When Offshored Customer Service Sucks, Stock Value Drops. Shocking!

The WSJ report “How Offshore Outsourcing Affects Customer Satisfaction” states customer satisfaction drops when outsourced and off-shored customer service is implemented. They then cite reasons for that drop in happiness. I was bemused that these findings are seen as a “discovery”. It ought to be obvious that whenever an organization cedes control of the treatment of its customers to anyone, even an internal employee, things will go awry.

The same principles that make internal customer service work ought to be applied to outsourced or off-shored service. For example, most department store customer service lacks for the same reasons that the authors cite as causing deficiency in off-shored service: lack of training, lack of authority, lack of information. The contrast that proves the rule is an organization like Nordstrom. For them to deliver on the promise of their customer service they have multiple structures in place to encourage their employees to err on the side of great service, as well as granting sufficient authority to them so that they have the freedom to make those right choices. Go to any of their competitors and try to return an item and the violations of these principles are readily apparent. Returns are handled in a centralized location. Only certain employees (managers) have the authority to accept returns. The conditions under which returns are accepted are strict, making the entire process onerous. The limitations on authority make it a gauntlet. Remove those restriction, add a great deal of training on both operations and the logic and principles that underlies decision-making, and voila, customers have a good experience – a positive “moment of truth”.

These same kinds of problems are ubiquitous, both in internal customer interactions and those that take place via outsourced or off-shored employees. Organizations that want to avoid falling prey to the drop in customer satisfaction – a drop that obviously is causally related to a drop in stock value – need to be vigilant about maintaining a deep level of empathy for their customers’ experiences, and ensuring that they remain positive through their policies, procedures, training and control of the behavior of those acting on their behalf. Keeping it in-house is no guarantee of excellence. Off-shoring or out-sourcing is no guarantee of inferiority. Both are subject to the commitment and vigilance of the organization whose reputation and value perception is at stake.