We spoke to two contact centre experts about the challenges of starting an independent call centre business.
Before You Get Going – Do Your Research
In this article we are going to look into three main topics: identifying a service offering, acquiring the right technology and staff, and getting clients. These are the issues that will most likely be at the forefront of a budding entrepreneur’s thoughts, but it takes a lot of research to get to that point.
An Everest Group survey showed that during 2015/16, more than half of client businesses with end-of-term call centre contracts decided not to renew their vendor relationships.
There are two useful takeaways from that statistic: the first is that vacancies are being created for new operations to fill. The second is that there is a very high rate of failure among outsourced call centres.
The only way to be among the winners is to arm yourself with information. Avenues for research include social media, market research firms, forums like Call Centre Voice, and the experiences of former or current call centre entrepreneurs. Research is not going to be the most compelling part of starting your business, but you can’t succeed without it.
Half-Knowledge Can Lead to Failure
“I think 90% of the BPO start-ups that fail are because the person who started them has been in the industry long enough to think it looks easy but not long enough to really understand every aspect.”
“Half-knowledge is very dangerous. They might manage to get some business, but once they have it, they usually can’t hold it together because they don’t have the knowledge to factor in every cost.” Vikrant Kallakuri.
Finding Your Market – How Do You Select a Service?
It’s likely that most people interested in starting their own contact centre want to apply themselves to the verticals that they experienced as an employee. If you have detailed knowledge of an industry segment, you may have the ideal service offering – provided you can design a pitch that isn’t already abundantly available.
Business Process Improvement (BPI)
The primary area of expertise for a lot of contact centre owners is contact centre operations. That might seem like a circular situation, but apart from being useful in its own right, this knowledge is also highly commodifiable. BPI is a growth area in outsourcing, and could be the reason a start-up stands out.
It can also help to have a diverse offering. Increasingly, small contact centres with a core focus on generating sales are able to take on additional work as virtual receptionists, events promoters and overflow for larger centres.
“When it comes to markets, new centres tend to go with whatever is the flavour of the month. A few years ago it was PPI, debt management, mis-sold mortgages, and the claims-type programmes. At the moment funeral plans are very big, as are life insurance, RTAs and the whole injury side. Financial services are the easy ones because there are always lots of programmes being offered.” Ian Haines.
We’ve already seen how the Dimension Data statistics show an increase in the number of clients dropping their call centre vendors. The reason most commonly given is that businesses are becoming less interested in cost-down activities than improving customer experience.
Customer Service Quality
Research from MyCustomer showed that 75% of businesses now recognise customer service quality as a crucial competitive differentiator, which challenges the traditional narrative around how small centre start-ups compete.
A real-world implementation of this is the contact channels that you can offer. If you have the skills and experience to promote a high level of multichannel engagement, that might be an extremely valuable feature.
A large majority of contact centres claim to be multichannel, but on closer inspection, there is still relatively little adoption of options beyond IVR and email. Only a tiny minority of contact centres are able to offer services even as established as SMS and webchat.
“We probably have 5 partners out of 750+ who can run truly multichannel services for clients, with social media management. Although there is a huge need for this kind of service, a lot of companies that are outsourcing are just outsourcing one chunk without thinking of the big picture.”
“So, while we do have some partners offering this, their skills are not really being used in the way we would expect, given that we were talking about this three or four years ago.” Ian Haines.
What Do You Need to Acquire?
For many new business owners, the question of what assets they need to secure conjures mixed feelings. Both excitement and tension are likely to be associated with watching the carefully sourced CapEx fund start to dwindle.
Most of the basic elements of a call centre can be rented, from headsets to CRM. Plug-and-play enterprises include managed facilities, staff amenities and some hardware. This might be the ideal option for start-ups with very limited time or budgets, but it will reduce your options and may cost more in the long run.
“Here, everything is plug and play. Once a new call centre locks in a single process they look at renting a place, renting computers, finding an IT person on salary. My way was a little bit different; I wanted to build everything and then go searching for business.
“If you are doing your own set-up, you need to build a team. You need a good IT person alongside you, and you need a great operations manager. You need an HR person who knows what skill sets to recruit for if you’re performing a voice process compared to back-office processes.
“The next thing you need to have is the right IT infrastructure. You need a leased line, and the connectivity has to be great. In my case, I’ve created a back-up leased line so if there’s any down time, we can immediately switch to the next. That’s the business continuity standpoint.
“From a disaster recovery standpoint, you need a server and a good backup. We’ve created a mirroring server, and for that mirroring server we have another backup. The business requirement for most calls is that they’re on a recorded line and that we keep that recording for two years.” Vikrant Kallakuri.
How Do You Find the First Clients?
Of course, none of this matters if you can’t get the clients. The best position to be in is having a ready-made client list from your time in the industry. But, if you don’t have that, or if the list won’t be enough to sustain you, it is still possible to get a foot in the door.
Going Through a Broker
One option is to go through a broker who charges a commission for connecting clients with companies. Naturally, with their reputation on the line, brokers still need to see that you have a solid offering and can deliver.
“When a new centre asks for work, they’re generally told ‘I’m not going to give you any paid hourly work, but I can pass a client to you who will pay per lead or per sale’. These campaigns are outbound in nature, and a lot of the call centres look to work for clients where the data, dialler and VoiP is provided.
“For a newbie starting out in a call centre, if they haven’t been in the industry for many years and don’t have a list of very good contacts, they are all starting at pay-for-performance. Nobody will trust them with a campaign because they haven’t got the references from happy clients to prove that level of competency.”
“There are 1001 outsourcers all looking for campaigns where data and dialler is provided, and they’re good to go. All they need is office space, computers, and some kind of internet connection so they can access the VoiP and the dialler.” Ian Haines.
A new venture will inevitably need to take work that develops its reputation. Outbound campaigns that pay per lead can present the lowest barriers to entry, and they will certainly keep you motivated to put up the best and most efficient performance you can.
The fact is, the highly available work will not be the work that pays the most. Even if your business plan is ultimately to provide a highly specialised service, going in without an existing client will probably mean taking outbound sales contracts.
Find a Company That is Piloting a Product
“One way for a five-seat operation to get a foothold is to find a company that’s piloting a product, because big centres are not interested in five-seat opportunities. If they went to a big, well-established call centre with a five-seat proposal, they would get shot down.
“There’s always potential for the project to scale up, so another reason for taking a five-seat contract – where you might just break even – is that the contract can stay with you when it’s ready to expand. Small and growing outsourcers also look to take different work because then it’s in their portfolio.” Vikrant Kallakuri.
Think back to when you first entered the job market as a teenager or a graduate. However skilled you were, potential employers were not going to take the risk of giving you a senior position – you had to work your way up.
Understandably, professionals with long careers might not love the idea of starting near the bottom. The good news is that this time you won’t have to put in ten years to get noticed – if you can carry off just a few outbound contracts, you will develop the kinds of relationships needed to take on serious long-term work.
With thanks to
Vikrant Kallakuri, owner at Northtree Support Services
Ian Haines, International Call Centre Broker