Going to the Outsource

Auto dealers are increasingly outsourcing functions such as customer relationship management, loan processing, collection and new-customer acquisition and retention.

That's because outsourcing frees the dealer to focus their resources and management on their core business — selling.

Auto dealers are finding they need to get the most from each and every customer contact. They can no longer randomly call so many customers or prospects because of “Do Not Call” legislation.

Many dealerships are mailing or emailing special offers, sending invitations to customer events, and requesting customer service feedback and direct-mail responses to quality service assessments.

It is logical that dealerships should turn to a new way to cut costs, grow margins and cash in on new technologies. By focusing on their core competency — selling automobiles — dealers can reduce overhead related to customer care. By outsourcing customer relationship management, dealers can concentrate on what they do best and do it even better.

Of course, dealers are suspicious of entrusting their most important asset — customers — to a third party. But outsourcers realize that the two most important assets an auto dealer has are their brand and their customers. Both must be handled with care or the client is lost, given the vastly competitive marketplace.

The right call center can interface with a dealer's legacy system and should be able to manage both existing and potential customer relationships in all areas. The outsourced call center should manage technology and human interaction to produce increased customer satisfaction and retention at a reduced cost.

Dealers can turn to outsourcers when they reach an operational limit. They may discover that they will need to increase their physical capacity for customer relationships but don't want to spend millions of dollars to hire staff, construct more space, and install updated technology. Such investments generally carry little guarantee of profitability and detract from the bottom line.

One company spent more than $2 million on purchasing its own high-technology hardware and software to establish an in-house call center and began hiring scores of people to staff it. After a year of continuous challenge, management abandoned the effort and turned to outsourcing. The company saved hundreds of thousands per year.

A good barometer of success in an outsourcing arrangement is the “seamless line” between the business and the customer.

The customer should not be able to distinguish between a person answering questions from an outsourced call center and a company's own customer service representative.

To achieve this seamless line, the dealer must give the outsourcer sufficient access to its internal information systems. In turn, the outsourcer's sales and marketing associates must be trained to mirror the culture of the dealership.

Outsourcing part or all of any after-hours support functions is on the rise. This is popular with consumers who are apt to telephone in the evening, when it is convenient, rather than during normal working hours.

Outsourcing reduces costs through improved use of facilities, higher productivity, and better personnel management. It can allow dealerships to improve strategic service offerings and full-cycle customer interaction.

In the competitive car business, the winners are dealerships that narrow their operational focus to their core competencies and concentrate on what they know best.

Dealers can do this best by outsourcing non-core but important functions to knowledgeable, competent partners.

Anthony Chase holds an M.B.A. from Harvard Business School and a J.D. from Harvard Law School. He is chairman and CEO of ChaseCom He's at 713-874-5800