RPM
Depending on where you are in your business will determine how much each of these 4 things stand out to you. We work with companies small and large across various industries, but common patterns and trends emerge when it comes to customer service.
Below are the Top 4 reasons you should outsource customer service based on our experience partnering with different companies.
1. You want to keep costs down while maintaining quality.
By far the #1 reason for outsourcing customer service is cost. In most cases, companies can reduce their opex by 60% (or more) by working with an outsourcing partner to handle sourcing, hiring, training, managing, and facilitating individuals.
Hiring great talent in-house can be out of reach for many businesses, especially when taking into account average incomes and cost of living.
Here’s a snapshot of the average salary for customer service reps:
That’s an average of $65,000 a year for a single customer service rep, taking into account 234,000+ salaries reported by Indeed. And your particular city may even be higher (looking at you NYC, SF, LA, Chicago…)
This does not factor in additional overhead like insurance and benefits and all the additional management layers that come with hiring front-line employees.
Your state may even require high salaries based on employee classification. For example, starting this year in California, the minimum annual salary for exempt employees (white-collar, salaried employees such as customer service reps) is $66,560 or $5,546.67 per month. Again, that does not include any additional overhead such as insurance or benefits.
New York is very similar, coming in at $62,400 a year.
If you consider minimum wages, you’ll have to offer higher wages to be competitive enough against minimum wage.
Take for example these hourly minimum wages:
- Washington D.C. - $17.50
- Washington state - $16.28
- California - $16.00 ($20.00 for fast food chains)
- New York - $16.00
- Connecticut - $15.69
- New Jersey - $15.13
- Massachusetts - $15.00
- Maryland - $15.00
- Illinois - $14.00 (Chicago is $16.20)
- Florida - $12.00
You’re competing against a multitude of employers in the job market for good people even at the lower end of the wage range, which means you’ll have to pay more to hire them and keep them over the long term.
2. You need to ramp up, like yesterday
“We can’t keep up, and response times keep getting longer and longer.”
That sums up HALF of all of our clients when we first spoke with them. And the reason for not keeping up?
They can’t hire and train fast enough.
That’s not a criticism either, it’s just a reality of any growing business, which is a good problem to have.
Sourcing qualified candidates, interviewing them, hiring, and training are all things that take up time and bandwidth from your management team. Not to mention you have to deal with “people problems” that come up.
On average, it took our clients 3 months to get someone interviewed, hired, and properly trained. If you work with the right outsourcing partner, you can reduce this down to 2-4 weeks depending on the size and scope of your requirements.
The reason being is that a good outsourcing partner can drastically reduce ramp up time is because:
- They have a large talent pool to recruit from.
- You have the expertise of professionals who live and breathe customer service.
- Their team has “mission-specific” people who can hone in on sourcing, interviewing, hiring, training, and managing hires.
- They have vast experience and know what to expect before it even comes up
All of this increases operational efficiency across the board, and you get the added benefit of focusing your time and energy on your core responsibilities.
3. You Do not Want to Deal with HR Headaches
This is a key benefit to outsourced customer service teams, but it’s also a key benefit to outsourcing in general: You get to offload HR overhead and responsibilities to your outsourcing partner that you would have to normally deal with in-house. For example:
- You don’t have to worry about compliance and labor laws
- You don’t have to track payroll and deal with all the sick, vacation, holiday, paid time off, lunch, break time, over time, etc. policies
- You can size up or size down the team as needed
- You’re not “stuck” with low performers or have to deal with a lengthy PIP (performance improvement plan) like you would in-house, which could keep a subpar resource around for months
All of the above is necessary, but it slows down your leaders and your business. These are things that need to be handled, but they eat up a lot of mental energy that could be better focused on other things that grow the company.
This is often an overlooked aspect of having an outsourced team, but in our experience, it ends up being one of the most valuable for clients. Imagine being able to eliminate an entire chunk of stress, distraction, or anxiety in your business and not being weighed down anymore.
That’s the true magic of a great outsourcing partner.
4. You need to validate an idea or flesh out a project
This one applies to small to medium businesses and even enterprises.
If you’re an SMB or enterprise who is introducing a new product or service, then hiring customer service in-house can significantly burn precious time and capital on a product or service that may not be around in 6 months, or at least pan out differently than expected. Better to mitigate risk and work with a partner on flexible month to month terms and not deal with the cost and lengthy time frames of building a team in-house. This is especially relevant in enterprise, where protecting the P&L at all costs (especially in relation to other business units) is paramount.
What most businesses need is the ability to give a 30 day notice and say, “This new project we tested isn’t working out” or “We’re taking this project in a different direction” and walk away cleanly with no baggage.
What businesses don’t need is the risk of hiring full time employees and taking on burdens involved with letting them go in a short time period should the new project not work out.
Where Do You Go From Here?
If you’re on the fence about outsourcing customer service, remember this:
You can always start small.
Having an outsourced team doesn’t need to be some behemoth of a project. Find an outsourcing partner who can start on a small enough scale that you’re comfortable with, get the fundamentals down, and then decide if you want to grow.
You should start seeing the value of a good partner within the first week. And after the first 30 days you’ll know if this will work out long term.
If this is your first time working with an outsourced customer service team, keep these in mind:
- Be as up front and thorough with the challenges your team is facing as much as possible
- Trust the process; there’s a method and reasoning behind everything
- Your outsourcing partner should guide you through the journey
- What you’ve done to get your team here is usually not the same thing that gets your team there
Who you partner with for outsourced customer service makes all the difference. No two outsourcing companies are the same, just like your company isn’t the same as others in your space.