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POOR QUALITY FROM YOUR OUTSOURCE TEAM? COMPETITION IS THE ANSWER
Are you constantly getting
bombarded with e-mails from your customers or clients that indicate
you are not getting the quality of service out of your contact team
that you should? Are you bewildered at the responses your outsource
team sends out to your hard- to-get customers? Has everything you
have done to improve customer satisfaction failed or had little
effect? If you answered yes to any of these questions, introducing
competition into the mix can drastically improve the quality of
service your customers deserve.
Managing Offshore
Constant competition between
outsourced, customer-service providers fuels Earthlink’s high
customer satisfaction ratings. Managing Offshore Editor Rusty Weston
reports on the aftermath of the ISP’s controversial decision to
offshore some of its outsourced call centers and how Earthlink
excels at multi-sourcing and cost-cutting. The business media terms
it a corporate restructuring, but that word fails to capture the
finesse with which the nation’s fourth largest internet service
provider (ISP) has transformed its customer-service operations in
the past two years. The numbers and accolades don’t lie, however.
Earthlink management shaved tens of millions of dollars in operating
expenses to boost its competitiveness and investor appeal, while
maintaining or improving the quality of its customer service. By the
end of 2002, it was obvious that Earthlink, which had built a strong
revenue stream among dial-up or narrowband customers, had arrived
late to the broadband party. The first round of layoffs in January
2003 impacted 1,300 customer-service workers in Washington,
California, and Texas. The cutbacks might have been forgotten by
off-shoring opponents if not for the board’s next two
steps—beginning with its decision to reward its chief executive with
a 76% increase in his annual bonus that year, from $196,000 in 2002
up to $346,790 in 2003. Then in January 2004, when the acrimonious
U.S. Presidential race was heating up, the off shoring opponents
received new fodder: Earthlink announced its second round of
layoffs, eliminating another 1,300 jobs, primarily call-center
workers in California and Pennsylvania. The company, which had at
one point employed 5,100 workers, was scaled back to around 2,000.
But Earthlink’s ambitious outsourcing plans worked well. Company
officials say the firm has saved $100 million in the two years since
it outsourced customer-service and support operations. Did the
savings comeat the expense of quality customer service? On the
contrary, Earthlink became the recipient of the 2004 J.D. Power and
Associates highest ranking for customer satisfaction among ISPs.
Scott H. Kessler, Internet
Equity Analyst at Standard & Poor’s, says that to management’s
credit the company’s subscriber churn rate has been unaffected by
the outsourcing. “Netzero [a United Online company] is trying to
undercut them, so Earthlink’s trying to differentiate [itself] by
providing award-winning service and some add-ons that people like,
such as Spamblocker [software].” Kessler respects management’s
cost-cutting acumen, but expresses concerns about revenue growth.
Yet on February 8, an ebullient Garry Betty, Earthlink’s CEO,
greeted the Wall Street investment community with news of the ISP’s
strong fourth-quarter growth. Betty reported that the company grew
its broadband subscriber base by 300,000 last year—taking its
overall base to 1.4 million customers, up 29% on a year-over-year
basis. The company still has 3.9 million narrowband (dial-up)
subscribers, though that’s a shrinking line of business. After a few
bumpy years, the $1.4 billion company is turning a profit. But
Earthlink executives know it can slip away easily. The sheer ease
with which customers can switch ISPs drives nearly every business
decision made by Earthlink. And this is what makes customer service
so strategic for the firm: It is far more cost-effective to retain a
customer—or up-sell him or her to broadband—than it is to find a new
one.
The Secret Sauce
The secret of Earthlink’s
success is deceptively simple: fostering competition among its
service providers to achieve continuous improvement. “We believe
that friendly competition certainly yields better results and raises
the bar for all parties involved,” says Scott Wise, VP of partner
performance and resource planning. “When developing a relationship
with our [potential] partners, we tell them our philosophy and
select ones that are OK with that. ”What began in 2003 with a small
customer-service engagement with ClientLogic expanded by the end of
2004 to a total of six providers, including Knoah, Sitel, Mphasis,
People Support, and West. The work is delivered both onshore and
offshore. Earthlink has an interactive-voice response (IVR) system
that it uses to “triage” customer calls and then it routes traffic
overseas via VoIP to different call centers.
As you might imagine, the
providers that perform the best over time pick up the most minutes
and, in this case, it’s not a hollow cliché: Time is money. “What
makes Earthlink unique, and what makes their approach effective, is
they’re very open about how a vendor does relative to the
others,”says Ralph Barletta, Founder and VP of Operations at Knoah.
