Pay Your Service Provider Out of the Savings It Promises

It's generally a good idea to limit the number of companies you outsource to, just to keep things simple and easy to manage. However, if a new outsourcing vendor approaches you with a spectacular, fabulous new service that you just can't live without, first see if they'll back up their promises with a financial commitment. An agreement that requires specific cost-reduction targets forces the vendor to prove the worth of its offering — and takes the risk off your shoulders and puts it on theirs.


Take SonicWALL Inc. The company sells Internet security software appliances and services to every size of business. "The bulk of our services are done through outsourcing partners," explained Michael Anderson, VP of services. The company deals with about half a dozen outsourcing vendors to offer its services.

A significant part of the company's outsourcing budget goes to its call center, which fields customers' technical help calls. As with most call centers — those that require experienced, knowledgeable customer care representatives — it's an expensive but ultimately necessary evil. However, it's also one that can be improved.

Mr. Anderson said the company had no intention of changing or upgrading its call center services until it heard an outsourcing pitch from noHold Inc. noHold offers a computer program called KnowledgePortal that helps users find answers to specific problems. The technology, accessed through a Web site, mimics a question-and-answer session a user would have with a call center representative.

noHold said the technology could cut down on the number of calls going into SonicWALL's call center by offering users a different way to get help. noHold explained that the self-help Web site would create an added value to SonicWALL's support services by giving its customers a place to seek extra assist and advice — without having to have a conversation with a customer care representative.

The argument was compelling, Mr. Anderson said, but the deciding factor was, as usual, the bottom line. SonicWALL didn't have any more money to devote to its customer care offerings, and Mr. Anderson told noHold it was interested but wouldn't be able to pay an additional fee for the KnowledgePortal service.

–>TIP #1: Cut a deal that rewards the service provider for the specific savings its services generate.

His ultimatum: SonicWALL would implement the KnowledgePortal self-help Web site if noHold could guarantee that SonicWALL would see a decrease of at least 15% in its call center traffic.

"To my surprise, they agreed to that part of the contract," Mr. Anderson said.

More importantly, SonicWALL would be able to pay for noHold's KnowledgePortal offering with the money it was saving in call center expenses. Mr. Anderson said the company's customer service budget remains about the same, but a portion during those first few months was simply redirected to noHold.

Mr. Anderson said SonicWALL first signed its deal with noHold more than two years ago. The initial contract lasted one year, and then transitioned into a month-to-month agreement.

"Our business is won or lost every quarter," Mr. Anderson said.

Mr. Anderson said noHold's KnowledgePortal offering continues to displace at least 15 percent of the company's call center traffic. However, while capping expenses in the first quarter was a risk-free way to implement the tool, now the company is paying a monthly subscription fee not tied to incentives. Said Mr. Anderson, "We are confident that we're getting value out of the service, and, in any case, customer adoption has at least as much to do with SonicWALL's content management as it does with noHold's performance."

"We are very satisfied with noHold," Mr. Anderson said. "There's some really nice work that's being done there."

Like any sort of sales pitch, outsourcing vendors can claim to provide all kinds of savings and benefits. However, a good way to weed out the frivolous offerings is to require a specific sales target or cost reduction goal.

–> TIP #2: While you're at it, make the vendor do the heavy lifting when its services need enhancing too.

Frankly, the writing, submitting and reviewing process for RFPs takes a lot of effort. Sometimes the whole procedure can amount to more trouble than it's worth, especially if you're looking for a quick fix or minor add-on to a service offering that's already established. If you have a good relationship with your outsourcing vendor (and if they don't mind doing a little hustling for your business) you might be able to get them to do the heavy lifting.

For SonicWALL, the chance to implement this philosophy came slightly later in the noHold relationship.

The company realized it needed to offer its customers a way to get personalized help through noHold's KnowledgePortal Internet site. The solution was a click-to-chat function that would set up an instant messaging session between the customer and a SonicWALL technician. Mr. Anderson said the solution is superior to an e-mail exchange because the technician instantly gets information about the customer's problem, as well as their account details, when the customer clicks on the IM button.

The lack of a click-to-chat capability "is a gap in NoHold's services," Mr. Anderson said. "We needed to get that technology from another vendor."

But, instead of doing the work itself, Mr. Anderson said SonicWALL got noHold to do it.

"We didn't put out an RFP. I didn't want to have to deal with an RFP process and do all the due diligence. I expected a partner to do that for me," he said. "We worked pretty closely with noHold — and put a lot of pressure on them, to be honest."

Mr. Anderson said noHold brought CRM technology vendor Echopass into the picture to plug the click-to-chat gap in its KnowledgePortal offering. He said SonicWALL didn't have to conduct an RFP process; but the company did perform due diligence on Echopass before it could go ahead with the click-to-chat service.

Mr. Anderson said the trick to getting what you want is to maintain close ties with a small number of outsourcing vendors. That way, a company can keep tabs on its partners while maintaining a good relationship.

"The best part about it was that we didn't have to do anything," Mr. Anderson said. "If you're outsourcing, that's exactly what you want."

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noHold, Inc.