Why Outsource Customer Service: Key Benefits and Reasons

As your business ramps up, one of the challenges you will encounter is maintaining excellent customer service while keeping costs low. Spoiler art: It’s time to outsource customer service and reap the many benefits.

In today’s fast-paced business environment, outsourcing customer service has become a strategic move for businesses of all sizes. After all, providing exceptional customer service is no longer just a value-added proposition; it’s an absolute necessity.

Customers expect nothing less. In fact, 93% of customer support teams agree that customer expectations are higher than ever.

However, meeting these demands requires a dedicated and efficient customer service operation. Achieving this in-house can be challenging and cost-prohibitive for many companies.

Whether you’re a budding startup aiming to expand your customer support team and capabilities or an established enterprise seeking to optimize operations, understanding the nuances of outsourcing can be a game-changer for your customer experience and overall success.

Understanding the need for outsourcing customer service

A customer service outsourcing company providing cost savings, scalability and access to expertise

Yes, the importance of customer service has already long been established. Meanwhile, outsourcing has become increasingly popular in recent years. In fact, 54% of companies already use third-party support teams.

So what makes outsourced customer service different?

What is outsourced customer service?

Outsourced customer service is when a company hires a third-party provider to handle customer support services for them. This involves call center operations, surveys, emails, and other support requests. So instead of handling customer service in-house, an external customer service company or provider does it for them.

In the outsourced customer service model, a team of trained agents—typically employed by the outsourcing partner—acts as an extension of the client’s brand. They represent the business and deliver support services to its customers. They handle customer inquiries themselves, resolve issues, provide product information, and offer assistance across multiple channels. These agents may work from dedicated call centers or remotely, depending on the outsourcing arrangement and the provider’s capabilities.

Here’s an illustration. Brand A hires Company A. Brand A’s customers have questions about the product or their service, and files support tickets via phone, email, or other channels. Brand A pays Company A for its services.

Customer service outsourcing companies also handle the hiring, training, and all administrative tasks related to customer service professionals and support agents.

Types of customer service outsourcing options

There is a variety of customer service outsourcing options available. Thus, it’s important to understand the differences between them so you can make an informed decision that best aligns with your business needs.

Onshore vs. offshore providers

A customer service outsourcing company providing onshore and offshore providers

Put simply, onshore providers are those located in the same country as the business. Offshore providers are those located in a foreign country.

Each option offers its own set of benefits and challenges:

  1. Onshore providers often share the same language and culture as the brand’s customers. This can improve communication and understanding. However, hiring them can be more expensive due to high labor costs and other overhead expenses.
  2. Offshore providers, on the other hand, can offer cost savings due to lower labor costs depending on their location. They can also provide 24/7 customer support since they may be in different time zones. However, language barriers and cultural differences can cause communication issues.

Shared vs. dedicated agents

A customer service team of shared and dedicated agents
  • Shared agents handle multiple clients or programs. Shared agents can be more cost-efficient since they manage numerous clients simultaneously. This makes them a suitable option for businesses with smaller budgets. However, they may not be able to offer the same degree of tailored service as dedicated agents.
  • Dedicated agents, on the other hand, focus solely on one business. Hence, they can provide more personalized support and greater expertise. Of course, dedicated agents may be more expensive than shared agents.

Multi-channel vs. omnichannel support

A team providing multi-channel customer support outsourcing services
  • Multi-channel support means providing customer support services via different methods. For instance, it can be any combination of emails, live chat, or phone calls. This approach allows customers to choose their preferred method of communication and can help businesses reach a wider audience. With 73% of consumers using multiple channels in their purchase journey, this is a very viable option for customer support.
  • On the other hand, omnichannel support takes multi-channel support to the next level by providing a seamless and consistent customer experience across all touchpoints. This means that customers can switch between channels without losing context or having to repeat information, leading to a more efficient and satisfying support experience. According to CX Today, 9 out of 10 consumers want a seamless omnichannel experience.

