360° Vendor Management

In the Absence of Outsoucing Governance or Vendor Management

A funny story told to us by an employee of a major US company (which we’ll call XYZ) with thousands of outsourced call center seats (domestic and international):

XYZ has two call center programs.  One is a major inbound customer service program and the other is a small (about 45 agents) complex inbound/outbound marketing programs that focus on driving customer loyalty and create a significant revenue lift.

XYZ’s marketing and customer service organizations feud regularly about vendor management.  Customer service insists on “owning” the vendor relationships and requires the marketing organization to liaise with the vendors through customer service’s vendor management team, which was insufficiently staffed and generally lacks vendor management experience.  This inadequacy led the marketing team to circumvent the customer service vendor management team and they began to manage the vendors directly.  The vendor management team became irate and the resulting seething rift between the two organizations was/is palpable.

Then came Christmas, the busiest 60 days of the year for XYZ.  The customer service vendor management team made a significant forecasting error and found themselves delivering a 3% service level over several weeks.  Yes, that meant that they answered 3% of calls in 45 seconds, which is terrible.  XYZ is a major company.  This was a nightmare.

Meanwhile, the marketing program was hitting on all cylinders.  It was creating a record ROI and the vendor and the vendor agents were ecstatic.  Attrition was a minuscule 10% annually.

This is when things got personal.  Jealous by the success of the marketing program, the customer service team ordered the vendor to immediately put all of the marketing program’s’ agents in the customer service queues.  They didn’t notify the marketing program.

We should point out for those less knowledgeable on the subject that a program that has thousands of seats is not going to create a meaningful lift in service level by adding a mere 45 agents.  This decision was almost entirely political, and was also poorly calculated.
In this case, XYZ sacrificed a successful marketing program and gained nothing, as all but 9 of the agents left within two weeks of joining the customer service queues.  Furthermore, XYZ squandered the returns they were creating in the marketing program - about $1M.

Funnier yet, the marketing program didn’t notice that their program had stopped until one week later…their success had less to do with their own vendor management capabilities than the vendor’s awesome execution.  Dumb luck?

Can’t we all get along?

This entry was posted on Tuesday, March 25th, 2008 at 8:15 pm and is filed under Vendor Management, Vendor Management Organization. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.