MAKING THE CALL ON OUTSOURCING

Outsourcing providers are one of the hottest commodities in telemarketing today. The total value of sales generated by outsourcing providers has grown to more than a quarter trillion dollars a year. This is particularly evident in the insurance industry, where the rise of call centers handling not only marketing, but also claims and other business functions, has been rapid and intense.

Still, many within the industry remain uneasy about outsourcing. They are hesitant to turn over a telemarketing program, whether it be customer service, claims processing, lead generation, or a retention service, to an outside resource. They are right to be nervous. After all, in many cases the only direct person-to-person contact a customer may get with your business is with someone in a contact center, and that first impression is laden with huge responsibilities. However, some of the common apprehensions about outsourcing can be laid to rest with greater understanding and planning.

Outsourcing costs

Is it not it cheaper to do this in-house? This is a common concern. The owner of a business can balk at paying a customer service representative (CSR) a substantial hourly fee, especially if they have never met him or her. Add to that set-up costs, and many employers start to look internally for resources they already pay for.

But in reality, it can cost a great deal more to turn your staff into CSRs. While you might save money in the short run, those savings dry up in a “New York minute” when all the factors are added in. First of all, each representative’s workstation will need to come complete with a phone, desk, chair, and the proper software and network access to properly connect with the customer. You will also need to shell out the necessary cash for conference and break rooms, not to mention the actual salary per employee, plus the health benefits you would not ordinarily pay for when you outsource.

That is not all of it – there is more. Since you will be using your own facility for telemarketing, there is the added cost of office space (several thousand for each CSR), and additional costs per square foot for leaseholder improvements. Where are the savings?

In addition to saving money for the employee’s pay and environment, outsourcing allows you to obtain the latest in cutting-edge technology (such as equipment to make your contact center web-enabled, meaning employees can interact with customers through the Internet) without having to invest in an ever-changing technological world. You also never have to worry about signing on too many/or too few employees when you outsource, you can adjust the levels as the job progresses.

Is it necessary?

With direct mail and today’s technologies, such as automated answering services, many within the insurance industry do not see the need to outsource. It is true that many businesses are opting for direct mail over telemarketing, feeling direct mail is less obtrusive, as well as substantially cheaper. But without prior research obtained through supplemental market research, direct mail can be a disaster.

For instance, a company offering a non-branded, flat-rate long distance service started a direct mail campaign. Without brand awareness and with all the competitive clutter surrounding long distance marketing, this company had an abysmal response rate, less than one-half of 1%. Seeking help, a new program was put in place that started with reps calling prospective customers before the mailing and asking five profiling questions to customize the direct mail message. The result? An estimated 70% of those called participated in the survey, and the total cost per sale was cut in half, even with the added telemarketing expense.

As for automated answering services, not only do they annoy customers more than help them (especially when they are looking for someone to talk to about a specific problem), but nothing can replace live one-on-one conversation. Just by speaking to a prospect, a live CSR can configure the message, and/or offer an incentive to fit that prospect’s needs.

Loss of control

In many cases, managers choose to have little interaction with an outsourced telemarketing program. As long as the goals are being met, it is usually “hands-off”. And for many managers, that is fine. But for those who are used to keeping close tabs on their programs, this could be seen as unacceptable. These managers do not have the time or resources to set up or closely monitor an outsourced program – which is why they are outsourcing to begin with. But they still require accountability, and rightfully so.

The solution is to have a third-party expert evaluate the telemarketing program. A good evaluator will schedule and attend weekly status calls, analyze reports thoroughly, monitor calls at least once a week, and carefully track “costs per metrics”. Even in programs where the goals are being met, evaluation programs that can drive reps to make only one more call per hour can pay off. For instance, take a contact center where the average conversion rate is 10%. Keeping in mind the costs of a telemarketing program, a rep making six contacts an hour translates to about $50 a sale. But if an evaluation program can drive that rep to make seven contacts an hour, the cost per sale drops to $43 – a drop of 14%. All for just one extra call an hour.

Measuring success

People are concerned that they will not be able to measure the success of their marketing initiatives if a third party carries them out. Okay, let’s say that you can accept giving up control of an outsourced program, and you find a third-party firm to monitor the contact center’s success. Still, how do you know when a program is worthwhile to begin with, never mind the “worth” of outsourcing? It is sometimes difficult to tell, especially since the company who designed the promotion in the first place is more removed from the process than the company who is now charged with carrying it out. But outsourced contact centers can provide you with several tools to analyze the effectiveness of your program.

One such tool is a “barrier/lever analysis”, which allows you to identify the objections that are the most frequent and difficult to overcome. Another is a “yield/loss analysis”, which outlines the entire marketing process, from list selection to enrolment, and identifies where the greatest percentages of prospects fall out. In the end, a yield/loss analysis helps you pinpoint key weaknesses and strengths in the contact strategy.

Finally, contact centers can provide a “testing phase”, wherein different messages and offers are disseminated, with their results compared. By limiting the number of elements that differ from call to call, you can find out what specifically impacts results – which offer, even which phrasing of an offer, is the most effective.