Pros and cons of outsourcing customer service

A customer service outsourcing company providing advantages such as cost savings, scalability and access to expertise

As businesses evaluate the prospect of outsourcing customer service, it’s essential to weigh the potential benefits against the associated drawbacks. By understanding both the advantages and disadvantages, businesses can make a well-informed decision about whether outsourcing customer service is the right choice for them.

5 reasons why you should outsource customer service

An image showing a customer service representative on a headset, representing the advantages of outsource customer service

Cost savings

One of the most appealing benefits of outsourcing customer service is the potential for reducing costs and other resources like time. In fact, 27% of small businesses and companies outsource customer service to improve their efficiency.

Outsourcing customer service offers a range of cost-saving advantages that can significantly impact a company’s bottom line:

  1. Reduced labor costs: Outsourcing to regions with lower labor costs allows businesses to benefit from cost-effective staffing solutions, often without compromising on service quality. An outsourced customer service provider can offer cost savings through flexible staffing options, such as a price structure based on resolution rather than an hourly rate, and by outsourcing to a region with a lower cost of living.
  2. Infrastructure savings: By outsourcing, companies can avoid the substantial investments required to build and maintain an in-house customer service infrastructure. Businesses can also save on training costs, equipment, bills, and employee benefits, allowing them to allocate resources more efficiently.
  3. Operational efficiencies: Partnering with specialized customer service providers can streamline processes, reducing inefficiencies and associated costs.

Access to specialized talent and expertise

Outsourcing customer support enables small businesses everywhere to tap into a pool of skilled professionals who have the necessary knowledge and skills to provide top-notch customer service. They can even specialize in specific industries, languages, and tools.

In short, outsourcing allows companies to tap into specialized expertise that might otherwise be challenging to acquire:

  1. Industry knowledge: Reputable outsourcing partners already have experience and insights into specific industries, enabling them to provide tailored support to customers.
  2. Multilingual support: Accessing a diverse talent pool can offer multilingual customer support, catering to global audiences and breaking down language barriers. After all, 76% of online customers are more likely to do business with a company that offers support in their language.
  3. Technological advancements: Established customer service providers invest in advanced technologies, granting businesses automatic access to cutting-edge tools and practices. This can help streamline processes and improve the overall customer experience.

Scalability and flexibility

A customer service team growing during peak season

As businesses grow, customer support needs can change rapidly. When businesses can outsource customer support service, they can easily scale their customer service operations up or down to accommodate varying demands.

  1. Flexibility in agent numbers: Outsourced providers can swiftly adjust the number of agents handling support to align with seasonal peaks like Black Friday and Cyber Monday or changing business requirements. During quieter periods, they can reduce capacity to optimize cost efficiency.
  2. Rapid expansion: When businesses expand into new markets or launch new products, outsourcing provides a quick and efficient way to meet increased customer support needs as needed.
  3. No downtime: With outsourcing, there’s no concern about delays in hiring and training new staff. This ensures continuous and uninterrupted customer service.

Always-on support

For businesses with a global reach, outsourcing customer service allows them to be reachable at any time. This leads to improved customer satisfaction, especially when it comes to urgent and time-sensitive queries. 24/7 chat support, for example, is already taking the world by storm, and one reason for that is probably because 80% of customers want faster responses.

  1. Expanded operating hours: Offshore outsourcing and shared agent models facilitate 24/7 customer support, providing round-the-clock assistance to customers all over the world.
  2. Reduced response time: Outsourcing partners can manage high volumes of support tickets efficiently, resulting in reduced response times and quicker query resolutions. Improved response times contribute to better customer experiences and heightened brand loyalty.

Operational focus

By outsourcing customer service, companies can concentrate on their core competencies and strategic priorities:

  1. Shifted focus: Delegating customer service to experts allows businesses to focus on product development, marketing, and other core areas.
  2. Enhanced innovation: With reduced operational burdens, organizations can channel resources toward innovation and improve their offerings.
  3. Streamlined workflows: Outsourcing enables better resource allocation, fostering greater efficiency in all departments.

