Faced with tightening budgets, customer service and support (CSS) leaders need to reduce costs and, therefore, consider outsourcing. But what activities are best suited to be outsourced? And what impact does that outsourcing service provider (OSP) have on customer loyalty?
OSPs often perform activities at a lower cost because they can leverage existing technologies, can work on a larger scale, and conduct business in markets with lower labor and operating rates. This can result in immediate cost savings, but CSS leaders must understand the indirect cost of outsourcing on customer experience (CX).
CSS leaders must not lose sight of CX needs when deciding what to outsource to prevent customer disloyalty
Consider each customer engagement as having potential to impact loyalty. A poor experience created by an OSP increases the likelihood of losing customers — negating any benefits of outsourcing.
“Outsourcing may have some advantages when it comes to cost saving,” says Deborah Alvord, Senior Director Analyst, Gartner. “But CSS leaders must not lose sight of CX needs when deciding what to outsource to prevent customer disloyalty.”
What to keep in-house or outsource
Restrict outsourcing to service activities with limited influence on CX. To determine the criticality of an activity to CX, assess how greatly the service activity influences these factors:
- Competitive advantage: Does this activity help the company differentiate its brand(s) from competitors?
- Loyalty driver: Does this activity significantly influence CX and, therefore loyalty, among high-value customers?
- Elevated risk: If something went wrong with this activity, would it create significant risk to the company?
- Customer proximity: Does this activity occur close to the customer?
“Those activities that highly impact these factors are the highest-value opportunity for service centers to improve CX and therefore should be left in-house,” says Alvord.
Activities that have less of an impact on CX, like collections, data analytics, basic support for general inquiries and claims processing, are more suitable for an OSP. That being said, CX should still be a priority.
Learn more: Create an effortless experience
Prioritize CX with OSPs
Outsourcing tasks can have an impact on customer loyalty, so service leaders must set and communicate CX expectations to OSPs. Typical contracts contain service targets, such as average handle time (AHT), average speed of answer (ASA) and abandon rate (ABN), but too singular a focus on these metrics can be misleading. While it’s true that OSPs deliver cost savings by prioritizing efficiency, too much emphasis on managing “numbers” instead of people leaders can promote the wrong behaviors.
To avoid focusing solely on efficiency, for example, contracts should also define qualitative behavioral expectations for the service center. Leaders and OSPs should align on the CX vision to meet customer expectations and ensure all staff have a customer-centric mindset.
To realize benefits from outsourcing and offshoring, CSS leaders responsible for service and support planning and operations must:
- Maintain brand equity by keeping service center activities that are critical to CX in-house (for example, loyalty programs, top advocate support and escalation care).
- Mitigate risk to CX and fully realize cost savings by defining CX priorities and “what good looks like” with the OSP (for example, defining specific customer-centric behaviors expected of the agents during transactions).