and after much research. Comes, for example, used what she terms "the standard selection criteria."

"We documented all requirements. Then we did a broad market scan — using some Internet research — of available contact center services," recalls the Castle Rock, Colo.-based merchant. "Then I short-listed the top 10 companies that looked suitable. Next, I did a 'deep dive,' talking with those companies, checking references, doing my research. Then I narrowed the field to the top three companies and created a matrix, slotting in how each of the three fared given our requirements."

In summer 2002, Comes selected AnswerNet, a contact center outsource provider. "We've been happy with them ever since," she notes.

If you're thinking about outsourcing all or only a portion of your contact center operations — or if you already do this but are less than thrilled with your current provider — here are some strategies that can help you select a partner that's right for you.

What to Look For

1. Experience: Ideally, the provider should have experience with catalog and/or e-commerce companies, says Erv Magram, managing director, catalog division of offshore contact center provider Cyber City Teleservices, and the former CEO of Lew Magram catalog.

2. Technology: The provider also should have technology that's compatible with your order-management system for easy flow of data between your companies, says Marc Klein, director of sales at SC Fulfillment Services, an outsource provider.

Magram agrees, adding, "Is the outsourcer willing to have its agents key orders directly into your system, so you can offer real-time inventory availability to your callers — something that's especially important in the holiday selling season?"

Some outsourcers, he says, don't want their agents to switch computer screens to take orders for various catalog clients or to have to learn different screen prompts. "They'd rather use just one order-management system, their own, and send your orders in batches, say, once or twice a day.

But that's not the best solution for catalogers, especially during the holiday crunch," Magram notes.

3. Commitment to quality service: Many merchants who keep all contact center operations in house say they do so out of fear that the customer service an outsourcer would offer won't be at the high level they expect. When shopping for a provider, methodically investigate service quality. For example:

- Insist on monitoring a few customer calls. Are the reps polite, efficient and obviously qualified? Is there too much background noise?

- Call the provider and do a little mystery shopping to see how the company handles your queries. And don't throw any softballs — make them work, then document their responses and how they handle your call.

- Call companies currently using the provider — and not just those the provider offers up as references.

- Visit the contact center. "Look at the environment," Klein suggests. "Is the place clean? Do the reps have enough privacy and sound barriers so there isn't much background chatter?" Also while at the site, interview a few reps, he continues. "Are they happy in their jobs? If not, that bad tone may come through in their voices.

You wouldn't want your customers to hear that."

4. Flexible and scalable: An ideal provider is one that can ramp up when your call volume spikes and still maintain excellent customer service. Gary Pudles, president and CEO at AnswerNet, recalls one incident in which flexibility and scalability were crucial. "We have a client that previously did only a small volume of direct business. But after it was cited positively in Consumer Reports, its sales quadrupled overnight. It's good that we were flexible enough and scalable to help them over the hump," he notes.

Scalability also was crucial to CoffeeCakes.com after it sent its first direct mail campaign — 50,000 pieces to its customer list — last September. "We were swamped with orders," Comes says. "The sales volume was way more than we expected." Because of AnswerNet's ability to quickly ramp up, she says, it could handle the short-term spike.

5. Low employee turnover: Insist on knowing the provider's turnover rate. "The contact center industry is plagued by relatively high staff turnover," Pudles says. "That's a fact. But if the outsourcer has significant turnover, that's a bad sign. Ask about its processes for hiring, training and retaining employees. Can the company articulate its staff-training process? Does it promote from within? These are important questions to be answered when selecting an outsource provider," he notes.

6. Relationships: Look for a provider with whom you're confident you can build a strong working partnership, Comes advises. "I like that AnswerNet communicates with me regularly and understands and supports my drive for continuous improvement," she notes.

Trust is part of the equation, too, Klein adds. "You must trust that the provider will manage costs, staffing and service levels in a reasonable way." Before hiring an outsourcer, set pre-defined goals and expectations for its service. Then, after it's been taking your calls, "benchmark the provider's performance. Communicate and be ready to readjust goals when circumstances dictate," he notes.