4 things to watch out for when it comes to outsourced customer service

A customer support agent facilitating virtual customer interaction

Despite the numerous advantages, outsourcing customer service also comes with potential drawbacks. Being aware of these pitfalls allows companies to proactively address them and ensure a successful outsourcing partnership.

Here are some crucial aspects to watch out for when it comes to outsourced customer service agents:

Language and cultural differences

Language barriers and cultural differences can lead to misunderstandings, miscommunications, and ineffective customer interactions. Agents from different regions may have varying levels of language proficiency, accents, or cultural norms that can impact the quality of support provided.

For example, they may not understand the customers clearly, and the customer might not receive the solution that they need, thus increasing customer dissatisfaction.

How can businesses tackle this issue?

  • Choose outsourcing partners with agents who are proficient in the languages required for your customer base. Don’t forget to conduct language assessments during the selection process.
  • Provide cultural training to outsourcing partners to ensure agents understand the cultural sensitivities of the customers they will be assisting.

Potential quality concerns

In shared agent or low-cost offshore outsourcing models, there may be concerns regarding service consistency and the quality of customer interactions. As agents handle queries for multiple clients, it can be difficult to maintain the same level of service for each business. Sometimes, agents get confused or underdeliver for one or all clients.

How can businesses tackle this issue?

  • Establish clear Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) with the outsourcing partner to set performance expectations and monitor service quality.
  • Ensure that outsourcing partners provide ongoing training and monitor agent performance regularly to maintain consistent service levels.
  • Conduct periodic performance reviews and collaborate closely with the outsourcing team to address any identified issues promptly. For example, the LTVplus team comes with a customer success manager who will help businesses manage the agents and keep their eyes on the goals.

Time zone challenges

Time zone differences can pose challenges, especially in offshore outsourcing arrangements. Businesses may struggle to provide real-time support to customers in different regions during their respective business hours.

How can businesses tackle this issue?

  • Consider opting for an outsourcing partner that offers 24/7 customer support to accommodate customers in various time zones.
  • Collaborate with the outsourcing partner to establish overlap hours with your business’s working hours, ensuring adequate real-time support.

Security and data privacy risks

Outsourcing customer service often involves sharing sensitive customer data with the outsourcing partner. Without proper data security measures, there is a risk of data breaches and compromised customer information.

How can businesses tackle this issue?

  • Ensure that the outsourcing partner follows stringent data security protocols and complies with relevant data protection regulations.
  • Implement Non-Disclosure Agreements (NDAs) to legally bind the outsourcing partner to maintain the confidentiality of customer data.
  • Enforce data encryption and strict access control measures to protect customer information from unauthorized access.

Best practices for successful customer service outsourcing

A customer service outsourcing company providing best practices such as aligning with brand values, establishing clear communication channels and monitoring and evaluating performance

While outsourcing customer service presents numerous opportunities, it requires thoughtful planning and execution to ensure success.

Implementing the following best practices can significantly enhance customer retention and the outcomes of customer service outsourcing initiatives:

