Outsourcing and Call Center Blog

24 June, 2007

You can’t save your way to success

Filed under: BPO,Call Center,Marketing,Outsourcing,Revenue,Value — shamrin @ 13:37

There is sure nothing wrong with being frugal or economic. One has to draw the line somewhere though and I’ve had many a discussion with my wife about the difference between frugal and cheap, for example she thinks reusing paper napkins or glueing the heels back onto an old pair of shoes is frugal – I don’t complain. Even being cheap is no sin in business, the problem is you can’t build a company on it. No matter how much waste or leakage you cut out, no matter whether you ration printer paper or pencils or long-distance phone calls, your business only grows if you increase your revenues. And importantly, growth is how our customers (and their shareholders) measure the success of their businesses.

So what does this mean for how we should go about delighting our customers, how can we help them attain their heart’s desire?

If we assume that our customers are rational or even close to it, then they probably want to increase revenues and profits – let’s help them. It doesn’t sound like that radical an approach really but you would think it was by the way some Call Centres and BPOs sell and market their services. The message seems to be, “buy our service because it’s cheaper than X” (where X is the internal way of working or perhaps their prospect’s current outsourced arrangement). Is saving a few dollars in his call centre what gets the CEO of your biggest customer or prospect out of bed in the morning? I doubt it.

An article on the Pragmatic Marketing website has a reference to a very good, probably apocryphal, quote attributed to someone from the US tool manufacturer Black & Decker,

“Remember no one wants a drill bit; they want a hole in the wall.”

CEOs, and business managers don’t want cheap call centres, they don’t even necessarily want call centres, what they want is to increase shareholder value. Now if the only thing we have to offer them is to shave a bit off the expense line of their income statement, fair enough let’s knock ourselves out trying. But if we really want to grab their attention, to make them an offer they can’t refuse, then we need to be offering them more creative ways to build their bottom line by improving the way they do business, by helping them get new business and by facilitating new capabilities that they can’t get any other way.

Does this mean we have to change the way we think? Yes, probably. Will this challenge our creativity? You bet. Will this make more money for us and our customers? I think so. Will it be a lot more fun. Absolutely. Then I can’t think of any reason not to do it.

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28 May, 2007

Value Creation

Filed under: BPO,Call Center,Marketing,Revenue,Strategy,Value — shamrin @ 16:12

Raimo van der Klein founder of Marikaya, a marketing and idea factory (my words) has some thoughts on value creation that really resonate with me. There were a couple of things in this entry in his blog that I thought were particularly apropos for Indian BPOs and coincide with a number of the things I’ve been talking about here.

If you look at the slideshow that goes with his blog entry, there is a slide titled “Adding Value Creates Margin“. This idea should be sloganised and put above every door in your building, pinned to every cubicle wall, emblazoned on every piece of stationary and perhaps tattooed on the back of the hand of every executive (and staff) in your organisation. We should, no we must be in a continuous struggle to find, create and invent value for our customers. I find that I can’t emphasise this enough because we, here in India, concentrate way too much on price which is merely the denominator in the value equation and is a very poor vehicle with which to manipulate value.

I want to keep this a short entry so let me just make a few unsupported bulletted claims:

  • Customers buy from you and stay with you based on (perceived) value
  • Value = Benefit / Price
  • There is some lower limit on Price, i.e., pricing below cost is an unsustainable business model for most of us
  • There is no such limit on the upside of Benefit
  • Increasing Value by increasing Benefit is a lot easier and more profitable that doing so by lowering price

1 May, 2007

From Cost-Centre to Revenue-Generator

Filed under: BPO,Call Center,Outsourcing,Revenue — shamrin @ 17:35

“Within five to 10 years, contact centers will become one of the most important revenue-generating departments in most enterprises”.

This is a recent quote from Donna Fluss of DMG Consulting (registration required) who specialise in customer support and call centre strategies. If this is true (and I think it is except that there is no way it will take 10 years, I would say more like now to 3), it will have a profound impact on our business and on profits as this business moves from a price-based commodity to one offering a high-value / high-margin product. To take advantage of this change, contact centres will need to be able to demonstrate our expertise at selling and customer service. (more…)

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