A word of advice to customer call centers: Location matters.

In the drive to become low-cost producers in their industry categories and to be price-competitive in a down economy, many companies are looking into every corner of their business to wring out excess costs wherever they can.

And with business as soft as it is right now, one would think that telephone customer contact centers are a prime target for outsourcing and offshoring. After all, it’s one of the more labor-intensive operations. And relying on resources in English-speaking Second and Third World countries is far cheaper than employing American workers — 50% to 75% less costly by some estimates.

But instead of migrating offshore, evidence is mounting that some companies are beginning to bring their call center operations back into the United States instead.

Why is this happening? Well, when one considers that the purpose of a call center is to promote customer satisfaction, placing these functions offshore hasn’t exactly accomplished that. It’s a topic I’ve addressed before in this blog.

And now, we have new survey data that prove it. A recently-published survey conducted by CFI Group (Claes Fornell International) covers 2,200 respondents who rated telephone customer contact centers run for retailing firms, cable/satellite TV providers, cellular phone service providers, financial service firms, computer equipment manufacturers and government agencies.

The annual survey uses the University of Michigan’s American Customer Satisfaction Index to rate overall satisfaction. In this year’s study, that satisfaction index stands at 74 on a 100-point scale. Not a great score by any stretch; in fact, most companies would surely want to score better.

But when comparing the ratings for domestic call centers versus offshore ones, the differences are stark. The domestic satisfaction index was 84, while the offshore index was only 62.

Moreover, the survey respondents were nearly twice as likely to recommend a company or product to others if they thought the customer contact center reps are in the United States … and three times more likely to abandon the brand if the call center is located offshore.

Is this disparity in results simply the result of American nativism or chauvinism? Perhaps. But it becomes a lot harder to discount the differences when we see that respondents reported that U.S. call center reps resolved their problems 68% of the time during the first contact — “first-call resolution” in industry jargon — as compared to only 42% of the time for contact centers located offshore. That’s a difference that can’t be ignored.

Looking into every corner of a business to find ways to drive down costs certainly makes sense. But in the case of customer call centers, there’s clearly a danger of being “penny-wise, pound-foolish” … and risking a customer backlash that ends up negating any cost savings you might have realized – or worse.

4 thoughts on “A word of advice to customer call centers: Location matters.

  1. I agree with your posting. Here is a funny personal anecdote:

    I used to resent having to talk to customer service representatives in India because they were hard to understand. But when I had to make a few calls to a government office and heard some of their language skills … I don’t mind talking to the people in India anymore.

  2. This was bound to happen eventually. But only out of absolute necessity.

    Corporate execs talk so-o-o much about customer service—how important it is, how committed they are to it—and then they trot off and hire a call center in Bangalore, where the Hinglish is barely intelligible to native speakers of American and International English, much less others who acquired English as a second language. Everybody — employees and customers alike — knows customer service almost always takes a back seat to pinching pennies.

    We’ll know when companies REALLY start to care about their customers when they ditch their awful phone trees—the ultimate insult.

  3. Phil, these blog entries continue to be impressive…just wanted to pass that along. Researched, thought out…I really enjoy reading them.


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