Contact Center Solutions Featured Article

August 17, 2009

Understanding the Widespread Adoption of Home-Based Customer Care

By Rob Duncan


Jim had a call center but could never find enough people to staff it. So, he followed the traditional solution and put up another call center in a different location. That too eventually tapped out the market so that no more qualified employees could be found. Over and over again, this happened. Frustrated and financially strapped, he took a step back and asked the question “Why does it have to be done this way?” He wondered, “Why does a person need to leave their own desk, computer and phone, just to come here and use my desk, computer and phone?” Thus the home-based call center model was born.
 
The invention of the at-home model came about by having a problem, spinning it around and looking at it from the sides, the top and the bottom. This model was created because one person was able to break away from a solution created by someone else and embrace the notion that just because something was done a certain way doesn’t mean that it’s the right way.
 
In his book, Freakonomics, Steven Levitt applies this same philosophy to reveal how everyday life really works. By looking at the hidden economic drivers behind what people have accepted as societal norms, he uncovers intriguing correlations that force us to re-evaluate conventional thoughts and solutions. To do this, Levitt relies on data. He approaches each scenario with the intent of looking at it from a new perspective and begins by asking the unasked question – “why.” 
 
Applying Levitt’s methodology to the birth and subsequent adoption of the virtual call center helps shed light on why major Fortune 500 companies have now fully embraced the at-home model. Of course it didn’t happen overnight. At first, convincing companies that effective customer service could be handled by people working from home wasn’t easy. It also wasn’t easy creating a remote workforce, developing a sense of teamwork in a remote environment and figuring out how to best use technology to provide secure access to information. But just like Levitt’s book reveals, the data speaks for itself. The at-home model provides the highest quality service at the lowest possible cost. The compelling economics of the virtual contact center have turned the industry upside down and propelled this solution into mainstream corporate America.
 
Highest Quality Service
 
Simply put, higher quality Customer Care Professionals provide higher quality service. Home-based call centers employ the top 2 to 3 percent of CCPs in the nation. They are able to recruit and hire these top performers because the virtual nature of the model eliminates all geographical hiring boundaries. This allows at-home contact centers to hand-pick their staff members from a massive pool of applicants. Even better, the ability to work from home is such a desirable situation it attracts only the best of the best.
From an economic perspective, home-based CCPs consistently outperform in-house staff to receive the highest scores in customer satisfaction measurements such as:
 
Better Service
Higher Sales
·Higher first call resolutions
·Lower average handle time
·Lower abandonment rate
·Higher customer service top box scores
·High “refer to a friend” numbers
·Larger average order sizes (more units per call)
·Larger average dollars per sale
·Increased conversion rates
·Higher dollars collected
·Improved credit card conversion rates
 
Lowest Cost
 
In conjunction with higher quality service, the at-home model streamlines operations and eliminates many of the fixed costs associated with maintaining a physical environment. While some of the cost-savings are obvious, such as building leases and maintenance, cost reductions can also be found through scalable operational processes and systems. Consider these data point comparisons between brick and mortar centers (B&M) and the virtual model:
 

Economic Benefits of a Virtual Model
Estimated Savings
(100 Seat Virtual Center vs. a B&M)

Lower Fixed Costs
·According to multiple industry studies, it costs anywhere from $10,000 to $20,000 per seat to equip and maintain a brick-and-mortar call center.   For a typical 100-seat center, the annual fixed costs (for real estate, furniture, workstations, etc.) can add up to $1 million to $2 million. With the virtual model, these fixed annual expenses largely go away.

$1 - 2 million a year
 
Lower Attrition Costs
·At-home agent attrition rates are typically one-half to one-third of comparable B&M rates, which can often reach 65 percent or higher. For a typical 100-seat center, with an average recruiting and training cost of $6,300 per agent, this can equal upwards of $250,000.
·A typical 100 seat B&M center must recruit and hire 65-plus agents each year, while a virtual contact performing the same call type will likely only need to hire 24 replacement agents.
 
 
Over 40 less
new hires each year or $252,000.
Less Labor Expense
·Virtual contact centers often require 25 to 30 percent fewer agents than comparable B&M operations, through a combination of more productive agents and more efficient scheduling. For example, compared to a B&M center that needs 100 agents to appropriately handle the call volume, a virtual center can accommodate the same volume with approximately 75 agents.
·At-home agents are also willing to work for a lower hourly rate than their B&M counterparts, as they highly value the benefits and cost savings of not commuting or having to maintain a work wardrobe.
·By switching to at-home agents, a 100 seat B&M center can save approximately $1.4 million in labor costs through a combination of the fewer number of agents and the lower wage rate.
$1.4 million a year
 
More Effective Recruiting and Training
·Through its nationwide geographic footprint, high volume of applications, and automated processes, the virtual model can recruit and train agents for one-third less. When combined with the lower attrition and replacement hiring rates, a virtual contact center can save over $200,000 in recruiting and training costs each year.
 
 
More than $200,000 a year
Add it all up, and a virtual contact center can save a 100 seat B&M operation approximately $2.8 million to $3.8 million annually.
 
With the combination of high quality service and low cost, it’s apparent why this customer care solution has reached wide-spread adoption. Not only that, but with the revealing economic data it’s hard to understand why some companies are still hanging on to the old school way of helping customers.
 
Just as Levitt encourages people to question conventional wisdom and seek out data that illuminate new ideas, I challenge businesses to revaluate how their customer service is currently handled. If you haven’t looked at virtual contact centers, it’s time to examine the data. The at-home model is now the solution of choice for conservatives who base their decisions on hard evidence and demand proof of performance. And to think that it all started when one man wondered why. Now it’s your turn. Why aren’t you benefiting from a more efficient, more effective customer care solution?
 
Rob Duncan is Chief Operating Officer of Alpine Access, Inc. a Denver-based provider of call center services using home-based customer service and sales employees. Alpine Access clients include numerous Fortune 100 companies in a wide variety of industries. 
 

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Rob Duncan is COO of Alpine Access, Inc., a Golden, Colorado-based provider of contact center services using exclusively home-based customer service and sales employees.Duncan can be reached at 303-279-0585.

Edited by Erin Harrison


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