Outsourcing customer service: everything you need to know

Juggling each facet of your business operation while championing exceptional customer experience can be extremely challenging, especially if you don’t have the budget to train your agents in-house. This is where outsourcing comes in. You can transfer all of your customer service operations to a third-party provider that can attend to all of your customer queries while you focus on other business matters.

Outsourcing is more than just handing off your customer service to an external vendor. If you’re considering outsourcing, you’ll need to choose the right provider, calculate cost-effectiveness, and understand its drawbacks.

This guide will help you navigate the moving parts of outsourcing.

What is outsourcing customer service?

Outsourcing customer service is a strategic business decision that involves entrusting your daily customer inquiries and tasks to an external service provider. This approach eliminates the need for in-house advisors, with an external company managing your calls, live chats, social media responses, letters, complaints, and other customer service functions.

Outsourced solutions handle both inbound and outbound communication, meaning outsourcing can be a fully comprehensive service.

When should you outsource your customer service?

There are two main reasons you should consider outsourcing. Firstly, if you’re handling more than 50 daily customer contacts, outsourcing can help you reallocate resources so that you can focus on more pressing business matters. Alternatively, your in-house customer service is underperforming or is overwhelmed and you don’t have the time or resources to train customer service agents to the required standard.

The importance of outsourcing customer service

Outsourcing customer service is not as simple as a time-saving or cost-cutting strategy; when properly executed, it can help you meet your organisational goals. An impressive 70% of companies opt for outsourcing to trim costs. This, in turn, empowers businesses, with 40% emphasising the freedom it provides to concentrate on core activities.

Beyond financial advantages, 54% of all companies leverage third-party support teams to forge meaningful connections with their customer base. This, in turn, translates into loyalty. 93% of customers are inclined to make repeat purchases with companies that deliver superior customer service. Outsourcing is not just a financial boon, but a potential driver of customer-centric success.

The pros and cons of outsourcing customer service

Outsourcing can offer many advantages, including saving money to boosting customer loyalty. However, you’ll also need to consider its drawbacks. Here are the main points to keep in mind:

✔️ Cost-effectiveness → outsourcing to a third-party vendor provides businesses with a price-cutting solution. These vendors come equipped with the necessary infrastructure, trained personnel, and efficient processes, empowering companies to save money.

✔️ Scalability → businesses can avoid the challenges of rapidly increasing call volumes during peak seasons by relying on a flexible third-party workforce. This eliminates the need for unnecessary investments in additional personnel that may not be required in the long run.

✔️ Highly specialised workforce → outsourced customer support agents possess the technical expertise to navigate company software and deliver effective solutions. By outsourcing, businesses can tap into this expertise without incurring the training costs associated with building an in-house team.

✔️ Customer loyalty → outsourcing can help eliminate key points of friction in customer interactions, building trust and confidence among users. The result is a more loyal customer base and an increase in repeat transactions.

❌ Less quality control → when customer service is run remotely, compliance with your company’s policies can be a challenge. It could even lead to a deviation from established quality standards, posing a risk to your business’s reputation and user experience.

❌ Lack of interdepartmental communication → collaboration can become cumbersome when working with a third-party vendor. Sharing information and customer feedback can become harder, especially if different software are in place.

❌ Protecting confidentiality → outsourcing customer support exposes businesses to the risk of data breaches and confidentiality issues. Third parties often have access to sensitive personal data, making it susceptible to theft or improper transmission.

Different types of outsourcing

There are a number of outsourcing models to fulfil various customer service functions. These are the main ones:

• Inbound call centres → outsourced experts handle the inbound queries of your customers. They can answer questions to do with the location of orders, what you have in stock, and other general business enquiries through phone calls, social media, and live chat.
• Outbound contact centre → this involves a contact centre team that reaches out to your existing or potential customers. From telesales to data capture, this type of outsourcing can go hand in hand with your inbound call centre operation.
• Bureau call centre → tailored for companies experiencing extended dormancy periods or engaging in one-off campaigns, this outsourcing model ensures efficiency during peak times without the need for a permanent, dedicated workforce.
• Overflow call handling → these teams can handle sharp rises in call traffic during unexpected busy periods of pre-planned peak seasons. They can also be used in addition to in-house services, providing an ad hoc outsourcing solution.
• Out of hours call handling → many customers make calls outside typical business hours or local time zones. This solution helps businesses capitalise on opportunities that could have been missed.

Choosing the right outsourcing partner

The success of outsourcing hinges on a number of factors, from costs to the technology of your vendor. Here is what you need to know:

• Costs involved → it’s crucial to align outsourcing expenses with your overall budget and business goals. Requesting quotes from third-party providers is a must, ensuring you can calculate the potential and ROI in the form of improved efficiency and value.
• Level of expertise and reputation → while affordable rates are enticing, it’s essential to ensure that the provider can deliver on time and meet the quality standards required. We recommend looking on customer review sites like G2 or Capterra.
• Technology and resources → the business landscape is constantly evolving, and your outsourcing partner must keep pace. Look for signals that they’re investing in the newest communication tech, like using artificial intelligence to reroute calls and the use of a VoIP system.
• Service-level agreement → also known as SLA, the service-legal agreement is a binding document between the company that’s outsourcing and the third-party provider. It states the terms, functions, and metrics of the services that need to be provided as well as the penalties and actions that will be undertaken should the agreement fail. It’s essential to execute an SLA where every term and condition is clearly stated.

Conclusion

Outsourcing customer service can be a great solution to slash costs without sacrificing customer satisfaction. Although it won’t be the perfect remedy for all businesses, it can be a strategic move if your business experiences peak customer service demand, can’t afford to train staff in-house, wants to reduce in-house pressure as it grows, or has unmanageable volumes of customer contact.

As long as you’re aware of the drawbacks, can mitigate the risks, and choose the right provider, outsourcing can prove to be a worthwhile investment.