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Should I out-source customer service?

Guy Letts

This post was prompted by a question I saw, asking for the pros and cons.

As the wrong decision on this can do serious damage to your customers’ experience, and therefore to your business, I thought I’d share the experience I’ve accumulated on the subject.

Before you decide, it’s important to get your thinking clear about customer service.

1. Customer service is everyone’s job, not a department to which you give that name.

Everyone in an organisation can influence the experience of customers for good or ill, and there’s a danger in referring to customer service in this way that some people fail to realise the impact they can have. Out-source by all means if you decide that’s right for you, but don’t forget that you’re only out-sourcing a small part of the overall job of serving customers.

2. Reducing cost does not necessarily increase profit.

Don’t think of the ‘customer service department’ as a cost-centre. Think of it as a profit centre. If you get service right when customers contact you, your customers will reward you with repeat business, with loyalty, they will allow you to cross-sell to them and if you are consistently good they will recommend you to their friends and colleagues. That means new customers for free.

But get service wrong, and the impact on your profit will dwarf any apparent saving on headcount.

3. It’s all about people.

Remember that staff satisfaction is a pre-requisite for customer satisfaction. Even the most highly trained and capable people (whether in-house or out-sourced) will not represent you well if they are treated unfairly, paid poorly, or not given the systems and policies to enable them to do the job that customers need them to. You can only expect good service to be delivered if you look after the people who you expect to deliver it.

4. Reap what you sow.

Culture is also an important factor to consider. How will you treat people if they use their initiative to resolve a problem? For example suppose someone offers a refund outside your allowed period because they listen to the customer and consider that it is merited in that particular situation. Will the person be punished for breaking the rules, or rewarded for retaining a customer? Which behaviour do you want to encourage - people who follow all the rules blindly yet alienate customers, or people who use their initiative to gain loyal advocates for your company?

5. Important but often neglected.

The last but most important thing to consider is what your customers would prefer. Think about how you would feel contacting your company. If you can get another company to do a better job of representing you than you could do yourself, then out-sourcing could be a good solution. But is that really likely? Work out what would be best for your customers, not which would cost least - and in the cost analysis, include the factors above, not just the headcount costs.

If you want to save time, there’s really only one factor to consider. Which option will make your customers write in to thank you, and which will make them lose confidence in you and look elsewhere?

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