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Call Centers Return To The U.S. -- More Companies Get The Link Between Customer Service And Profit

This article is more than 4 years old.

You’ve got a problem with a bill, a reservation, a defective product. The company’s website doesn’t help, so you call the toll-free number to try to sort it out. After the usual “Please listen carefully because our menu has changed,” and the “press 1,2,3,4,5…” dance, you finally get someone and immediately realize that the person you’re speaking to is in the Philippines or India. Your heart sinks, along with your hope that you can resolve your issue. No matter how well the customer service agent speaks English, there is the fear that you’re going to deal with someone who you don’t fully understand and who may not understand you.

This kind of reaction is not about nativism or America first, it is about distance, real and psychological. In the days of the local store, storekeepers and their customers knew each other. As commerce and modern transport evolved, customers got used to dealing with chain stores and large companies with thousands of employees. But even so, before the advent of off shore call centers (aka contact centers) in the 1990s, if you called Verizon or AT&T or an airline, you reached someone who was close to home or at least sounded like it. If you were calling from Virginia and the person you spoke with was in Texas, often he or she would ask you about the weather where you are and you chatted for a few seconds or more; it wasn’t a real relationship of course, but still there was something “relational” about it.

Once technology made it cheap to move phone calls anywhere on earth, big companies and even your local water or electricity utility dropped their U.S. customer service agents in favor of outsourcing to companies that manage call centers on behalf of multiple companies. Now the person you spoke with was not only distant physically and culturally, but distant from the very company you were trying to deal with.  

The underlying message was that the company you buy from doesn’t care enough to invest much in responding to you. After all, call centers arose because companies wanted to  lower their costs – the purpose of the outsourced call center was to benefit the company, not its customers. This cost-driven view is still prevalent. According to the research director for the National Association of Call Centers, five percent of companies surveyed said they are totally cost-driven and forty percent said they are “primarily” cost-driven but occasionally pay attention to better customer service. In short almost half of the U.S. companies surveyed still haven’t quite figured out that to be totally cost-driven may be a strategic mistake. And a 2018 survey of 750 customer service leaders (see the Liveops Call Center Industry Report, 2018) classified 23% as having “undisciplined process and reactive approaches,” and another 46% as companies where only “some steps have been taken towards upgrading the customer experience.” Customer service call centers are still not universally seen as a potential generator of profits rather than costs.

Yet such a view should be self-evident given the size and age of the call center industry. There are tens of thousands of call centers around the world involving millions of jobs. In India there are over 250,000 call center jobs in Bangalore alone; in the Philippines there are over 700,000 such jobs. In states like Florida, Arizona and Texas call centers are big employers; Texas alone has over 600 call centers with 250,000 employees. There are also industry associations like Contact Center World (contactcenterworld.com), founded in 1999, and the National Association of Call Centers. In short by now this ought to be an industry that embraces the link between optimal customer service and company profit.  

Fortunately, there is evidence that this is happening. In the last five years the trend to outsourced overseas call centers has begun to reverse. It seems companies are listening to the growing dissatisfaction of customers who do not want to talk to someone 10,000 miles away. Firms that face competition, and especially on big ticket items like business class airline tickets, are either moving their customer service call centers back to the U.S. or allowing customers who request to talk with a U.S. based agent to do so. And companies are willing to pay U.S. call center employees reasonably well. According the Occupational Outlook Handbook of the Bureau of Labor Statistics, the 2017 median pay for customer service representatives was $32,890 for people with only a high school diploma. In a low-cost-of-living area of the U.S. this would mean that a couple working in a call center and making close to $66,000 per year would be able to buy a house.

The great recession of 2008-09 was the trigger than began to change companies’ thinking about call centers. The recession’s hit to their profits happened to occur around the time of another major change - the growing ubiquity of the smart phone, which contributed to a rise in customer expectations and an exponential growth in customers’ capacity to make their dissatisfactions known through social media. And now companies are learning to mine call center data with customer satisfaction in mind. Since most calls are recorded, computer analytics make scoring customer sentiments more sophisticated, enabling them to pick up and count phrases like “I’m not happy with this,” “I’m annoyed,” “I’m not going to do business with you anymore,” etc.

But there remains an important blind spot: Some percentage of customers will not say what they feel. They’ll simply walk away. There is as yet no way to know how many people do that or what exactly turned them off.  The only sensible way to mitigate that blind spot risk is to provide optimal customer service; to adopt a philosophy that says “we’ll do whatever it takes to make you happy.”

Ironically, such an approach brings us back around to the days of the great merchants of a century ago, when people like Chicago’s Marshall Field coined the phrase "give the lady what she wants."  Low prices, Mr. Field believed, “…could not do the trick alone. Nor could goods of the highest quality. There must be the personal touch -- that atmosphere of honest, pleasant service that makes customers feel they are special customers and brings them back faithfully, year after year."