Last year, 1 in 7 UK customers who used an offshore contact centre responded by changing supplier

MyCustomer.com
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“Finding the Balance: The Effect of Offshore Customer Contact on Profit and Brand”, a report published yesterday by industry analysts, ContactBabel, finds that UK companies are damaging brand and profit by their current use of offshore contact centres.

The report analysed a survey of 1,008 UK adults, carried out by ICM Research in February 2004, and finds that:

  • Last year, 14.2% of the UK public who knowingly used an offshore contact centre responded by changing supplier
  • 74% of the UK customers who personally experienced offshore customer contact feel more negatively towards the company providing it than they did before
  • Customers who experienced offshore customer contact were 4½ times more likely to change their supplier than customers who had no direct experience of offshoring
  • 42% of UK customers are less interested in sales calls which come from outside the UK
  • UK telecoms and insurance companies experienced the greatest levels of offshore-related customer defection
  • Scottish customers are most likely to have changed supplier because of offshore customer service

    As an example, a typical UK High Street bank will save £9.26m per year in operating costs by replacing 1,000 UK agents with the same number in India. However, if only an extra 0.343% of customers defect in protest at this, the bank’s revenues will be reduced by the same amount. Last year, 1.09% of UK banking customers changed banks as a direct result of customer service offshoring.

    Steve Morrell, principal analyst at ContactBabel, comments: “Offshore contact centres could have a valuable role in improving the service offered to UK customers. Through the flexibility of its highly-qualified and cost-effective labour pool, the offshore contact centre industry can help to solve issues that the UK industry has, such as finding staff for evening and weekend working, providing technical support, replying promptly to emails, reducing queuing times and increasing the service hours that a company can offer to its UK customers. Some survey respondents also complimented the offshore staff on their friendliness and speed to answer the phone.

    “However, too many companies are using offshore contact centres in an unimaginative and cost-obsessed way which is alienating their customers and not playing to the potential strengths of offshore. Most of the UK public are not against
    the concept of offshoring, and are prepared to give it a try. However, the experience has often been disappointing and has led to considerable numbers of customers defecting to UK-based competitors, which has made a definite and growing dent in profits – exactly the opposite to what these companies are trying to achieve through offshoring.

    “Businesses should not look upon offshore as just a cheap alternative to what they are doing already in the UK. Some types of customer are as happy to call offshore as they are the UK. Others prefer to call offshore only if they have an urgent query and the UK contact centre is closed. Some only ever want to speak to UK agents.

    “If UK businesses do not address the concerns of their customers, the level of customer defection will increase and their profits will decline further. Offshore contact centres certainly have a future role to play in providing service to UK customers, but they are a piece of the jigsaw, not the whole puzzle.”

    A SUMMARY OF THIS REPORT IS AVAILABLE AT:
    http://www.contactbabel.com/balance.html

  • Replies

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    avatar
    27th May 2004 20:05

    This report's findings seem to confirm that many businesses view their customer interactions as a COST TO BE REDUCED rather than as a potential investment in service, dialogue and learning. By automating customer interactions or outsourcing them overseas for example, many companies are at risk of commoditising one of their most precious future innovation assets: the opportunity to learn from and create value with their customers. In most cases such cost-focused initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing their more deep-seated underlying problems - i.e. a lack of customer knowledge and a limited customer orientation...

    The problem is that many companies have become so internally focused they have gotten carried away with supply-side issues and have taken their eye off the customer and their needs. Until such organisations make a serious effort to understand their markets and their customers better, initiatives designed to take cost out of the customer interface will amount to expensive, time-consuming mistakes. Many financial services businesses in the UK for example are spending too much of their valuable resources on internal operational efficiency (i.e. doing things right at lower cost) at the expense of external customer effectiveness (i.e. doing the right things for their customers to increase their effectiveness).

    Thanks (0)
    avatar
    By admin
    16th Jul 2004 17:16

    The report raises nothing new. Customer call-centres will continue to be offshored and SOME customers will get fed up and change provided. MOST will grumble but stick with their bank because they cannot be bothered to change. This is the central business generating principle in UK consumer banking and they know it.

    Thanks (0)
    avatar
    27th May 2004 20:05

    This report's findings seem to confirm that many businesses view their customer interactions as a COST TO BE REDUCED rather than as a potential investment in service, dialogue and learning. By automating customer interactions or outsourcing them overseas for example, many companies are at risk of commoditising one of their most precious future innovation assets: the opportunity to learn from and create value with their customers. In most cases such cost-focused initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing their more deep-seated underlying problems - i.e. a lack of customer knowledge and a limited customer orientation...

    The problem is that many companies have become so internally focused they have gotten carried away with supply-side issues and have taken their eye off the customer and their needs. Until such organisations make a serious effort to understand their markets and their customers better, initiatives designed to take cost out of the customer interface will amount to expensive, time-consuming mistakes. Many financial services businesses in the UK for example are spending too much of their valuable resources on internal operational efficiency (i.e. doing things right at lower cost) at the expense of external customer effectiveness (i.e. doing the right things for their customers to increase their effectiveness).

    Thanks (0)
    avatar
    By admin
    16th Jul 2004 17:16

    The report raises nothing new. Customer call-centres will continue to be offshored and SOME customers will get fed up and change provided. MOST will grumble but stick with their bank because they cannot be bothered to change. This is the central business generating principle in UK consumer banking and they know it.

    Thanks (0)