An Interview With The Call Center School Founding Partner, Maggie Klenke

Susan Berkley: “This month I’m pleased to feature a conversation with Maggie Klenke, a founding partner of the Call Center School. The Call Center School provides a full range of award winning educational and training solutions to call center professionals. A well-respected industry analyst, Maggie really has her finger on the pulse of what’s happening in the Call Center industry today. I ask her to give us some forecasts for the year ahead.

SB: Please share some general Stats about the size of the call center industry, both on and off shore. Revenue, number of employees, etc.

MK: Industry estimates suggest that approximately 3% of the working adults in the US work in call centers. Many call centers have less than 20 people handling calls, but there are also very large multi-site centers with thousands of agents. Since call centers serve as the “front door” to many businesses, a call center agent will typically talk to more customers in a week than most employees will touch in their entire career. So it is very large. Outsourcing is big and growing. The most common reason to outsource is to save money by tapping into the huge economies of scale that an outsource provider can supply, and when that labor is in a lower cost region of the world, that works even better. So first we had Canada (which is still growing), and Europe (primarily for the multilingual needs) and now India, the Philippines, and the Caribbean for low wages. Some estimate 3 million jobs will be sent overseas over the next 5 years, but that seems high to me.

SB: The “Do Not Call List” was big news in 2003. What kind of impact has this had? Has there been a lot of down sizing?

MK: Well, it has had a big impact on those outbound telemarketing firms that primarily contact consumers. Of course, business-to-business, non-profit, and political fundraising calls are all exempted. There was a dire prediction that up to 2 million telemarketing jobs would be lost, but I don’t really don’t think that is realistic. There might realistically be some 2-300,000 jobs at risk. I’m hopeful that many of these will be refocused on outreach programs to improve relationships and wallet-share with existing customers instead of cold calling mass numbers of people who have little or no interest in the company’s products. Some of these jobs will be shipped overseas and to Canada where the laws don’t apply, so the total number of calling staff may not change as much as where they are located. Inbound centers will see an increase as companies try to find other ways to reach prospects such as mailings that drive them to call.

SB: How are Call Centers dealing with this regulatory shift? Are they adapting? How are they innovating?

MK: Some are adjusting well and finding new ways to market their products. Some are fighting the regulations in court. We haven’t had enough time yet to really see how this will shake out, but innovation sure beats whining. The politicians found the voter interest in the Do Not Call legislation higher than anything they’ve done in recent history so they are not likely to rescind it. I think I read that more people put their names on the Do Not Call list than voted in the last presidential election.

SB: Call Centers are getting a lot right but they’re also getting a lot wrong. A personal tale of woe: I recently ordered a laptop from the call center of a major dealer. I was assured it would be here in time for an international trip I’ll be taking in a couple of weeks. When I went to check the status today, I was told my order had been cancelled! You could have heard my scream a mile away. We then wasted several hours trying to resolve the problem. As it turned out, the cancellation notice was an error and the computer is on its way. Where do you think are the biggest opportunities for improvement?

MK: We’ve spent most of the last 10 years trying to figure out how to handle calls more efficiently and automating to save money. But call centers are beginning to see the value in worrying about effectiveness. The CRM movement made some companies really think about how they interacted with their customers. After all, it is hard to up-sell or build a good relationship with a customer who only talks to the IVR or interacts with the website. So I think we will see more effort put into figuring out why customers feel the need to call and putting fixes in place to prevent these unnecessary calls that annoy the customer and cost the company money. Then we’ll concentrate on taking the opportunity to actually talk to the customers who do call so we can build relationships, understand their needs for new features and services, and up-sell to maximize revenues.

SB: Let’s talk about off-shore call centers. How fast are they growing? Which countries are the major players? Has this segment of the industry shifted as well? What kind of impact has it had on US call centers?

MK: The offshore centers are growing like crazy and as long as the wage rates are at 10-25% of the US wages and the workers are highly skilled (mostly college graduates), it will continue. The call centers in the US have to become so integral to their company’s success that the concept of outsourcing is abhorrent to really stem this tide. Or wages and performance overseas has to change dramatically. Interestingly, I saw an item in the local Nashville paper this week indicating that one big computer manufacturer who had outsourced some of its technical support to India is planning to shift its more important customer calls back to the US and only send the low level consumer calls to India due to the high number of complaints. So getting it at a lower cost is not the only criteria and it is good to see at least one company getting that message.

