Nexus Teleservices

Remember the sub-prime mortgage financial bubble collapse a few years ago? If the potential home buyer had a pulse and could sign the mortgage loan application it was a deal. No one (broker, lender, Federal Reserve, Congress) looked too closely at the details or asked too many questions. There was too much money to be made moving the paper and riding the expanding real estate bubble. Once the bubble popped, everyone got torched.

The US economy still has not recovered with extensive “shadow inventory” of defaulted housing on US banks balance sheets waiting to go through the bankruptcy process. Why waiting? The US banks want to delay recognizing losses on their balance sheets (i.e., mark to market) in addition to adding to the glut of housing, depressing prices even further, reducing their balance sheets even further. It is not surprising that investors are hammering the US banks and will continue to do so until they are fully deleverage of this toxic mortgage debt.

If you were in the call-center outsourcing business during the run up of the mortgage financial bubble, you were inundated with programs to market to the consumer. These programs were generally sales lead generation, hot transfer to a loan officer, or some variation. You were probably making a lot of money while the bubble lasted and then BOOM it all stopped.

Well, look out now but the market for US student loans is nearing that stage of bubble expansion. US student loan debt is now at $830 billion having surpassed credit card debt. Read that again. All those plastic cards in your pocket and those of every other consumer in the US now represents less debt than student loans. This concept would not have been possible to conceive of 20 years ago.

Who is to blame? You have to go back to where the rules of the game are made and changed: Congress. In 1965 Congress (Democratic controlled) approves the Higher Education Act allowing millions of students to apply for Federal guaranteed student loans. In 1978 Congress (Democratic controlled) approves the Bankruptcy Reform Act disallowing discharge of student loans in bankruptcy for the initial five years of the loan period (too many doctors and lawyers were filing for bankruptcy after completing their degrees). In 1998 Congress (Democratic controlled) eliminates the ability to discharged public student loan debt in bankruptcy, along with loans related to criminal acts and fraud. In 2005 Congress (Republican controlled) amends the Bankruptcy code to eliminate the ability to discharge private student loan debt in bankruptcy. Now all student loans, public and private are virtually impossible to discharge.

Currently the percentage of student loans in default after15 years of repayment are:

• government – 25% (1 out of 4 students)
• community colleges – 30%
• 2 year for profit colleges – 40% (2 out of 5 students)

Note that there is no statute of limitations on repayment of student loan debt. The student debtor will pay, even if it is deducted from their Social Security checks! The student literally will be a slave in debtor´s prison the rest of his/her life. It is not surprising that participants in the Occupy Wall Street protests include many students who are unemployed, unable to repay their student loans and don´t see a way out of their debtor prison.

Using the sub-prime mortgage market as a parallel, more than 40% of current US home mortgages are under water; owing more on their mortgage loan than their house is worth. At some point the homeowner simply leaves the keys in the mailbox, walks away from the loan and considers the option of bankruptcy. The student however does not have the same option of filing for bankruptcy.

For additional details on the Student Loan Racket.

So, if you are currently marketing to the US student loan market, it would be wise to make plans for some major changes in the future.

Nexus Teleservices

If you are in the process of considering outsourcing some aspects of your company´s business activities you are probably using the Internet to do some level of investigation. This might include basic topics, what to do and don´t do, success and horror stories, vendors, checklists, etc. In your process of investigation you may run into the concept of “transparency”, an often abused business term with increasingly nasty political overtones if one spends any time observing the emotionally charged election season in the US. If you choose to look up the term of “transparency” in a dictionary you will get a lot of different contexts based on its type of use (politics, business, media, financial, etc.) but for this discussion let us simply focus on business. In this context as related to call-center outsourcing, let us view transparency as a management philosophy that minimizes barriers of communication to facilitate the flow of information between the outsourcing provider and the client.

In particularly you will likely find that “transparency” or “transparent” are commonly used marketing terms used by call-center outsourcing providers. Why? As a basic starting point, the outsourcing providers know that if you have little experience in outsourcing, you will likely be “uncomfortable” with the thought of letting go of part or all of the basic business process. Business managers by nature like control (i.e., manage) of the resources in the business process. So, the call-center outsourcer wants to alleviate the uncomfortable feeling of the decision-making by offering a “full-disclosure” of who, what, how, and when. The call-center outsourcing provider wants you to have the warm fuzzy feeling that by opening up the clothes, by working together as a trusted teammate, things won´t be as bad as you fear. If you have previous experience in outsourcing, the same still applies, but for substantially different reasons. In the latter case, you have been burnt at least once in the outsourcing business relationship. Things were not as they seemed and did not go as advertised. You now an instinctive ability to smell if things aren´t right and thus the call-center outsourcer, acknowledging that experience, wants to “share the pain”, to verbalize what didn´t go right, to let you know that they are going to be different and that this time it will be much better.

