Posted February 24, 2017
Success can happen fast in the tech world. Six years ago, Snapchat was just a young start-up that made a time-sensitive messaging platform. Now it’s valued at $20 billion.
Of course, not every tech start-up has that degree of success; a very small percentage of tech companies go on to become “unicorns,” the nickname for start-up companies that are valued at over $1 billion. A lot of companies struggle to acquire and retain customers, while trimming excess spending and keeping their start-up “lean.”
A truly landmark moment in the evolution of any company moving from bright idea to profitable business is when its customer service needs to reach a critical scale. That’s when the customer support team may need some support of their own. Management must consider how to optimize the company’s customer service offering, and for those seeking help from an experienced partner, choosing contact center outsourcing can influence that process in a big way.
However, the decision is not an easy one to make, and there are some key questions to address before making the final call.
‘Can customer support be kept in-house?’
It’s not uncommon for start-ups (yes, even unicorns) to keep customer support in-house during the initial growth period. And it’s understandable, given some of the benefits. Keeping customer support in-house can keep costs down when the volume of customer inquiries is still manageable. It can provide an opportunity to develop an end-to-end customer brand experience that truly represents the company’s philosophy. It can also create a more intimate relationship with early customers, thereby cultivating both loyalty and crucial feedback.
But a time can come where company growth — and the inbound customer inquiries that come with it — can potentially dilute those benefits. Martin Zwilling, founder of the consulting service Startup Professionals, says that typically happens at one crucial moment: “When they experience explosive growth, and can’t handle the growth or costs internally.”
Arriving at the right answer requires a company to look closely at the demand it’s experiencing, and establishing a logistical and financial turning point when it makes sense to adopt outsourcing.
Take Breather, a start-up that rents temporary work spaces in major international cities that has raised $69 million since its founding in late 2012. Breather currently maintains in-house customer support. For Kurt Wilson, the company’s director of customer service and inside sales, there’s a fixed future point when outsourcing will make sense to the company. “In the long run, I think the question for us with outsourcing will simply come down to, ‘Do we need enough agents to require outsourcing?'” he says.
However, Wilson says it’s not just about meeting a demand, but also about profit margins. Once it reaches a certain scale — and a level of profitability that comes with it — outsourcing could help further improve the company’s cost structure.
‘What value is needed from an outsource partner?’
The financial value of outsourcing customer support shouldn’t be underestimated, but there are other benefits companies may seek out. “People are looking at quality and outcomes and specific expertise, much more than they are looking at cost,” says Vadim Gouterman, a partner at multinational strategy-consulting firm the Boston Consulting Group in Toronto.
Among tech companies, those kinds of needs can vary. Some companies may want to consider outsourcing to a strategic partner to get help shaping a proper end-to-end customer experience — particularly if rapid growth has limited a start-up’s time and ability to do so on its own. Gouterman says some companies see value in very specialized help, such as technical expertise for mobile-app support.
Complexity is a definite factor in whether to outsource a given function, says John Goodman, vice-chair at Customer Care Measurement & Consulting (CCMC) and author of Customer Experience 3.0. For example, Goodman says some auto manufacturers have split their customer service offerings depending on the nature of the inquiry. “The real simple stuff could easily be outsourced,” Goodman says. For example, companies could outsource what are sometimes called “tier-one interactions” — basic questions like “Why hasn’t my order been shipped yet?” or “What oil does my car need?”
This frees up the company’s internal resources to respond directly to more complex inquiries. “What you do is you keep the tier-two stuff like warranty complaints in-house,” at least to start, says Goodman.
A blended in-house/outsource model could be a good stepping stone for a company that is uncertain about exactly what to outsource, particularly one that has functioning customer support already in place but fast-growing inbound call volume.
Another consideration to weigh carefully is who a company is targeting as its ideal customer base. For example, a company looking to service Millennials may need to up its ante on an omnichannel offering to meet its customers online, delivering support by chat, email, messaging and social media. Developing the systems and technology in-house to deliver this kind of support can be resource-intensive, and may be better in the hands of an outsourcing partner.
In the end, it’s up to each company to not only evaluate what its customer support needs are, but also be brutally honest with itself about its abilities to meet those needs.
‘How important is crisis preparation?’
No aspiring tech company wants to think negatively, but unexpected crises can happen, often leaving start-ups flooded with inquiries they’re not equipped to manage. “Those things can happen to anybody,” says Gouterman of the Boston Consulting Group.
Just look at Volkswagen and its diesel-emissions controversy. After an incident like that, customers calling in with questions and complaints would be enough to stretch a contact center to its limit. Eventually, Volkswagen offered its customers buyback options, requiring registration forms and processes that weighed heavily on their contact center.
Crisis situations are why Gouterman says some companies consider it worthwhile to invest in an outsourcing partner who can help face the best and worst of times. “People will be willing to pay more not just to scale normally as they grow, but scale in reaction to crisis,” he says. A crisis naturally need not be something as drastic as Volkswagen’s: It could be something as simple as a service outage.
Regardless, start-ups should consider some of their more likely crisis scenarios, along with the probability of occurrence, and then factor them into their outsourcing decision.
‘Is the company culture established well enough to outsource it?’
Outsourcing isn’t just passing on customer support. It’s also about passing on a piece of the company’s identity and culture, and how both should be reflected in the customer experience.
When a company grows quickly, defining its identity and culture can sometimes take a back seat to getting the product out the door. But it’s absolutely critical for companies to work with potential outsourcing partners to establish and maintain what makes the company, its brand and its culture great. That means lots of executive level communication. “Outsourcing is as good as what you put into it,” Breather’s Wilson says. “Your outsourced call centers will only be as successful as your level of engagement with them, and also leadership of that team.”
Indeed, companies need to be prepared to dedicate time to collaborate, as well as work fastidiously on investing in staff training, issuing clear directions, developing KPIs and more. Start-ups shouldn’t expect outsourcing to free them of responsibility. “There’s a certain level of maturity you have to have to be able to hand your business over, because when you hand it over, you create a partnership,” Wilson says. “If you don’t invest the time in that, you lose control of your tone and the voice that you want to convey.”
The road ahead
Outsourcing can affect more than a brand image; it can impact the very growth a fast-growing tech company is trying to generate and respond to. While growth may come quickly, the potential decision to outsource shouldn’t. Properly weighing the decision can make the difference between seizing growing momentum or stunting it.