New Frontiers for Call Centers

Many wireless carriers are recognizing the opportunities of worldwide deregulation. Maybe you've even decided to go after a piece of the 600 billion dollar global telecom market. But there's more to an international venture than arranging networks, negotiating rates and getting licenses. Before you embark on an international foray, you need to address many issues, including back-office functions, customer care, billing, operator services, sales and marketing.

Should you outsource these functions or implement in-house operations? Should those operations be located overseas, or should you route calls back to the United States?

The call-center solutions you choose will play a crucial role in your international business strategy.

FRONTIER EYES UNITED KINGDOM Frontier has made increasing international traffic a priority. Its United Kingdom operation, Frontier Communications International, acts as a hub for traffic to and from the United Kingdom as well as Eastern and Western Europe, Scandinavia and other regions.

In the United Kingdom, Frontier initially operated as a reseller of the Colt network, but in early 1997 invested in its own London node, connected directly to the Frontier Network.

Although wholesale business accounts for much of Frontier's current revenue, its retail activities are growing. Like many carriers in the United Kingdom, Frontier targets small-, medium- and large-size businesses with high-spending thresholds that can justify the investment, along with those that have significant international traffic. According to Drew Wilkin, Frontier Communications director of retail business, the London-based arm expects to bring in 80 million dollars in revenue this year.

Vodafone supports Frontier's PlusMobile GSM offering. It offers a single invoice for fixed line and mobile services, preferential tariffs on calls to other PlusMobile subscribers and consolidated billing for all company sites (MultiSite Billing). The carrier offers a range of other products and services including fixed-line direct dial services, local, national and international free phone (toll-free services), pre- and post-paid calling cards and Internet services through its recent acquisition of Global Center. Frontier also plans to roll out frame-relay services, targeting the international business community.

Frontier considers its integrated-billing solutions and PC-management tools for call management and accounting key competitive advantages. It also places a high priority on long-term customer loyalty. Frontier has succeeded in reducing churn dramatically with a 2.5 percent churn goal per month. With high customer-retention standards set, Frontier put call- center management as a priority. It decided the best way to handle and give this segment the attention it deserved was to hire an outside company to perform many functions related to the call center, customer service and sales environment.

IDENTIFYING A LEAD-MANAGEMENT SOLUTIONFrontier selected a marketing-solutions company specializing in the international market. The company was charged with integrating and operating sales and call-center functions to help with lead generation in the unfamiliar market.

There is a common notion that domestic carriers can support international business adequately from the United States. Certainly, follow-the-sun routing and plummeting costs for International Freephone/Global 800 may make this a viable option logistically and financially. However, you shouldn't underestimate cultural issues. If you are selling retail services and competing with the incumbent provider and new entrants, you want customers to see you as a local player. It is difficult to provide satisfactory international support from the United States.

Telemarketing campaigns have bombed, and customer service has suffered because carriers have relied on U.S.-based call centers and underestimated cultural and linguistic differences. Even the best bilingual speakers can't match a native tongue, and even if a U.S. center claims to provide native speakers, you'll be hard-pressed to find the depth of native-language labor pool you need to support your business as it grows. Making a mid-stream transition to an overseas-based center is not an easy one.

Frontier realized the importance of having a local presence and insisted on an outsourcer that could provide international expertise. It was vital that the call-center staff understand how to market telecom services in a European context.

TARGET MARGETSOnce Frontier committed to outsourcing an overseas call center, the next step was to appraise and identify target markets. Because there were many market niches in the United Kingdom that might present possible opportunities, the companies identified the best fit between product offerings and the needs of the market. In part, the team drew from a series of in-depth telecom studies that its research division had completed among small- and medium-size enterprises (SMEs) in France, Germany and the United Kingdom. A key to identifying international market opportunities is research. An outsourcer should be able to research various industries in the market to identify a sector that is most likely to change service because sector members are high users and want more value for their money.

For example, cellular usage is second only to fax-machine usage in terms of penetration of IT equipment among United Kingdom SMEs (73 percent and 85 percent penetration, respectively), but mobile-service spending represents the highest IT/telecom expenditure levels. Many United Kingdom companies claim to pay more than 1,700 dollars a month for cellular calls, depending on their industry sector. Mobile usage also differs by industry sector significantly.

Once target markets are identified, you should work closely with your partner to define qualified prospects. Frontier developed a comprehensive list of more than 15 qualifying criteria, including factors such as spending thresholds, past and anticipated switching behavior, loyalty measures, services currently used and needed in the future, the decision-making process and likely switching-time horizons.

