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Coffee to go: Starbucks to outsource call centre operations

26th Jan 2010
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Starbucks is to close a customer feedback call centre and outsource the work to Sitel in a bid to improve flexibility, call handling and feedback tracking.

After spending much time and many millions of dollars to beef up its customer engagement and customer loyality initiatives, coffee giant Starbucks has turned its attention to its call centre operations some grande sized outsourcing on the menu.

Starbucks plans to close a 130-strong customer feedback call centre based at its Seattle headquarters and outsource the work to Sitel and a centre based in Albuquerque, New Mexico. The move will be completed by September, affecting 78 ful-time Starbucks employees and 52 contract workers in Seattle.

"As we've grown, the number of calls we get fluctuates during the year. Going to a third-party provider gives us flexibility" to ramp up or down as needed, said a Starbucks spokeswoman who insisted that the move was not just a case of cost-cutting by the firm. "They [Sitel] have state-of-the-art technology for managing calls and tracking customer feedback.”

For all that, it's clear that cost must have played a part given Starbucks' relentless push over the past year to reduce overheads and implement efficiencies. It managed to remove $580 million from expenses in its last full fiscal year, some $30 million more than Wall Street had been expecting.

Growth in outsourcing?

More and more firms are likely to look to outsourcing as the wider economy recovers but CRM budgets remain tight, argues research firm Ovum's Peter Ryan. "Very few enterprises expect significant growth in their CRM budgets through 2010, with only one in five contact centre managers indicating an increase. Conversely, an overwhelming majority stated that their budgets would remain flat or decline," he noted. "In-house contact centre managers are consequently being asked to do more with less. In the case of handling flexibility around call volumes, it is difficult to accurately forecast staffing levels without being able to invest in the top-level predictive analytics due to limited CRM budget availability.

"In addition, recruiting and retaining agents to work through night shifts is always a challenging prospect, and without the funds needed to spend on higher salary levels or increased incentives, this prospect will face further obstacles, especially as the economy improves and labor begins to tighten. It is our view that the ability to help enterprises to achieve CRM operational excellence and to gain a full view of the customer will emerge as a key differentiator for outsourcers in the economic recovery."

But it's not all about cost, added Ryan. "Starbucks emphasised two particular benefits that this deal would bring about," he noted. "First, it noted that by bringing on an outsourcer it would be affording itself increased levels of flexibility in terms of ramping up and down agent count in order to address varied levels of call volumes that occur throughout the year. This is a particularly challenging issue for contact center managers, in terms of accurate agent scheduling as well as dealing with the cost of incentivising parts of the labour force to work unsociable hours and during awkward times of the year.

"Second, Starbucks noted the high degree of quality that this deal would bring in terms of the technology offered by Sitel, both for call management and tracking customer feedback. Both these aspects of operations are crucial for a successful CRM strategy, with regard to knowing the customer better through data mining and ensuring a high degree of accuracy when channeling a caller to the right agent (crucial to ensuring high levels of end-user satisfaction). On an aggregate basis, these key result areas are becoming more important for firms across the vertical spectrum."

Starbucks CEO Howard Schultz discusses his firm's customer experience strategy, as well as its social media initiatives, in Starbucks CEO: "We've cracked the customer experience code"

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