Responding to the Recession

By Steve Michaels

Over the past few months, I’ve been asking call center owners how the recession has affected them and what they are doing to combat this economic downturn. I’ve also surveyed call center owners around the country. Overall, everyone has been affected. The drop in call volume ranges from 8 to 38 percent, while the loss of clients is from 5 to 25 percent. Most of those losses were due to cutting expenses or going out of business. One call center wrote off $50,000 in accounts receivable from clients who went out of business.

One respondent shared with me that the economy in Vermont has not been affected as much due to banks being more careful in lending practices. In Washington State, one woman said that the recession was slow to hit, but when it did, she lost about a quarter of her business from clients who went out of business. In New York State, a telemessaging call center with 950 accounts lost about thirty-five of them due to clients who went out of business, and call volume dropped 5 to 10 percent. In California, with a 15 percent drop, one call center went from a staff of twenty-nine agents to twelve. Although scheduling was a bit tighter, all of this center’s current staff are secure in their employment and grateful for their jobs. However, a Kansas business owner said that some of his trade people had fired their secretaries and outsourced calls to him at $275 per month versus paying their secretaries $275 per week. He regained about eight trade clients as a result and is doing fine.

Intensifying the problem nationwide is a reluctance by many employers to hire again until they’re convinced the economy is on firm footing. One unemployed agent said she is concerned for her future and that of her eight-year-old son. She’s had to fight off discouragement. “You don’t see a light at the end of the tunnel,” says the twenty-year veteran, “and that can be very frightful at times.” She is among hundreds of call center agents who are looking for work.

This problem was confirmed by Jim Geary in Jackson, Tennessee, who stated that he has never received so many calls from “out-of-work” agents as he has in the last quarter of 2009. Jim has been dealing with two major problems: the first comes from clients who want their charges reduced – something that has never happened before from the well-established doctors who make up his client base. The second problem is the delay in payment, which has skyrocketed. There are some long-term healthcare clinics that used to be current and are now three to four months past due. Two reasons for this are delayed insurance reimbursements and people who can no longer afford to see a doctor.

To decrease his clients’ monthly bills, Jim has increased the use of call center automation, intentionally making it harder for patients to reach an agent. He changed the “speak to an agent button” from a zero to a double-digit number, requiring callers to actually listen to the client’s prerecorded announcement. In most cases, the announcement answers callers’ question without agent intervention. This simple adjustment has saved Jim approximately 15 percent in labor, thereby reducing his clients’ bills.

In Florida, Nick Koutrakos from Call-4-Health has lost some of his smaller doctors’ offices who have either gone internal or to a cell phone. Nick said that his doctors’ patients have been slow to pay or not to pay at all, affecting the doctors’ ability to pay him. Nick’s clients are also concerned about costs, so he proactively looks for ways to reduce their bill. One method he uses for smaller clients is increased automation or voicemail. He also offers some clients a “piecemeal” type of billing, billing them only for the services they use.

Mark Herlache of TelAssist in Chicago is also feeling the recession but is doing well because of his “First Level Helpdesk” program. This program, explains Mark, enables clients to offload their simple tasks to his outsourced agents, while freeing up their higher-paid tech people. One example is helping wireless subscribers set up their accounts. Mark believes that great opportunities and lessons can be learned from these trying times.

In Ohio, Basil Pinzone stated that he has lost a fair amount of accounts from people who went out of business or switched to a cell phone. He has even offered some clients a three-month courtesy service, but most still couldn’t make it because although they gained business as a result, oftentimes they wouldn’t be paid. To balance his finances, Basil initiated a rotating layoff for his part-time staff. One laid-off employee receives unemployment for twenty-six weeks, returns to work, and then someone else goes on unemployment. He said his employees have accepted this program because he provided them all with a fair share of work without having to permanently lose his longtime, valued staff. Like others, Basil lost some accounts of doctors who decided to retire because of Medicare and Medicaid price cuts and paperwork hassles. He believes businesses need to carefully control expenses to maintain their margins.

Jim Geary noted that potential business is being lost by call centers that do not respond quickly to inquiry calls. Jim takes sales calls on his cell phone 24/7. “You wouldn’t believe the calls I receive after hours from individuals [needing immediate help],” said Jim. “The best time to sell is when a customer is in a mood to buy – that’s why I am available 24/7.”

Companies that are able to persevere during poor economic cycles will always come out on top in the end. We need to become proactive rather than reactive. If you know that something is about to happen, then prepare. According to my surveys, this is exactly what the prudent businessperson is doing. By being proactive, you will create a rapport with your clients and establish a reputation as someone who really cares about their problems and their business. Here is what others are doing to stay viable in the marketplace:

  • Selling entry-level accounts with short-term contracts, making it easy for a potential client to test the service
  • Soliciting current clients for additional business
  • Networking
  • Tightening up agent schedules
  • Being selective about replacing departing employees
  • Diverting travel and convention budgets into sales and marketing efforts

The call center industry provides employment, as well as the services that clients need and want. Despite the threat of job losses and bankruptcies that serve as powerful reminders of a bad economy, the basic reality is that these call centers are still in business. Just knowing that you are not alone or stumbling blindly through this era is huge; 2010 will surely be a better year.

From my interviews, I found call center leaders are resetting their priorities and are eager to meet their own make-or-break challenges. “You have to be resolute and determined all of the time,” concluded Jim Geary. “You also have to be alert to any situation that may lower your bottom line. If your business is suffering, it is just a matter of looking inward and fixing or changing what doesn’t work, which ultimately results in one of the upsides of a bad economy – a more productive company.”

Steve Michaels is a business broker with TAS Marketing and can be contacted at 800-369-6126 or

[From Connection Magazine January 2010]

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