“Your rank is out there on a weekly basis. There is a constant
jockeying for position and an effort to stay on top, and that
ultimately leads to the best result.”. Each provider receives a Call
Center of the Month plaque that has 12 spots for brass plates. When
a provider scores highest in a particular month, it receives a plate
with, say, March 2005 inscribed, and it holds a party to celebrate
the victory. “So, for that month they get to celebrate the
performance,” says Wise. “They don’t like to let it go.” Having won
and lost these monthly competitions, Barletta likens the award to
playing “king of the hill. Everybody’s on the hill, but only one
person is on top of the hill at any point in time.”
Stacking Up
It’s morning in Northern
California, but evening in Hyderbad, India, when the news reaches
Barletta’s inbox. The news in question is a monthly “stacked, ranked
report” that shows how Knoah performed compared with Earthlink’s
other providers. There’s also a weekly scorecard. “Every Monday we
get our scores,” he says. “It’s definitely something we wait for
with anticipation—I wouldn’t say dread. We have bulletin boards
around the building where we put the numbers, so everybody in the
company knows where we’re at rankwise.”
Sourcing
That Earthlink’s approach to
customer service includes a mix of onshore and offshore service
providers is hardly news. That the company is willing to go on the
record about its initiative is emblematic of its belief in, and
success with, this global-delivery model. Our thanks to Earthlink
and its partners at Knoah and ClientLogic for the opportunity to
conduct this case study. Thanks to executives at these call-center
firms, we were also able open a window into the highly competitive
yet collaborative nature of their engagement with Earthlink. To
round out the discussion, we spoke with an equity analyst and a
consultant with knowledge of this type of “champion-challenger”
engagement model. The rankings are based on five attributes:
customer-satisfaction ratings; call handle time; cost per call;
percent staff to required load; and alignment with Earthlink’s
policies and call-handling practices. Earthlink rolls these metrics
into a single score that determines the monthly rankings.
Handle time is considered a
productivity measure. While it is linked to customer satisfaction,
Earthlink’s larger concern is that its vendors are paid by the
minute of phone time. Earthlink arrives at its customer-satisfaction
scores in a highly collaborative way. Vendors such as Knoah collect
100 or more surveys each week. Earthlink essentially verifies these
scores by fielding its own weekly “Call Quality Assessments” of
recorded calls, looking for adherence to call procedures and
policies. (Are they using hold techniques appropriately? Are they
appropriately apologizing for certain types of issues?) Each
customer who contacts Earthlink receives a follow-up
customer-satisfaction survey. The company says it has about an 8%
response rate to these studies. Earthlink collects and analyzes
verbatim customer comments, including info about improving its
products and service. Says Wise, “When a customer provides you
feedback, there’s no arguing with it—that’s how the customer felt.
We have found that to be a very effective tool.”
The basic policies and
procedures include areas such as exception handling, customer
dispute resolution, and giving lucid instructions. Earthlink insists
that its providers share best practices in these areas.The data
analysis runs deeper than by the provider or specific call center.
Wise says, “We also provide this detail down to the rep level, so
the vendors can see their strongest performers and see who needs
additional development.” The agents have a checklist of items to
cover—depending on the type of call—that may include upselling a
customer from dial-up to broadband.
Champion-Challenger
There is more than one way to
implement the “champion-challenger” model—some methods are much
tougher than what Earthlink does with its providers. Providers who
score highest get more minutes, but the ones at the bottom of the
ranking aren’t cut off altogether. According to Bryan Mekechuk, a
partner at the Pacific Crest Consulting Group, the
“champion-challenger” model sometimes begins with a request for
proposal (RFP).
Earthlink's Evaluation
Seeks vendors with high
client-satisfaction levels, conducts on-site vendor visits—talks to
service reps about their training and experience. Also ask reps
about management style and company culture Interviews management
team – looking for continuous quality-improvement process? ..Try
these:
*Evaluate vendors on a variety
of attributes common to the service industry
*Gauge effectiveness of “culturization” and accent neutralization
programs
*Require vendors to be highly collaborative—surfacing ideas in
quarterly reviews and “socializing” best practices current contract
and says “beat it.”
Yet another variation of the
model is this: You maintain a “rolling contract” with multiple
vendors and “drop off the bottom one on a regular basis—and you keep
them all bidding.”
The client benefits, says
Mekechuk, because “they don’t have to worry about being taken
advantage of—their service providers are always competing for
something.”
