CALL CENTRES - Push all the right buttons

The channel is in for a boom time if it can dial into the cash to be made from the burgeoning call centre sector.

Call centres are set to be one of the biggest growth areas in IT overmade from the burgeoning call centre sector. the next five years, as the fledgling market gains customer acceptance and takes flight. Businesses are realising that it is far easier to retain existing customers than to lose and replace them, and competitive pressures will force them to automate this process.

The UK is already Europe's largest call centre market, but it is expected to more than treble in size by 2003, according to a report from Ovum, entitled Ovum Evaluates Call Centre Software. The worldwide market is set to quintuple by that date, from $1.2 billion to $6.2 billion.

'The call centre market is potentially very large,' say the report's authors, David Bradshaw and Philip Carnelly. 'Much of the market is untouched.

Users are getting by with old-fashioned systems or, even worse, paper-based systems. More instructive marketing will reap huge benefits.'

And some of those benefits will be coming the way of resellers. 'Channel partners have high margins - 50 per cent is not unusual,' the report claims.

Call centre software could prove an ideal market for resellers, especially if they are able to offer added value. There are basically two types of product - development tools and ready-made applications. These are tending to converge as the tool vendors offer better out-of-the-box capabilities combined with customisable templates, while the application vendors are improving their products' development capabilities. Both, therefore, offer the potential for Vars to perform the customisation.

'All call centre systems require some work before they can be used,' the Ovum report says. 'Even ready-made applications require integration with existing communications and data systems. Also, some user organisations will spend a long time customising them to work exactly the way they want.'

A mix 'n' match approach may be needed. 'There is considerable variety among call centre products,' the report points out. 'And if one also counts related products - such as help desk software, sales automation and customer support - the field is even wider. No single product will suit all situations.'

It is frequently necessary to link call centres to existing systems, like customer accounts, warehousing or logistics. Some of today's call centre packages are poor at integrating with main database systems and business software packages, or with integrated voice response (IVR) units.

So the potential for systems integrators is huge - Ovum predicts that the market in Europe will grow from $181 million this year to $1.05 billion in 2003.

Partisans of e-commerce argue that the internet will put a brake on call centre development, as customers are encouraged to transact their business via the cheaper media of the Web and email.

But Ovum disagrees: 'Many people think the Net removes the need for call centres. Nothing could be further from the truth. If anything, internet commerce has increased the number of call centres. When people have a problem with an electronic transaction they want to speak to someone.

When a Website achieves a high number of transactions, it will require a call centre to handle the volume of customer enquiries this will generate.'

Once customers get used to doing some of their business electronically, they will come to expect the same level of speed and information provision from telephone staff who may, therefore, need a call centre to provide the required level of service.

Also, if visitors to the Website are asked to leave their phone numbers so they can be called back, the call centre is the obvious place from which to do this.

But Ovum claims many companies are 'pathetically ineffective' at doing this. This is one area where call centre products that have a direct link to the Website can prove their worth very quickly.'

Ovum has identified three key benefits of call centre software - higher service levels via faster, more effective service, extended hours and flexible deployment of staff and services; more efficient call handling, by reducing repetitive tasks, providing a better interface, 'screen popping' of relevant information (enabling consistency from the operators) and dealing with legacy systems; and lower cost, thanks to faster call handling, lower phone charges, lower staff turnover and knowing why the customer called in the first place.

The trick is to industrialise - standardise and automate - the service without de-personalising it. 'By using call centre software to place customer details and appropriate product knowledge at the agents' fingertips, call centres can achieve this mass personalisation,' Ovum believes.

Call centres generally perform one or more of four basic types of function, each of which may require different features and functions from their software. The first is telemarketing - searching for new customers - which can be done either by cold-calling entirely new prospects or by contacting existing or former customers with new products, better offers or incentives to return.

The deal is not usually closed there and then - once the customer is hooked, the rod is passed to another operator, while the telemarketeer casts a another line into the pool.

Ovum says telemarketing requires strong outbound telephony, especially predictive dialler links, and the ability to write scripts which are easy to use (because users may be untrained temps) and easy to create and update (for new marketing campaigns). It also needs software with good management and reporting capabilities.

Telesales can be divided into two distinct areas. Major sales include big-ticket items such as PCs or holidays and financial products such as pensions and insurance. For this, operators need to gather information about the customer and their requirements and respond quickly with the right offer.

