Are Contact Centers Profit Centers?

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 15-Sep-2004 10:57 AM
Are contact centers becoming profit centers, meaning you're going to make an investment and get a return? Or are they still primarily considered an expense to be minimized, hence: offshore it outsource it, automate it, whatever you can do?

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 15-Sep-2004 11:02 AM
[For Donna Fluss, principal, DMG Consulting, LLG]

From speaking to a few thousand call and contact centers, I can tell you that today, somewhere between 90% and 95% of contact centers or call centers are still cost centers, which is unfortunate. But the good news is that it is starting to change.

Organizations are really struggling to improve the effectiveness of their marketing programs, and what they're finding is that there's a huge opportunity within their contact centers. Basically, they can no longer afford the lost opportunity cost of not taking advantage of each and every customer-initiated contact or contact made in the contact center.

It's not just an issue of the technology but also of the people and the process. We are at the beginning of seeing a transition of call and contact centers from cost centers to profit centers, which doesn't mean that we're not going to continue to see pressure on these organizations to reduce their cost.

It does mean that we're going to start to see these organizations brought more into the corporate fold and invited to participate in revenue activities, including actually being assigned revenue goals. So, this transition will probably take five to eight years.

The identification of the problem has been made. The question is, how do you change what you already have?

I know of a couple handful, maybe, of organizations that have actually converted themselves to profit centers, but the vast majority still remain cost centers.

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 15-Sep-2004 11:09 AM
[For Bill Price, founder Driva Solutions]

I totally agree with Donna. The emphasis has traditionally and sadly been on treating call centers and contact centers as cost operations. I think that the industry, itself, is partly to blame for this, because it's become more of an operations production orientation over the years. You can tell as much when you look at the metrics that we use in call centers and contact centers. They're still very much dominated by things like average handle times and speed of answering—other easy-to-measure service levels.

The tougher stuff to measure, but the more important areas, have to do with customer interaction quality, building relationships and, as Donna mentioned, taking advantage of those customer-initiated contacts, to really build an overall profit motive for the company.

We're seeing companies that are beginning to move away from this. But they have to take a big mental shift away from those old metrics and the productivity focus of the past and really move themselves into the center of the operations.

One way to do that is something that we actually put in place when I was vice president of Global Customer Service at Amazon.com—and we're helping some of our clients do—which is taking the notion that the best service is really no service. If you're not running a telemarketing operation, most of the contacts that call centers deal with should be eliminated or should be turned into self-service because they represent either mistakes that the company has done—with the call center being the repository of healing those mistakes—or confusion.

If you wind up eliminating what we're calling the "dumb contacts" and focus on the meaningful relationship-based contacts, then the contact center can move away from being a cost operation and doing a value center, sort of a middle ground in concept.

Graham Hill
Guru
Member

Posted 16-Sep-2004 12:37 AM
Gwynne

Donna and Bill are both clearly right in saying that call centers are overwhelmingly seen as cost centres rather than profit centres and that that is gradually changing.

And both are clearly right in saying that marketing is starting to play a much larger role in call centre operations. This goes as just as much for sales from inbound service activities as well as the outbound telemarketing that has had such a bad press.

The real challenge is in achieving a balance in how the call centre provides the right combination of service, marketing and sales activities. Right for customers and right for value growth.

Bill says that the best service is really no service. He has a good point. As Patrick Barwise suggests in his new book, 'Simply Better', many companies focus too much on outbound marketing & sales at the expense of making sure that the internal business can deliver the high-quality invariably promised in those same marketing & sales glossies. A recent study by the customer experience management consultancy Beyond Philosophy found that more than 90% of customers' experiences of companies did not match their marketing & sales promises. Companies clearly do create an enormous number of inbound calls in response to their failure to deliver that which was promised.

To mis-quote an old saw, "Corporation, heal thyself".

Graham Hill
Independent CRM Consultant

V Achuthan Kutty
Member

Posted 16-Sep-2004 10:21 PM
In converting from a "Cost" Operation to a "Profit Center" almost on the fly, we are perhaps assuming that the person whose primary duty is "Servicing" the inbound call from a prepared script will in fact be quick on the uptake and edge the real, live prospect towards a sale. While this is an ideal scenario, there are a couple of real, basic issues:

Organization Structure—Bill Price has explained this at length. Unless the change occurs in the defined SLA itself, why will an outsourced call center want to do anything out of the ambit?
People Capability—The people manning the contact center have to be capable enough, with the right training, attitude and all the rest of that. Ususally they are not. Their own sense of the task at hand is that it is one more call, not one more opportunity. And that distinction between call and opportunity has to be driven from the parent organization.

Customer Interest—Can you hold customer interest? Inbound calls are usually problem solving ones. Irritation is at its peak. It will take some doing to sell to this customer whose primary source of irritation is the failure of the parent organization to deliver what was promised.

As an acquaintance (in the contact center business here in India) once said, "The biggest value we can add to our clients is doing our job well."

If the marketing and sales promises can be delivered, then the contact center business would need to reinvent itself!