Sure, you can save money by off-shoring your customer service. People in some faraway spot on the other side of the globe who happen to speak a form of English will be thrilled to work nights at an air-conditioned office job, answering phone calls from angry Americans for a pittance. The checks you will be writing will be lower. You can boast of saving big money. Meanwhile, customer dissatisfaction will be such that your company's market capitalization will fall (depending on your industry) between one and five percent. A more convenient, yet commensurate, way to impose a similar level of damage on your company would be to set fire to the headquarters building.
At least, that was the implications of a study that appeared last year in MIT's Sloan Management Review. The study was based on the results of the quarterly American Consumer Satisfaction Index (ACSI), a measure created by the National Quality Research Center at the University of Michigan. The researchers found that the negative impact took place whether customer service was off-shored to foreigners, or out-sourced domestically. The damage was not primarily because the customers felt snubbed by talking to foreigners with odd accents, but because the outside customer service typically was, to put it bluntly, organized stupidly.
Basically, the firms who decide to let others handle their customer service turn out to be paranoid about their corporate data and will not give the call agents enough information to handle complaint cases. Customers who call them end up being frustrated, going in circles. By the same token, those companies don't trust the call agents enough to give them the power to actually help the customers by doing something significant, such as issuing credits or refunds, etc. So, for their customers, calling customer service becomes a humiliating exercise in futility.
Of course, the companies could counter the impact of outsourcing customer service by, for instance, investing the money they save in new product development, or cutting prices. Oddly enough, the researchers could not point to anyone who was actually doing that.
There were two bright spots. The first is that outsourcing might sometimes be beneficial if the contractor has trend-spotting technology not possessed by the company. Of course, then the best of both worlds would be to obtain the technology and retain customer-service in-house. The second bright spot (if that's what it is) is that outsourcing back-room operations had no impact on the company. Nobody cared about that. Sorry, programmers.
The ACSI, incidentally, measures customer satisfaction across the entire US economy through 80,000 random phone interviews annually. Data is released quarterly but coverage of individual topics is done on an annual rolling basis, so that a specific topic will be revisited every fourth quarter. A company's ACSI score (on a 100-point scale) and its stock price typically move in parallel—if the customers are unhappy, then the investors usually are too, presumably for similar reasons.
Incidentally, the latest ACSI results, issued amidst the worst recession since World War II, showed that overall customer satisfaction was actually creeping upward. Apparently, a lot of desperate companies were getting their acts together. Customer satisfaction with airlines improved for the first time since 2003, albeit slightly.
Not getting the word were the telecommunications carriers, whose average satisfaction rating on the whole fell one point. The average hid some big winners (Sprint Nextel surged 13 points) and losers (AT&T Mobility fell 6 points.)
Financially troubled Charter Communications had a rating of 51 points, a record low in the 15-year history of the ACIS. Yes, they use off-shoring.
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