7. Reports: Before contracting a provider, determine exactly which reports you want it to provide and how often. Some merchants, Pudles says, pay for AnswerNet's standard reporting services, "but then they'll say their CFOs want analytics done in a certain way. I have to then tell the client that they bought only a standard package. So being communicative upfront and throughout the relationship is crucially important to a healthy business interaction."

8. Pricing: Look for an outsourcer that offers reasonable prices when compared to an in-house contact center with fully loaded costs (e.g., salaries, benefits, technology, overhead). Magram advises, "Maybe you have 70 contact center seats in house right now, but you need 100 during peak seasons. Why should you be forced to hire, train and ramp up for those time periods?" Outsourcing overflow calls during peak seasons can alleviate those short-term costs and the extra work of your full-time contact center staff.

Mistakes to Avoid

1. Shopping on price alone. Shopping for an outsourcer based only on price is a common mistake cited by several providers. "I often find catalogers want good, quality service, but they don't want to pay for it," Klein says. "And they don't investigate if the contact center has a record of offering consistently good quality" at that price level, he continues.

Pudles agrees, adding that some merchants actually expect some services to be provided free of charge. "That's just not realistic," he says. "We wouldn't remain in business if we gave away our services, would we?"

For Comes, price is not a strong consideration. "You can negotiate that as you grow," she notes.

2. Shopping by proximity. Some merchants prefer providers who are located nearby. "They'll want to know how close the contact center is to their corporate headquarters," Klein says. "If after the initial rep-training period you still have to visit your contact center provider for weekly meetings, you have the wrong provider."

3. Dismissing offshore providers. Magram, whose company provides offshore contact center services, says many merchants don't know that outsourcing can be done more cheaply than keeping it all in house. However, he cautions, if you're considering going offshore, look for a provider operating in a Westernized country, one that understands American consumers' wants and expectations and whose reps are perfectly fluent in English. "Our contact centers are in the Philippines, which is a very Westernized culture," Magram notes. Its Columbia, South America, office primarily handles callers who prefer to speak in Spanish.

4. Not paying for adequate staff training. Pudles notes another common mistake merchants make is expecting the outsourcer's staff to provide a high level of customer and product knowledge, without having to pay the provider for adequate staff training. "The more you spend and the higher your volume, the easier it is to train reps to take your calls, to train them as well as you would train your own in-house staff," he says.

In short, when shopping for a contact center partner, look for a strong team attitude and good communication, Comes says. Remember, you want interested and informed reps servicing your much-valued customers. Be sure your outsource provider is able to supply that consistently, efficiently and effectively.

When to Fire an Outsourcer

So you've researched appropriate providers and carefully selected one. You've been using its services for a while now, and … well, it's just not up to snuff. Here's when you know it's time to search for a replacement:

Your issues aren't being resolved. Ongoing quality problems that don't get fixed or even responded to can signal it's time to move on, says Erv Magram, managing director, catalog division of offshore contact center provider Cyber City Teleservices. "Ask for a face-to-face meeting first," he says. "See how they respond to that request and then to the meeting. If they're still not fixing your problems, seriously consider a change."

Communications break down. If you've carefully defined, verbalized and documented your expectations of the provider, but it still isn't measuring up, look around. But before you put on your shopping shoes, be aware there might be extenuating circumstances. "We had a client who goofed big time on its sales forecasts for a catalog drop," recalls Marc Klein, director of sales at SC Fulfillment Services, an outsource provider. "We got so many calls that our call-abandonment rate for the client went over our [pre-set] benchmark." Although Klein's firm was able to ramp up 20 percent more than normal for the client, it still wasn't enough to meet the merchant's call volume.

You notice high staff turnover. If the provider suddenly starts shedding staff quickly, jump ship.