Surprising call center adoption

Posted: February 6, 2008 in CRM

I got a statistic stuck in my head last week during a visit to a client.  Sometimes you hear or see something so interesting for its oddity that it stays with you no matter what and this was one of those times for me.

There are actually two closely related bits of information and both relate to the call center.  Ready?  In the business-to-business (B2B) space less than 40% of the companies have purchased a call center system for customer service and in the B2C space less than 25% of companies have bought service call center solutions.

Just to be clear much higher percentages of these companies have some form of call center directed at customer service, they simply build and maintain these centers themselves or outsource.  I don’t know what the full compliment of call centers is but I would expect that close to all of the B2B companies at this point in time have some kind of function for taking customer calls.

So the question that sticks in my mind, amazes me and even permeated my sleep briefly one night, is why?  Why would a large (or small) company with other things on its plate decide to take on the rigors of building, maintaining and managing a call center infrastructure when it could easily enough ring up some software company and place an order?  I have to say I don’t know but, pundit that I am, I cannot help but to noodle on this and offer up some ideas. 

Idea number one — it’s less expensive to do it yourself.  That’s somewhat credible if all you look at is the cost of the raw elements.  However a lot of what goes into a call center is labor and smarts in the form of software and I have a hard time believing it’s better to write code rather than buying it along with all of the best practices it encompasses.  I’d call this the “IT centric solution” since it no doubt gives people in IT job security.

Idea number two — the call center grew organically.  It started as a small mushroom and mushroomed into a big mushroom.  Like anything that grows buy accretion before you realize what happened this simple little system grew into a great big legacy application that people are afraid to mess with today.  I call this the Supportzilla scenario and I can see how it could happen.  Start with a small investment and every time you reach a make-or-buy decision, the make part always looks better than ripping out the whole thing and replacing it with a packaged system.  This idea might have legs but I call it the “management through avoiding decision making” approach.

Idea number three — customer service is expensive and no matter what we spend on it, it’s never enough so we have to cap spending and that means no new spending on those pesky customers.  I call this either the “pure finance approach”.

There are probably other ideas but my brain is tired from not sleeping well because I am thinking about this idea too much. 

The truth is that call centers are expensive and they don’t usually show positive returns except for the fractional payback you get when you can boost productivity by handling more calls in an hour with a fixed number of agents.  Also, with so many moving parts, it really is easy to believe that the system you’ve nursed along for years is as good as anything out there or certainly good enough.  On top of all this there are the ongoing costs of constant hiring and training and re-training call center staff which may draw attention away from the issue infrastructure.

I guess there is one more alternative and it might be my favorite — companies don’t see enough value in packaged call center solutions period.  It’s not that the things are expensive per se, it’s that they simply don’t provide a solution to the problem of dealing with customers.  After all, these systems don’t help customers avoid the need to call the vendor, they just manage the call flow.  In the modern world they are necessary like so many other things.

A few years ago I did some research on CRM in the insurance industry and what I discovered then dovetails into this issue.  The data showed that there was an almost perfect split between insurance companies that bought CRM packages and those that built their own.  I recall even calling a few executives to verify the data and what I was told (and the data also confirmed) was that the products then available did not support enough of the business processes that the insurance companies needed covered. 

The executives’ logic was that they could either customize a package or build from scratch but when they did their own financial analysis, the insurance executives decided it was just better to start from scratch.  I don’t know if things have changed in the years since I did that research, I left the company where I did that research and never followed it up with another study.

Nonetheless, it strikes me that a similar situation exists in the call center.  There are so many business processes that could reasonably need to be supported in a call center that no vendor has gotten its arms around the problem yet.  If that’s true I wonder what, if anything, the vendors are doing about it.  The chances are pretty good that it will require a good deal of investment and with a market trained to build rather than buy it might be hard to generate a return on the necessary investment.

I wonder if anyone else is losing sleep over this.

Comments
  1. Paul Sweeney says:

    All these seem to be perfectly viable explanations. But why limit the conversation to Call Centre Software?

    (1) What kind of cross-tab is there between those that choose to build their own software and other packages within the organisation?

    (2) What kind of cross-tab is there between that decision and the number and quality of internal IT staff (I would posit a strong positive correlation), and

    (3) What is the history of previous package-buy versus custom build disasters within that company, or in other companies that decision making management were in, and their decision to buy/make?

    I would posit that where their have been failed or dramatically below performing package apps buys, people will look to insource the risk so that they have full visibility. I would posit that the very presence of highly qualified IT staff might lead to a “we could build that ourselves and save money mentality” (I might be unfair there, but it would be worth a see), and If you don’t have standard apps environment in the first place, how is a packaged app going to fit in?

    Just a few thoughts.

So, what did you think?

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