Can you still win when you out-source your front line?
I have to admit, up to this point, my customer centric mindset has led me to believe that if there is one area of your business that you should not outsource, its your front line. These teams are the people interacting directly with your customers and delivering ‘moments of truth’, delight or misery to them every day. They are essentially your brand. But the fact is, many business units and organisations do outsource their internal and external front lines, generally for cost reduction purposes.
But as this interview with a Vodafone Spain executive demonstrates, it is possible to outsource your front line and deliver a great customer experience in line with your brand promise. And its no different to how you should align all your teams inside your organisation to deliver successful customer outcomes. So hold off on the ‘in-sourcing’ and ‘re-shoring’ and read this interview undertaken by McKinsey with Vodafone Spain’s, Carmen López-Suevos Hernández.
Vodafone Spain started with a situation that looked like this:
- almost fully outsourced (onshore & offshore)
- large number of vendors as each customer service function had outsourced individually
- often short term contracts
- ranked last for service levels among major Spanish mobile providers
- cost pressures made it hard to in-source
- first contact resolution rates were low
- call volumes were growing
- costs were actually increasing (despite the goal of outsourcing)
- vendors found it difficult to work with Vodafone
- focus on costs meant relationships were transactional with an emphasis on volumes and fixed prices
- vendors disliked the constant price pressures
- vendors with multiple contracts found it was like working with different companies
Vodafone realised it had to refocus on quality of service, not just cost and reevaluate vendor relationships and front line agents who serve their customers.
Vodafone always had goal to reduce overall cost to serve and reducing cost per call is one avenue to do this but when you squeeze vendors on price, they squeeze back by:
- reducing the quality of people,
- reducing the ratio of team members to team leaders,
- reducing the attention given to development & retention
Attrition increases while skills fall and the result is fewer calls resolved on first contact and up front cost benefits are essentially lost as call volumes rise.
The other way to reduce the overall cost to serve is to reduce volumes by solving more calls at first point of contact. This could allow a higher price per call which vendors could re-invest in further quality improvements while Vodafone still comes out in front.
Vodafone realised it needed to change a lot about how they operated, their mind-sets about the role of vendors, performance expectations of them and how they interacted with them. And while they indeed needed to reduce number of vendors and sites, what they really needed was a new operating model.
Fundamentally Vodafone wanted call centre agents whom could turn customers into brand advocates, not just handle calls.
After a 3 year transformation Vodafone Spain was now ranked first for customer satisfaction among major Spanish mobile providers and operating costs fell by double digits. Not a bad turnaround.
And for all the gory detail on how Vodafone did this, you can read how Vodafone did this here.