We are not pushing domestic versus off-shore, but instead the analysis of what using a third party call center can do for your business. One of our clients outsourced 300,000 phone calls off shore, resulting in a substantial reduction in costs. How substantial? This client’s fully loaded internal cost per minute was $0.72, while a fully loaded off-shore cost per minute for this client was$0.42—and most of the customer service remains in-house. Additionally, the client’s 90,000 mail/fax orders cost was only $0.15 per order: scanned, transmitted to Asia, keyed overnight and available on-line for picking and customer service the next morning.

Clearly, you need to look at the potential savings of outsourcing. How should you approach doing this type of study?

Know your internal costs. In order to compare your internal costs versus third party outsourcing, you need to identify your fully loaded internal costs. “Fully loaded” includes direct and indirect labor, occupancy and telecom costs. This needs to be converted to a cost-per-minute basis, which is how outsourcing will generally be proposed and invoiced. You may say that you can’t control occupancy costs, however, there may be other uses for that space, if call center is outsourced.

Competitively bid out to multiple vendors. It goes without saying that you need to competitively bid the call center functions in question to a short list of qualified bidders; both domestic and off-shore. This is the only way to get the lowest costs.

Formalize an RFP (Request For Proposal). This should include:

• A pro forma for your business, meaning the types and volumes of transactions (actual and multi-year forward projections)
• Required services and functions
• Service level standards for total call length, abandonment rate, and average call service level standards
• Request references, boilerplate contract, and reports available
• Details about order management systems needs and systems integrations including eCommerce site, etc.

Decide what to keep in-house. You should keep your call center customer service internal. This gives you a way to monitor the service levels of the outsource company. It also gives you the opportunity to have control and be the “front line” for resolving customer issues.

Ask other critical questions. Among the things you’ll want to know:

• How will training be conducted about your product(s) and company policies?
• Is the third party provider PCI compliant and certified? To what level?
• How will you monitor your customers’ calls coming into the third party call center?
• Who are the company’s references? Come up with standardized questions to ask each of the references so you can compare their responses.

Domestic outsourcing has some advantages over off shore. Here are a few that I think are important:

• There may be an advantage in the area of English speech. However, I am greatly impressed with how well the Philippines has performed for some of our clients.
• Shorter travel distance means you can visit call centers more often.
• Understands US culture.
• Keeps jobs in the USA. This may or may not be as much of a factor for you.

Of course, domestic outsource providers’ costs may be higher than some off-shore solutions, but that is not necessarily a dead end. We have one client, a major non-profit with a high average order, that outsourced 100% of its direct orders domestically while keeping customer service in house. They were able to successfully renegotiate with their domestic outsource provider so that the costs were not so widely different.

If you’re interested in potentially using a third party call center and want to talk with a consultant, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.

Our team understands the issues and challenges facing multichannel businesses and provides insight on the following topics:

• Business Management – including “Developing Your Corporate Dashboard Of Key Performance Metrics”
• Contact Centers & Call Centers – including “Managing Your Cost Per Call”
• Forecasting & Inventory Management – including “10 Ways To Improve Vendor Quality Control”
• Direct Commerce Systems – including “How to Select Any Business System: Four Steps To Take Now”
• Warehouse & Distribution -including “Rising Transportation Costs – And What To Do About Them”

With over 45 articles filled with data, results and in-the-trenches experience, we compiled this information to provide a how-to and best practices resource to our clients and others in the industry. The articles in this book reflect the type of in-depth knowledge that a consulting firm with 250+ published articles in US and European trade publications should have – the type of knowledge and experience that F. Curtis Barry & Company brings to every client engagement. Each article was reviewed by our team and edited with timely updates.

Best Practices in Multichannel Operations & Fulfillment provides quick tips and thoughtful answers to companies working to increase their profitability, improve efficiency & productivity and reduce costs.

There are more dynamic email/chat systems that will allow you to better service your customers and not break the bank. Using either an Application Service Provider (ASP) or email management system will give you greater access to monitoring and quality control. KANA, RightNow and eGain all have great solutions for centers that process hundreds of thousands of transactions, but as contact center consultants, we find that ASPs such as InstantService, LivePerson or Talisma, all fine solutions, offer alternative options with distinct advantages.

Those that charge a per-use fee, such as InstantService, are more enticing than a seat/named user license. You will have an annual fee, but that is reasonable considering the peace of mind and reduced need for IT support at your location. Your fee structure will then be based on answered email or chat transactions. Using an ASP gives you a solution that is virtually maintenance free, saving on IT resources and server space. It allows you to manage your email and foray into chat, while establishing best practices and KPIs that will service your customers, and have it up and running quicker and easier than any other tool. In fact, some ASPs can have the entire implementation, from initial contact to production, done within a few days.