  1. Define clear objectives. Establish the specific goals and expectations for the outsourcing partnership. Is it cost reduction, improved response times, or multichannel support? Remember that clarity on objectives is crucial for effective collaboration. It’s important to align expectations with the service provider right from the get-go to establish trust and a smooth start.
  2. Select the right partner. Thoroughly research potential outsourcing providers. Evaluate their track record, industry expertise, client reviews, and technological capabilities. Hot tip: Companies who have experience handling clients from your industry or niche will have an easier time handling your brand.
  3. Establish Service Level Agreements (SLAs). Define key performance indicators (KPIs) and SLAs that will be used to measure the outsourcing partner’s performance. This ensures accountability and helps monitor service quality. Additionally, this provides transparency on both sides.
  4. Establish clear communication channels. Foster open and transparent communication with the outsourcing partner. Set regular catchups (which can be either synchronous or asynchronous or a combination of both) to discuss performance, provide feedback, and address any concerns promptly. After all, clear communication is essential for a successful outsourcing partnership. Hot tip: Communication with an outsourced support team (especially offshore teams) is made easy with tools like Slack and Zoom.
  5. Cultural alignment and training. If outsourcing to an offshore provider, pay attention to cultural compatibility. Conduct cultural training sessions to minimize miscommunications and enhance empathy in customer interactions. Your outsourced customer support agents must be culturally sensitive too.
  6. Maintain brand consistency. Share detailed brand guidelines and customer service protocols with the outsourcing team to ensure consistent representation of your brand. Remember that customer support agents are your brand’s frontline representatives.
  7. Monitor and evaluate performance regularly. Periodic evaluations also help ensure that the outsourcing partner remains aligned with the company’s objectives and strategy. This helps to ensure that the outsourcing partner is delivering the desired results and that the company is operating efficiently.

How to choose the right outsourcing partner

A customer service outsourcing company assessing expertise and experience, considering legal and security risks and comparing pricing and contract terms

With a plethora of customer service outsourcing companies to choose from, selecting the right outsourcing partner can be a daunting task. However, it is a critical decision that can significantly impact the success of your customer service operations.

To make an informed and strategic choice, consider the following steps when choosing the right outsourcing partner:

Step 1: Assess the expertise and experience of various companies

Begin by researching and assessing the expertise and experience of potential outsourcing companies. Look for providers with a strong track record in delivering high-quality customer service and relevant industry experience.

Consider the following factors:

  1. Reputation and experience: Look for providers with a strong reputation and a proven track record in delivering high-quality customer service. Check reviews, testimonials, and references from credible websites like Clutch.
  2. Industry expertise: Prefer partners who have experience working with businesses in your industry or related domains to ensure a deep understanding of your customers’ needs. Their familiarity with industry-specific challenges and requirements can be invaluable. Look for case studies specifically about how the outsourced customer service providers helped companies in your industry.
  3. Technological capabilities: Assess the outsourcing partner’s technological infrastructure and tools to ensure they can support seamless and efficient customer interactions.

Step 2: Consider legal and security risks

When outsourcing customer service, sharing sensitive customer data with the outsourcing partner is often inevitable. Mitigate legal and security risks by ensuring the partner follows strict data protection protocols and complies with relevant regulations.

Businesses should ensure that the outsourcing partner complies with relevant regulations and has measures in place to protect sensitive customer data, such as credit card details and health records.

Additionally, it’s recommended to review the outsourcing partner’s internal security measures and seek legal counsel to review any documents or agreements that you are uncertain of.

Step 3: Compare pricing and contract terms

Finally, comparing pricing and contract terms among potential outsourcing partners is essential to find the best fit for your business needs and budget. Be sure to consider factors such as the pricing structure, the scope of services provided, and any contractual provisions that enable businesses to terminate the agreement if necessary.

By carefully assessing pricing and contract terms, businesses can ensure they are entering into a fair and reasonable agreement with their outsourcing partner.

Expanding horizons: the growth potential of outsourcing customer support

A customer service outsourcing company receving good reviews due to helping their clients achieve customer satisfaction

Outsourcing customer service can be a game-changer. Remember, the key to successful outsourcing lies in finding a partner that aligns with your objectives. As you explore the possibilities of outsourcing customer service, consider partnering with a trusted and experienced outsourcing provider like LTVplus.

With a proven track record of delivering top-notch customer support services, LTVplus can help your business achieve customer loyalty and service excellence at its finest. To find out how LTVplus can tailor a customer service outsourcing solution to meet your unique needs, reach out to us today!

Together, let’s elevate your customer experience and drive your business to new heights.

Need a dedicated customer experience team ready to support your brand?

Book a consultation with us and we’ll get you set up.

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