Ten Minutes with Jeff Selub - Industry Expert

Interested in retaining your best customers? Optimizing the delivery of services through a Customer Management Services partner can decrease costs and increase quality of service. Jeff Selub, director of NelsonHall's Customer Services Management Program shares the latest trends in the CMS space and tips for improving service delivery.In light of the current economic reality it seems many organizations are likely to reappraise both their broader business strategies and sourcing strategies. How will this impact BPO contract activity in the customer management services industry?

In this environment every business is looking at where they can gain efficiencies and one of the things they're all doing is examining and reexamining all their internal and external processes, which includes Customer Management Services (CMS).

In the world of CMS most opportunities are driven by business and economic activity. In this slowdown in the US and in Europe, we think it is going to depress CMS in 2009. We see layoffs everyday, foreclosures, and The Conference Board's Consumer Confidence Index fell to an all time low of 25.0. The thing about CMS is it's both in-sourced, provided by companies, and it's outsourced. We think there is a good chance that the outsource piece will grow modestly.

CMS allows companies to reduce their capital expenses and control uneven labor expenses. In an unstable economy activity in call centers will be rising and falling and this is something they can control by working with a CMS vendor. CMS labor accounts for 70 percent of CMS cost. CMS vendors have the scale, geographic footprint, technology and best practices, which lower the costs of serving customers and maintaining high quality at the same time. The other thing they have is this multi-shore capability and the technology and ability to drive CMS through various channels using analytics. In times like this these vendors are well positioned to help companies retain their best customers.

What market segments are showing growth in the customer management services industry? Where are there opportunities?

In 2008, in terms of vertical markets, government, telecom and media (which we group together) and retail accounted for 70 percent CMS contract value according to our tracking records. The government piece was boosted last year by the U.S. General Services Administration awarding a 10-year 2.5 billion dollar contract vehicle for CMS that included eight providers. That's where we saw a lot of activity last year. We noticed a lot of contracts in CMS specifically including cross-sell and up-sell components as organizations looked to gain more wallet share in a down economy. We also saw more contracts including work-at-home agents.

In 2009 the opportunities are going to be in helping clients retain their best customers. This is going to be accomplished by using analytics and decision tools - things we know about our customers, the frequency they call, what they call about, and what services they have - to make sure that the customer experience is optimized.

We may also see some unique opportunities brought on by the market. Until there is a loosening of credit, we see opportunities generally in the financial services space are somewhat weak. Tight credit is tamping down credit card enrollment and related CMS activities in financial services and there's been large disinvestment equity as people pulled tons of money out from their brokers. There was a flurry of calls at the beginning of this financial crisis and now people put money in cash so we're seeing less calls into brokerages.

However, in every dark cloud there is a bright spot. Everyone is aware of the drastically falling mortgage rates. We're at a 37-year low for a 30 year mortgage. This is likely to drive refinancing among borrowers with good credit, which will drive opportunities to support customer inquiries, application loan taking, loan origination, and other customer related services like processing, document and workflow management in the back office. President Obama recently announced this $75 billion homeowner stability initiative which is going to provide incentives to mortgage lenders in an effort to move them to help four million borrowers who are on the verge of foreclosure. That's going to generate a lot of activity and inquiries and a lot of customer-facing activities. I don't think anyone would be geared up for that at the moment.

What are some of the latest trends or key developments in the delivery approaches within customer management services?

There is one really interesting key development in CMS delivery and that's been work-at-home-agents (WAHA). All of the global CMS providers with bricks and mortar centers have added WAHA delivery to their portfolio. In addition, this capability is provided by a number of companies that are strictly in the home agent business.

WAHAs are generally more mature, typically in their 30s, 40s, and 50s, compared to contact center agents, who are usually in their lower 20s. They have higher educational levels, 80 percent have some college and much more real work experience. And, companies experience reduced agent turnover in the range of 50 percent and more.

Typically in North America agent turnover in call centers is 70 percent or more. If you cut that in half, it's particularly important in a business where 70 percent of the costs of delivering CMS are labor. In addition, companies are seeing 10-15 percent or more productivity gains using WAHAs. It's possible that companies can also achieve in the range of a 10 percent reduction in capital costs by having agents at home rather than using the real estate of a contact center.

WAHA's are especially useful when looking for specialized skills such as people who speak a foreign language, such as Portuguese. In the U.S., contact centers tend to be in tier-2 or tier-3 cities. In Nebraska it might be hard to fin the right number of Portuguese speakers or agents with specialized licenses like insurance licenses so this virtual labor pool is quite an advantage.

WAHAs have also become the home-shore part of a multi-shore solution. A multi-shore solution includes onshore, serving customers from domestic contact centers, near shore that's often Mexico and Central America, and offshore. In CMS risk and quality are often managed through offering a multi-shore solution that balances the risk and quality and costs. And the home-shore piece has become part of it.

Whether organizations are planning to introduce shared services or extend the scope of their current shared services operations, what's some practical advice or useful tips you can offer our readers for success in their initiative?

Shared services are different from outsourcing. In some ways they're the opposite because these functions are retained inside the company, but in other ways they're similar in that the company is trying to leverage economies of scale and specialized, centralized expertise.

Shared services can encompass the back, middle and front office, which includes CMS. More than anything it's important to establish the right governance for shared services. What that means really is that the shared services organization is led by a top executive of the company and that the internal clients of the shared services organization have a voice in setting expectations and providing feedback.

There should always be service level agreements (SLAs) in place and there should be the ability for departmental charge backs. It makes a big difference when your budget is being charged. There should also be the option to consider outsourcing. Shared services should not be a "sacred cow," but the most effective and efficient business solution and when it's not, it needs to be fixed or other alternatives should be considered.

Delivering good customer service is shown to increase customer loyalty. Tell me about the best customer experience you've ever had.

I'll tell you about something I haven't forgotten  that happened over 20 years ago when travel agencies still made consumer travel arrangements.  I had my travel agency book a flight, hotel and limo for a funeral I had back east. I was coming from Denver and due to weather, my flight was delayed. I ended up spending the night in Chicago and missed the funeral. The travel agent arranged for a limo to pick me up from La Guardia to take me to the hotel and later to the family's home to pay a condolence call. When I arrived at their home there was a food selection there that the travel agent sent on my behalf. I thought that was extraordinary customer service and just like you'd think, I used that travel agency until that business moved off onto the Internet.