For the effort, time and money an ASP offers you more options than standard Outlook for the customer experience. You will gain efficiency immediately with increased productivity levels, and over time the monitoring capabilities will allow you to help agents develop better communication with the customer.

If you’re interested in discussing your call center needs or issues with a consultant, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.

There are numerous ways to capture VOC. Box post cards, follow-up telephone surveys, end-of-call IVR surveys and email surveys are all options to gather vital feedback information about the customer’s experience. Focus groups and interviews are also great tools; just make sure any agency you hire has been given focused parameters, otherwise you will be wasting resources and time. Postcards will need support for entering or scanning the data, and then for analysis of the data. Outbound calling is expensive and success is sometimes challenging. IVR surveys are great, but you need some expertise in surveying and telephony to make this really work.

That leaves us with email surveys. These are both cost-effective to distribute and easy to analyze. As supply chain strategy consultants, we find the post-call email survey is a great tool that can create near immediate interaction for true 360-degree or VOC reaction. Many of the ASP services have templates already developed and ready to go; look at Vovici (www.vovici.com) for one. If you are able to collect an email address for shipping confirmation or order acknowledgements, you can use that information for an immediate customer feedback module. You can start with the customer experience concerning the telephone call. It makes sense to send an email within two or three weeks to understand the customer’s acceptance or pleasure with the product they purchased, but don’t wait several weeks to gather information concerning the customer interaction. The process of data collection needs to be somewhat scripted, consistent and timely.

If the customer is not pleased with an aspect of your service, product, or supply chain strategy they will leave, and it is far easier and less expensive to keep the customers you have than to try to acquire new ones. So listen to your customers and grow with them. By collecting these customer insights, your future mailing, product andsupply chain strategy decisions will be supported by real data about what your customers think and want. In the end, does anything else matter?

If you’re interested in discussing your supply chain strategy and call center with a consultant, contact Jeff Barry at jbarry@fcbco.com, or call (804) 740-8743. F. Curtis Barry & Co. is a national consulting firm that works with eCommerce, catalog, retail, manufacturing and wholesale distributors on projects focusing on supply chain strategies, order management systems, warehouse management systems, inventory management, third party logistics, and to reduce freight costs.

Gorman has written about the company and its growth in the last half-century in L.L. Bean: The Making of an American Icon. This is one of the industry’s great books. It painstakingly charts the changes in marketing and merchandising that achieved these dramatic results over 38 years. The book discusses the synergy and the necessary tension between marketing and merchandising. The role that supply chain strategies, including call center, plays in providing exemplary customer service. Staying true to the principles established by his grandfather L.L., sourcing the best outdoor products at the right price, how the college and preppy trends accelerated L.L. Bean’s growth, trying to sell to women shoppers without getting caught up in fashion trends, providing a 100%, no-quibble guarantee (there are legendary stories about shoppers returning outdoor gear after extensive wear). It is the ultimate in customer service and kept customers coming back. Bean’s huge retail presence in Freeport, ME and the slow charting of retail growth outside the region. Gorman talks about how different these channels are for them.

I met Leon Gorman in the mid-1970s. Mr. Gorman was friends with Mr. Frank O’Reilly, the then president of Brooks Brothers. In a very forward-thinking strategy, Mr. O’Reilly launched the first Brooks Brothers’ catalog when BB had less than 20 stores. At that time I worked for Garfinckels, Brooks Brothers, Miller & Roads, Inc., in the corporate data center as the manager of research and development (systems and programming). Our team was invited to Freeport, ME for a week to explore all the aspects of order management software and customer service. Mr. Al Schmidt was in charge of the marketing at that time. Mr. Gorman and his team couldn’t have been more gracious and thorough in educating us on the basics. Back then there were no commercially available order management systems. I vividly remember Mr. Gorman walking us through how he guided the selection of product and worked with creative to paginate the catalogs, and his concern for developing new products. We designed and programmed our 370 mainframe system by emulating L.L. Bean.

In the book, Mr. Gorman continually talks about the top guy being thoroughly involved with the merchandising of a direct company, something which is obviously very difficult to do given this rate of growth. Without continual product research and development and sourcing, retail and direct businesses are essentially out of business.

