Outsourcing Customer Complaints and Inquires

Outsourcing or automating activities like order status updates can free up CSRs for activities that build stronger relationships and contribute to the bottom line.

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Effective customer service helps ensure that your customers are repeat buyers, your brand maintains a good reputation, and the money you invest in customer service is well spent. However, organizations differ when it comes to customer service strategy and how best to manage interactions with customers. In this article, we discuss the current state of outsourcing for customer complaints and customer inquiries, with a focus on the benefits and challenges of both in-house and outsourced customer service. Striking the right balance between these two approaches can help organizations reap the benefits of both while mitigating the risks involved with each.Apqcmay1APQC Fig. 1

APQC finds that organizations at the median (midpoint or 50th percentile) outsource 23% of customer inquiries and 20% of complaints. Organizations that outsource the most (those at or above the 75th percentile) outsource 30% or more of their customer inquiries and complaints. Organizations at or below the 25th percentile outsource the least, with 15% of inquiries and 16 percent of complaints (or less) going to outsourced customer service representatives (CSRs).

Customer Complaints

Resolving customer complaints in a positive manner helps maintain customer relationships. This not only matters for an organization’s reputation but can also help organizations save money because it typically costs less to retain an existing customer than it does to find a new one.

Given the importance of resolving complaints appropriately and the consequences of failure, it is not surprising that organizations at the median only outsource one in five customer complaints. Keeping complaints in-house enables customer feedback to travel more quickly to relevant areas of the business, which in turn enables faster resolution of customer pain points and challenges. Depending on the business and its industry, in-house CSRs may also have deeper product or technical knowledge than an outsourced CSR.

While managing complaints in-house has obvious benefits, it may not always be the most strategic choice. One recurring theme across respondents to APQC’s customer service research was the importance of evaluating the cost-effectiveness of customer complaint handling and the need to be able to scale capabilities according to fluctuations in volume. Third-party customer service providers often have the tools and technology to scale up quickly for high volumes, helping organizations to save both money and time. This allows in-house CSRs to focus on more strategic tasks like building and maintaining customer relationships.

Given the benefits of both approaches, the decision of whether to outsource complaints (and to what extent) is one that organizations will need to consider in light of their industry, business goals, learning and development capabilities, and other factors. The considerations below are a good place to start.

Keep customer complaints in-house if:

  • You want to ensure consistent brand representation and maintain control over the customer experience;
  • handling and responding to complaints requires a degree of technical or product knowledge not easily transferred to an outsourcer; or
  • you need faster access to customer feedback for continuous improvement.

Consider outsourcing customer complaints if:

  • It would be cost prohibitive to build and maintain a customer service function;
  • the in-house team lacks the expertise to manage diverse complaint types; or
  • customer complaint volumes are exceeding in-house capacity and leading to cycle time delays.

Customer Inquiries

Respondents are outsourcing routine inquiries (for example, questions about products or services) to a slightly greater extent than they are for customer complaints. As with customer complaints, there is no best-practice standard for whether to keep inquiries in-house or to what extent. Instead, organizations will need to weigh the various tradeoffs involved. For example, in-house CSRs are typically more familiar with a company’s products and services, but outsourced CSRs may be more objective and impartial. Customer self-service and automation tools can also take over more routine tasks like providing order status updates so that in-house CSRs can build more advanced customer service skills. The considerations below can help you think through these tradeoffs more deeply.

Keep customer inquiries in-house if:

  • You have access to in-house tools like instant messaging platforms, internal chat systems, and project management software to collaborate in real-time, share files, and handle customer inquiries more efficiently;
  • internal handling of inquiries allows customer service teams to leverage their product knowledge to serve customers and further enhance customer relationships; or
  • you can meet customer expectations for response times and CSR availability.

Consider outsourcing customer inquiries if:

  • Doing so gives you access to specialized skills and expertise that you may not have in-house;
  • you want to give customers immediate availability to CSRs regardless of the day or time they make contact; or
  • you have business units in multiple regions and need CSRs with a local presence that understand local culture.

key Takeaways

Whether to outsource customer service is ultimately a strategic decision that comes down to how an organization wants to balance control of the customer experience and consistent brand reputation against the ability to focus in-house employees in other areas. Outsourced third parties that provide customer service often have expertise and systems that allow their teams to work more efficiently, which can help you save labor costs while leaving in-house CSRs free for more valuable work. On the other hand, in-house customer service gives you more control over interactions with customers and enables you to push feedback to relevant parties across the enterprise more quickly.

As you work to strike the right balance between in-house or outsourced customer service, evaluate whether your processes and practices enable customer service team members to make the highest and best use of their time. Outsourcing or automating activities like order status updates can free up CSRs for activities that build stronger relationships and contribute to the bottom line.