As far as the major countries, Canada and Ireland were big a few years ago and are both still growing. But the big growth now is in India and the Philippines where there are English-speaking people with the skills and low wages. Some US companies are building call centers in these places and staffing them with employees, but outsource providers are building huge businesses there as well. Many of the international students and workers employed in the big US technology firms who lost their visas in the dot com decline have taken their skills home and become wealthy entrepreneurs.

SB: What are the off shore call centers doing to make it easy for US companies to work with them? Is their competitive advantage solely based on cost or are there other lessons to be learned as well? Is there an Achilles heel? How can domestic companies compete?

MK: The governments of many of these countries are working with the entrepreneurs to help them lure jobs to their areas. Major incentives and investments in infrastructure have been needed, but these are being met and the foreign equivalent to Economic Development Councils are hard at work making it easier for US companies to send their work overseas. While cost is certainly the biggest factor, there are some significant benefits in terms of the education level of the typical call center worker or IT programmer that is supplied in these markets versus those that would be hired in the US as well.

Accents and lack of understanding of North American culture is a big challenge for these overseas operations. They want it to seem to the caller as if the call is being handled locally, not across the world. There is a lot of work to be done to overcome the accent issues and make these folks as effective as they can be.

In terms of competing, it is tough when the call center is viewed as a necessary evil and a commodity in the executive office. That perception has to change to stem the tide of outsourcing. The call center has to learn how to express the value it brings to the company in terms that are relevant to the executives, and that value needs to be enhanced by inter-departmental cooperation.

SB: What are the biggest management and process problems facing your clients inside the call center?

MK: For many call centers, the hardest thing they have to do is to move out of a victim mentality and become a vital part of the company’s success. For example, the call center is often a feeder organization to the rest of the company, hiring new people and training them, only to have them move on to other jobs in the company in a few months. While it is easy for the call center to feel like a victim, this can be a good thing and needs to be turned to the call center’s advantage. The call center can accept the role and work out a compensation plan with the receiving departments to take some of their training budget, for example.

Another typical situation is the marketing department starting a big campaign that will generate a huge call load, but failing to mention it to the call center so they can plan the staff to handle it. This is another case where many call centers feel victimized, but need to work with marketing on a regular basis to ensure that the marketing dollars are spent in a way that maximizes the company’s net return, and the call center can not only answer the calls but gather the information that marketing needs to gauge the effectiveness of one campaign versus another.

SB: Now it’s time to look into your crystal ball. What are some of the major trends and where do you see this industry going 5, 10, 15 years from now?

MK: While there are some that predicted that call centers would diminish in size due to the Internet and websites, we haven’t seen that play out. The rate of growth of phone calls has dropped off some, but it is still growing. And in addition, many call centers now handle the added workload of emails and web chats that are growing at a high rate. So I think this trend will continue. The Customer Interaction Center will handle all types of media and interactions, and the number of centers and agents will continue to grow as long as the economy is strong.

Another big trend is the switch from IVR to speech recognition systems. This will increase the utilization of these automated technologies and make more opportunities for voice artists as well. The conversational quality of these interactions is so much more appealing than the tone dial commands of IVRs. Many predict these systems will find wide deployment in the next 5 years.

Of course, the demographic shift as the baby boomers start to retire will affect call centers too. There will be strong competition for good employees and more centers will discover the benefits of the older, part-time call center worker. Outsourcing will continue to thrive in my opinion.

SB: Maggie, thank you so very much for your insights. It’s always a pleasure chatting with you. Tell us about the books you just authored. When will they be available? How can people get in touch?

MK: We have written the 5 college textbooks for the University of Phoenix certification program in Call Center Management. In addition, we published our first book from The Call Center School Press, which is Call Center Staffing – The Complete Practical Guide to Workforce Management. These 6 books are all available now and can be ordered from our website at www.thecallcenterschool.com or by calling our office at 615 812-8400.

We are planning a new book in early 2004 that will be the complete practical guide to call center supervision, and a series of small books aimed at the frontline agents including topics such as customer service, collections, sales, etc. There are a couple more that might make it into 2004 as well, but it is too early to talk about those.

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