In defining lead criteria, it is important to understand your positioning and product/service offerings.

"The basic thing that we wanted to communicate was that at the end of the day we are not about rates to the U.S.," Wilkin said. "We are about control of your business. Rather than your financial staff being tied up checking over three different fax bills and cellular phone bills, Frontier will do that, and your financial staff can work on your year-end accounts."

The team developed lead categorization and scoring scales, allowing Frontier's sales staff to prioritize and focus on the best prospects first, while nurturing colder leads into hot leads over time. For this lead-generation program, they used a 4-point lead-scoring scale.

Next, the team addressed systems and database issues. It is important that any lead-management/generation program have a closed loop; all leads must be tracked through the sales cycle carefully to measure sales conversion and sales-force productivity. For example, a proprietary database solution allowed Frontier to receive 2-way information flows, electronic access and lead information updates.

Finally, you should work with your partner to define success criteria for the program. Frontier based its criteria on qualitative and quantitative outcomes, with performance metrics including lead-generation productivity goals, quality-assurance metrics, conversion rates and qualified lead ratios.

PROGRAM LAUNCHAfter in-depth training is complete, you are ready to launch your international call center. Frontier launched its campaign late last year. Outsource representatives were assigned to an individual or group of Frontier sales representatives and were responsible for driving the productivity of that resource. Representatives contacted decision-makers across a range of industries and qualified companies through outbound cold calls.

If contacts wanted more information, call-center reps fulfilled customized letters and product literature and followed up on prospects. Once the prospects were categorized as hot leads, they were either converted into appointments on the phone or transferred to Frontier's sales force through a standard lead form for priority handling. All lead categories were transferred to Frontier electronically on a daily basis.

The program proved an overwhelming success for Frontier. By implementing a carefully designed and targeted lead-generation campaign, Frontier's direct-sales teams were able to achieve unprecedented results, doubling close rates, cutting sales cycles in half and tripling revenues. In addition, Frontier reaped rewards in terms of improved sales-staff morale and decreased turnover.

"Overall, we've realized a 10-fold increase on our investment," Wilkin said.

SHOULD YOU OUTSOURCE?Outsourcing an international call center is not your only option. Although Frontier chose this option, you could hire temps and run a lead-generation campaign in-house. There is a long-running debate over outsourcing back-office and telemarketing functions vs. keeping them in-house. So what's right for your company? Although there are no easy formulas, there are some general guidelines to consider in determining whether to outsource or set up your own in-house solutions.

In essence, your call center and teleservices application will determine what kind of call center is required. Consider these key strategic questions.

* What is the duration of your call-center application?

* How much time do you have to implement it?

* What level of capital expenditure can you afford?

* How much risk can you bear?

* How much control do you need?

In general, an outsourced operation is better for a short-term application, takes much less time to implement, involves limited capital expenditure and minimal risk, but means you lose some control of functions. On the other hand, an in-house operation, better suited for a longer-term application, takes much longer to set up, costs more, involves more risk, but provides a maximum level of control.

For Frontier, an outsourced solution allowed it to take advantage of international expertise and economies of scale, staff and technology. Frontier was able to focus on what it does best -- servicing client accounts.

International markets, although at relatively early stages of deregulation and competition, are becoming increasingly competitive, particularly in Europe. As this competition unfolds, the spoils will go to those carriers who succeed at identifying real market needs, targeting defensible niches and using effective sales channels to reach them. In short, the scattergun approach is ineffectual -- if you want to preserve margins, you must implement marketing programs that provide maximum return on investment.

Frontiers' lead-generation activities will continue to develop and evolve during 1999. Working with a call-center partner, Frontier expects its aggressive and targeted marketing approach will continue to produce strong gains in the emerging United Kingdom market.

If you decide to outsource call-center functions during the early stages of international growth, consider these top 10 key issues before you select a partner.

1. Does the call center have experience and competence in selling or servicing telecom products or services?

2. Is the company knowledgeable about the local telecom industry, and does it understand the role of the call center in your business strategy?

3. Does it emphasize training at all stages, both initially and ongoing, and does it want you, as a client, to be actively involved?

4. Does the company have a competent technical staff, and can it develop and maintain the systems you need?

5. Does it have database-management competence?

6. Is the program-management staff responsive and accessible, and will it pay sufficient attention to your program?

7. Can it adjust and grow to meet your changing call-center needs?

8. Is a multilingual application required? If so, does the partner have access to native-language speakers?

9. Does the company adhere to local regulatory restrictions regarding data protection and consumer privacy?

10. Do you feel comfortable working with and developing a long-term partnership with this company?