The model is not without
overhead costs. “There’s someone managing the stats and making sure
it’s all apples to apples, and not becoming overly burdensome,” says
Mekechuk. The downside for vendors includes theconstant pressure to
improve or lose business, to retain staff dedicated to the account
and to manage the relationship with Earthlink such that they can
maintain profitability.
Barletta says the method is
quite fair: “The competitive model is about rewarding providers who
are doing consistently well. Ultimately, it forces us to be much
more rigorous in how we manage people.” The firms that manage their
call centers properly get a “bigger share of calls over a longer
period of time than those that don’t.”
Socialization of Ideas
To Earthlink, the fact that a
customer-service agent wears another badge is merely a detail that
needs to be managed. Earthlink executives regularly visit the
onshore and offshore call centers to work closely with the
call-center workers and management —a process that might best be
described as calibration. Earthlink trains its vendors’
quality-assurance teams and also has its own internal team that
monitors calls on a daily basis. “We meet with partners daily, and
several times a week we monitor calls [together],” says Wise. “So
we’re certain that we’re calibrated and marching together to meet
our quality guidelines.”
The call-center agent training
also includes “culturization” which, according to Wise includes
accent neutralization and “sensitizing them to the American
customer.” The call-center agents are taught to mirror the
customer’s rate of speech and tone. “As long as we resolve the
issue, our customers don’t mind where the rep is located,” says
Wise. Earthlink expects “90% plus” of issues to be resolved on the
first call, but has Tier 2 agents on stand-by at call centers
located offshore and onshore. The Tier 3 calls, where something
unique has happened to a customer, are typically handled at the
corporate headquarters in Atlanta. An example
of a Tier 3 call might be one
where a customer needs to update his or her Windows registry. (The
company does not disclose what percentage of calls is fielded
onshore as compared to offshore.)
Training occurs frequently
because of the never-ending nightmares that chase customers each
time they tap the Internet, including viruses,worms, phishing scams,
spam, porn, pop-ups, adware, and spyware. “We try to be very
aggressive about anticipating issues,” says Wise. “We work hard to
make sure our reps are communicating the advantages of our software,
so our customers aren’t disadvantaged by what’s happening on the
internet.” Some customer issues are also fielded in live chat
sessions or via e-mail or Web-form support requests.
Earthlink’s customer-service
management team is always scouting for best practices and new ideas.
“Earthlink looks for practices that have yielded positive results,”
says Amit Shankardass, SVP, Solution Planning, ClientLogic. Once
identified, Earthlink “determines what ideas they want to socialize
across vendors.”
One idea currently making waves
at Earthlink is a Six Sigma project. “Now that we have mastered the
basics of outsourcing,” says Wise, “it is time to progress to higher
levels of customer satisfaction through measurement of key
processes, identification of issues, and process refinement and
improvement.”
Wise says Earthlink is working
with providers to help them “identify and develop improvement plans
related to drivers of key performance indicator (KPI) attainment.”
This type of commitment and training investment raises the stakes
even higher for Earthlink’s providers. “We are initiating a Six
Sigma process improvement for Earthlink,” says Seeks vendors with
high client-satisfaction levels Conducts on-site vendor visits—talks
to service reps about their training and experience. Also ask reps
about management style and company culture Interviews management
team – looking for continuous quality-improvement process
Evaluates vendors on a variety
of attributes common to the service industry Gauges effectiveness of
“culturization” and accent neutralization programs Requires vendors
to be highly collaborative—surfacing ideas in quarterly reviews and
“socializing” best practices current contract and says “beat it.”
Yet another variation of the model is this: You maintain a “rolling
contract” with multiple vendors and “drop off the bottom one on a
regular basis—and you keep them all bidding.” The client benefits,
says Mekechuk, because “they don’t have to worry about being taken
advantage of—their service providers are always competing for
something.”
The model is not without
overhead costs. “There’s someone managing the stats and making sure
it’s all apples to apples, and not becoming overly burdensome,” says
Mekechuk. The downside for vendors includes the constant pressure to
improve or lose business, to retain staff dedicated to the account
and to manage the relationship with Earthlink such that they can
maintain profitability.
Barletta says the method is
quite fair: “The competitive model is about rewarding providers who
are doing consistently well. Ultimately, it forces us to be much
more rigorous in how we manage people.” The firms that manage their
call centers properly get a “bigger share of calls over a longer
period of time than those that don’t.”
Game Center Group Blog
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