These customers tend to ask lots of questions, so systems to support big sales must be able to provide detailed product information. In areas governed by strict regulations or forms of words - such as financial services - strong scripting capabilities and call recording may be necessary.

Major sales systems also need good follow-up capabilities, for example, for sending out written quotations; good integration, for example, with broking, insurance or back-office systems; good staff management because operators may be in the job a long time and focused training pays off; and access to special services, such as credit checking.

Volume sales, such as PC consumables, stationery, mail-order goods and theatre tickets, are rather different. Speed and efficiency are of the essence because most customers only call if they actually want to buy and there is little opportunity for the hard sell.

These operators' needs may include access to superficial information on a wide range of products, facilities for cross-selling, easy access to account details for existing customers, integration with back-office systems and possible integration with a Web server for self-service applications.

The final type of application is customer account services, ranging from telephone banking - where customer calls are frequent and mostly routine - to utility companies, where customers call less often and usually with a problem.

These operators may have to handle a wide range of customer requests, spanning multiple data sources and therefore need access to customer data on multiple systems; integration with IVR for out-of-hours service and to cover busy periods; round-the-clock availability (which means good reliability and the ability to perform system maintenance online); good staff management because high standards are required; and a highly customisable interface.

Most large organisations have some kind of call centre, but among European companies, Ovum found a sharp distinction between small, informal call centres with 10 to 20 'seats' (concurrent users) and large, US-style call centres.

Several niche markets either have, or - more importantly from the reseller's point of view - need, call centres supported by IT systems. Banks and financial services companies have been among the early adopters. The latter want to sell investments, pensions and so on, especially to the increasingly ageing population, while insurance sales by phone are already well established.

Banks use call centres mostly to support telephone banking, plus a bit of sales and marketing. 'Banks will continue to increase their usage of call centres as there is growing pressure on them to reduce their infrastructure costs and maintain or improve customer service,' Ovum says.

The report predicts that retailers and wholesalers will also become extensive users of call centres, for functions including telemarketing and canvassing, direct response advertising, catalogue shopping and mail order, and supplier management (since many merchandising departments within retailers effectively operate as call centres). Conventional retailers will also use call centres to try to defend their market shares.

Government and healthcare organisations have been slow and late adopters of call centre technology, but Ovum expects sales to these sectors to increase by almost 1,400 per cent across Europe over the next five years.

Likely public-sector applications include tax collection, emergency services, passports and immigration, managing leisure facilities, recruitment, social services, social security, making medical appointments and following up mass healthcare screening.

Manufacturing and construction companies may increase their usage of call centres, especially as more choose to sell direct or find they have to provide after-sales support to customers. Telecoms and transport firms are already significant call centre users, for anything from directory enquiries to ticketing and reservation systems.

Utilities, too, with their mass customer bases, are big users of call centres. Ovum expects many utilities to upgrade their existing software in the next three or four years, providing further sales opportunities to vendors and resellers.

Even if call centres are not yet widely used within a particular niche market, this can soon change, since competitive pressures can cause a domino effect. 'It only takes one well-resourced entrant to force the entire market into phone sales,' says the report.

List prices for call centre software start at about #800 per seat for some products, but most are about #1,900 per seat (more for small call centres less than 50 to 100 seats), with maintenance and support fees of 20 to 30 per cent. However, discounting can bring the street price down to nearer #1,000.

Ovum tested eight leading call centre software packages. Two areas were singled out as needing improvement - the facilities for managing tasks (or marketing campaigns) 'varied from superb to abysmal'; and integration with other applications and external data sources 'varied considerably'.

But in general, the reviewers felt the products were getting better and more capable and that 'call centre software is coming of age and is already a viable choice for the vast majority of call centres'.

Other software vendors are eyeing the call centre market. Oracle has a call centre project and Ovum reveals that the database vendor has announced its intention to purchase Versatility. And Ovum believes SAP and also Siebel - the sales force automation specialist - are potential entrants.

No call centre software is perfect, but Ovum's advice to potential buyers is that if they select the right product for their needs, it will end up paying for itself: 'Once you work out the true cost of building call centre software yourself, or of getting by with inadequate and old-fashioned systems, the cost of call centre software becomes easy to justify. While you bump along with inadequate systems, your competitors will be stealing customers away from you.'