What’s interesting about the way the book is written is that many people were interviewed, current and former L.L. Bean managers across the company and consultants as far back as Stanley Fenvessy. Mr. Gorman has his commentary and the other participants give their viewpoints (they are identified by name and position). This illustrates the contrasting viewpoints of various people who charted and achieved the company’s long-term growth. But one thing for sure, Leon Gorman was ultimately in charge, and he held himself and the company accountable to achieving the best results for all stakeholders.

This is a great read. Get your team reading it now. Especially for young managers it’s a great way to see how all the functions fit together.

–

Curt Barry is president of F. Curtis Barry & Company, a national consultancy focusing on warehouse, systems, and inventory management.

This reduction is significant not only because of the reduction in costs, but because it shows how this company has uncovered problems with their online processes.  Too often this number stays stagnant or increases.  You may never be able to get rid of web orders that need to be completed in the call center but you need to identify why the calls occur.

Stronger companies will categorize and analyze why calls occur and develop a strategy for solving them, this will eventually lead to a reduction in the inbound calls to assist customers with web orders.  Here are some of the most commonly found reasons for customers completing their orders in the call center:

1.       In-sufficient product related information, including use and care or technical documentation.

2.       In-sufficient product photos accurately depicting the product.  Not just one or two photos but all aspects of the product, dimensions and colors.  Often times videos are needed to demonstrate a product or provide customer reassurance.

3.       Confusing product availability or expected ship dates for a product.

4.       Obscure or non-existent shipping & processing fees until the point of check out.

5.       Clunky check out process with confusing pricing, taxes and shipping and processing options.

6.       Forced, cumbersome registration processes.

7.       No ability to do customer self help on the site.

If your customer hasn’t just totally abandoned the cart and has opted to call you, then you better make sure that you record what the problem was in addition to placing the order for them.  The goal needs to be to analyze the various problems and quickly implement solutions to resolve the issues.

Companies that have a larger amount of inbound calls pertaining to web orders more than likely have a large percent of abandoned carts on the website.  Many marketing related guru’s may look at the cart abandonment but not consider the increased inbound calls.  By looking at both the marketing and call center aspects, you will be solving both – increasing the gross demand through efficient and effective web applications and reducing the call center costs from inbound calls.

When was the last time you reviewed this metric for your call center?  How often are you taking customer calls because your website isn’t functioning in a way that focuses on the customer?

Identifying call center problems and developing a strategy for improving the issues and measurements is F. Curtis Barry & Company’s core competency — let us help you.

Brian Barry is a Senior Consultant with F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, and benchmarking; Learn more online at: http://www.fcbco.com.

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Dear Curt -

We met briefly at the NCOF conference in Vegas, and I wanted to reach out  to you regarding performance errors.  I was hoping you could provide  me with some insight into how other 3 PL fulfillment companies manage employee errors.  Currently, we don’t have a strong policy in place to  deal with these issues.

Some questions that arise in my mind are:

1.  How many mistakes is too many?

2.  Should the consequence be different in receiving than picking or packing?

3.  If there is a larger mistake that causes our company should there be a more severe consequence?

I understand that everyone makes mistakes and I would like to allow  for learning and coaching, but I also want to make sure that our  employees have a formalized consequence to ongoing errors, and they  know what to expect.  If you have any feedback on this I would really  appreciate it.  Or, if you know any warehouse managers I could speak with to get ideas on what they do that would be great!

Thank you so much for your time!

Sharon, VP of Client Services, 3PL Company

Dear Sharon -

In my opinion, there are a couple levels of issues:

1. Weekly productivity reporting by person through out the call center and fulfillment.  Our clients display these by department and person on white boards, reports and monitors throughout the facilities.
2. Contact center monitoring should be in place.  There should be a form for evaluating the calls and a weighting system for the responses.  What are your standards for monitoring experienced core employees versus new hires?  Companies have developed coaching approaches to improve employees, get them to accept responsibility for improvement or a basis for asking them to leave the company.
3. Personnel policy that deals with severe HR issues.  These include theft, embezzlement, sexual harassment, etc.  These should have clear documented policies which employees understand.

In terms of error rates, we would expect that controllable error rates would be only 0.5%. Meaning, 99.5% of all major transactions are error free.  In bar coded systems it will be much higher.

In a speech a number of years ago when I made the statement about error rates of 0.5%, a national FedEx manager pointed out that meant 73,000 of their customers would not get their package on time in any given day. What is your management’s attitude about errors?  And you are in a 3 PL service so what guarantees are you making to clients?  Hope this helps.  Call me if I can further explain.

Curt Barry

Hey, blog readers, what’s your company’s approach?