Flip Goes The Contact Center

Are contact center outsourcers feeling the heat?  If not, perhaps we all have our heads stuck in the break room freezer while the building is burning down around us.  Because change is happening and it is going to continue to erode the core of the contact center business: agent-based contact handling.  There is a whole lot of research currently published that points to this fact that we all know intuitively.  Demand for phone-based customer service is on the decline.  There are many drivers behind this shift.  This quote from Gartner’s Michael Moaz in his lastest Magic Quadrant for CRM Customer Service Contact Centers says a bunch about one of those drivers. 

“A new generation of customers has a deep resistance to telephone-based customer service”

This fact is irrefutable.  So in response, every contact center is, or should be working on addressing this shift in channel preference and integrating new capabilities.  But, that alone, will not guide the contact center industry to sustainable future growth.

Now I know that every outsourcer worth salt has some portfolio of solutions beyond ‘butts in seats’.  Those solutions range from technology platforms like custom IVRs and auto dialers to analytics and contact center consulting services.  But, at the end of the day, these services continue to play a supporting role to the leading role of contact handling operations.  All you have to do to validate this assertion is look at the net margins contact centers generate.  Despite the move to diversification, margins and revenue mix across the industry continue to reflect the fact that ‘call floor’ is still king.

How long is this business model sustainable?  How long before the bottom falls out?  Well, that’s the challenge.  Change is happening more subtly.   And with current razor-thin net margins (publicly traded firms average in the 2-5% range), subtle change can easily tip these margins into negative territory.

What to do? What to do?

All ye heretics, join me in a group contact center headstand:

In the new world of the contact center, interaction handling will play a supporting role.  What we’re all really after is the data.  The insight into the customer; her experience, preferences and needs.  From this information, we can deliver technologies and analytic services that have a broader strategic value across the client enterprise.

If you’re in the contact center business, you might be looking at this and saying: “We already do all that new model stuff”.  And, this is a true statement in many cases.  The key question you need to ask is what strategic focus do these services have within my portfolio.  Can these solutions stand on their own?  Are clients lining up to pay you real money for delivering these solutions?  Or, are they hanging out in pre-sales purgatory?  Thrown in as a deal sweetener to get the seats. 

Having had the experience, and at times frustration, of launching a consulting business within a software company, the key challenge is to build a portfolio that aligns with customer expectations, yet breaks the mold of customers’ perceptions of you as a call center outsourcer.  Only then, will client value perception align with client value realization in such a way to generate higher margin revenue for your business.

Higher value for clients, higher margins for the outsourcer.  Everyone wins.

Comments

  1. Hi Barry,
    Very interesting post — love the title/graphics.

    The new generation of customers (young ones) have strong resistance to telephone based service. Yes, I have heard this before and can see it is true.

    Isn't it time to use a model that has a contact center with equal strengths in all delivery mechanisms. There are many of use who want phone, online chat, as well as self-service. Just yesterday I had outstanding service via online chat in a retail situation and the week before great service on the phone. There must be a way to deliver all this with decent profit.

    Like every other industry in this modern age — it seems that call center is not immune to the demand for major change to survive in this millennium. Time to not only flip but broaden and embrace a multi-point approach.

    I will RT ur post on Twitter. Luv your stuff.
    Best-
    Kate Nasser, The People-Skills Coach

  2. Thanks for stopping by Kate. I agree that contact centers need to by multi-channel. I'm not sure if equal focus on all channels is scalable, long term. I think that's one of the challenges many contact centers are facing today. They are adding channels – sms, web chat, self service, social media and trying to be all things to all customers.

    Another way to approach it is to be more customer-focused in making these decisions. So, as we make financial decisions on where to deploy scarce resources, the first step should be to understand your particular customers' preferences and then make investments to execute flawlessly on those preferred channels.

    In some cases, there may not be clear preference. But, in general, we know that phone channel is declining in preference. So, would it make sense to start the long range planning to divert investment and focus towards other, emerging channels that are growing in preference.

    thanks again. Always a pleasure.

    Barry

  3. bravo. enjoyed the flipping of the hierarchy!

  4. This comment has been removed by the author.

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