By Rob Lewis, staff writer
We all know about the savings outsourcing can make. Mention it to your FD and watch him salivate. Marketing and CRM have always taken a cooler view: after all, it’s hard to see the brand you’ve carefully nurtured abandoned into the arms of strangers. Nevertheless, the time will come when you have to let go. What steps are companies taking to make sure that out-of-house doesn’t mean the dog house for their brand?
It’s true that unscrupulous outsourcing can do strange and awful things to just about every aspect of your brand. Look at what Asia-based investigators humorously refer to as the 'third shift': deliberate production overruns in outsourced garment manufacturing that are then offloaded as cheap counterfeits. It’s an extreme example, but then outsourcing is a perilous brand environment. A recent report by Contact Babel on offshore customer contact suggests that offshoring will cause 25 percent consumer defection over the coming year.
You don’t have to outsource abroad to put your brand at risk either. Andrew Try is managing director of ComXo, a Windsor-based outsource provider specialising in switchboard support. He admits his clients’ concerns are understandable.
“Putting your brand into other people’s hands is pretty risky,” he says. “The difficulty one always has is that when you engage as a customer with another human being, they are the brand as far as you’re concerned, despite the fact they might be an outsourced partner. Whoever they’ve answered the phone under, that is who you are talking to, and if they don’t represent that brand as you’d expect, it sours your experience of the brand. It can all come down to one individual at the end of the day, and if you have a bad experience you’re not going to write to the company about it. They might never know.”
That, in a nutshell, is probably the biggest problem with brand and outsourcing. It doesn’t take much for brand damage to occur, and you will always find out about it too late. “Very small straws can break camels’ backs,” adds Try.
So what’s the answer? An awful lot of upfront management time. Most outsource providers will be only too happy to provide you with a host of performance metrics to ensure the contact is being delivered smoothly, but they aren’t always the right ones. Call centres, for example, will provide call volumes, answer times, the percentage of calls dropped, and so on. “But if you ask the person who called what their experience of that call was, you might find out something very different,” Try says.
Brand protection requires more qualitative metrics, such as customer satisfaction studies. The process will be more involved, but it’s essential if you want to keep things on track. All this will have to be drawn up from the start, of course. In fact, your brand’s survival will be determined before the outsourcing has even begun.
Begin at the beginning
“It’s all in the set-up,” says Phil Morris, CEO of outsource consultants Morgan Chambers. “You have to prepare every aspect of it, and most people don’t actually anticipate how much preparation is involved. But if it starts going badly, it’s going to take a fundamentally longer time to put right than actually starting the thing out right in the first place.”
Morris outlines stakeholder communication as the most important area in successful outsource preparation: “Tell people what you know when you know it. Be direct, honest and open-handed.” What you’re telling the press should be the same thing you’re telling your staff and your customers. Consistency in communications is essential for the brand of an outsourced company.
Employee buy-in is critical too. An us-and-them mentality between your current staff and your outsource providers can be very damaging for customer relations. Workers unhappy with the outsourcing decision might consider their responsibility for a positive brand experience abrogated (“It’s not my fault your luggage is missing sir, we’ve outsourced the handling”).
It’s not just the rank and file that needs to be convinced. Those at the top should remember they have to get onboard too. “You can’t have a set of managers that seek to blame a sub-contractor every time there’s a problem,” says Morris. “It just shows you up to be a weak manager, and I see that happen regularly. The reputational damage that can flow from trying to pin the blame is potentially immense. Look at what happened with Sainsbury's and Accenture.”
The us-and-them mentality is part of a wider malaise concerning outsourcing’s general image problem. Businesses don’t help this by pointing the finger, or clamming up about what functions they have outsourced. “There aren’t enough people talking,” he says. “They’re embarrassed. Yet outsourcing is one of the tools that is a business reality today, and almost all organisations use it to some degree, so why would you be embarrassed about saying you’re using it? They’re only making the problem worse.”
At the same time, there’s no denying the social implications of outsourcing can be enormous. “I don’t think BA could have realised how important baggage handling was when they decided to outsource Gate Gourmet,” explains Morris. But again, if you are prepared at the start, you can take steps to safeguard your brand from even that sort of bad publicity.
It’s all in the small print
The contract is critical. It should include service level agreements (SLAs) that outline both quantitative and qualitative metrics, allowing you to monitor technical performance and customer satisfaction. It should allow for modifications at any time, and give both the customer and the provider a clear roadmap for the future. And until recently, that was about as much as you could hope for.
Now that the outsourcing market is maturing, businesses are finding that more and more outsource providers are conceding liability for ‘consequential losses’ caused by any failure on their part to fulfil the contract. So where these failings might result in brand damage – and this could be measured by negative inches in the column press, for example – this would result in compensation to the client.
This will only be on a ‘limited liability’ basis, and you can expect a premium on the price, but it should act as a powerful reminder that outsourcers are to treat your brand with care.
“I know of one leading global bank whose outsourcing contract features this as a standard clause: £3 million for a media clean-up campaign if the outsourcer fails to deliver the service correctly and there is resulting bad publicity,” confides Morris.
Another way of protecting your brand is to let your outsourcer share it. Some contracts now pay outsource providers a percentage of fees based on the stock performance of their client (after all, if the brand is at risk, so too is the share price). Alternatively, in some cases providers could be allowed to make use of their clients’ credit rating, allowing them access to cheaper money, and improving their own rating.
With the right contract, you can still keep your outsourcing close, even if they’re on the other side of the world.
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