What do most businesses desire once they have made a decision to outsource? They want to reduce their costs, improve the quality, focus on core strengths, increase revenue/profitability and be more competitive. They basically want more for less with maybe a good surprise thrown in.

OK., so how do the call-center outsourcers provide transparency, to give you that good surprise? Some examples include: allowing you to interview and select the personnel assigned to your business process: listening to your agents talking to your customers whenever you want; conference calls and status reports with your assigned team; voice recordings of your agents and customers to listen to, access to production reports by agent to determine levels of productivity, access to outsourcer vendor management in real-time (chat), etc. These tools provide a means to facilitate the communication and accountability (transparency) of the personnel assigned to your outsourcing process. They provide a sense of “control” and direct involvement to the client of the outsourcing personnel and the process.

If transparency offers the perception of a higher likelihood of success, what would be the ideal outsourcing process for your needs? It is perhaps easiest to think of it from the vantage point if you were managing the process internally, that is, that you are NOT GOING to outsource the process. You know the process, you have the infrastructure, you choose the personnel, you determine the metrics for evaluation, you select the forms of monitoring and reporting, etc. If cost, time and management bandwidth were not considerations, you would probably not outsource. Given that is not the case, you would do all the above, with the exception of the daily management of personnel and associated costs. It is primarily the labor component in the business process that gets outsourced (and possibly infrastructure costs), with the assumption that the difference in labor and infrastructure costs is sufficient to justify the outsourcing decision.

In a good outsourcing transparency model, your outsourcing provider replicates the process with the personnel assigned having your company´s logo stamped to their foreheads. They walk and talk your company´s language to your company´s customers, but are simply located in another location, with the labor costs and management assumed by a third party.

Nexus Teleservices

You’re in business to make money. Maybe the business is simply you and your business card. Maybe it’s all in the family. Maybe it’s of average size (less than 10 employees), maybe it’s larger. Regardless of its size, you need new customers and need to maintain your existing customers. You have limited resources: time, capital, personnel, inventory, etc. You have competition, locally and probably nationally. The economy is in the dumpster. You’re in a tough spot. Your competition is in the same situation. Your competition may have more physical resources, but certainly not time and business savvy. So what to do? Increase your business revenue, reduce your costs, get stronger, and grow. Your business has to grow or it will die.

How? Start by reducing costs that do not contribute to revenue growth. Ask yourself “if I were to do it over again, would I make that investment, that purchase, which personnel hire all over again, knowing what I know now”? It´s time for you to make some cold decisions. On the revenue side you need to review the volume and profitability by product or customer type. You may need to streamline (i.e., cut) your product/customer set to focus of your resources to make the major impact on the bottom line. You may also need to reevaluate your business relationship with your customers. Your customers may be taking you in a direction that you do not want to or shouldn’t go. Remember Eastman Kodak? It was the dominant company in photographic film technology for generations. They were wed to their film development business customers. Then in like an instant the business vanished. Where are they now?

Your business has made some type of investment in marketing and sales resources. For example, Internet site, Email, advertisement, telemarketing, promotions, etc. Time to evaluate what is working and in what time frame it should be evaluated (short, medium and long term). Your Internet site is a long term investment and may be a simple online brochure or a direct selling tool. Regardless it should be kept “fresh” to keep the visitors interested. Email and advertisement usually require a series of “impressions” to spur an action from your target audience. That’s assuming you have the right message, the right timing, the right audience. Maybe it is time for you to refresh the content. For telemarketing (B2B or B2C), the more contacts and frequency will increase a buy decision from your target audience. It’s time to reevaluate how you are doing this as well.

Yes it is a good time to determine your “bang for your buck” in dialing for dollars. If your sales staff is doing the initial telemarketing prospecting, it is engaged in a “cold-calling” process. Regardless of the source of the prospect telephone number (yellow pages, membership directories, telemarketing list, etc.), this is the first time they are receiving a call from your business. Since there is no prior relationship, the reception from the prospect is probably cold and indifferent, not unlike the experience of a blind date. Add to this the uncomfortable reality that most sales reps HATE to make cold calls. It literally turns their stomachs. While sales reps know they need to make cold calls to feed their sales channel there are a multitude of reasons why they can find excuses for delaying this process. It takes a special type of sales rep to withstand 50-100 telephone hang-ups a day, every day and still have a positive attitude for the 10 really interested prospects, which with time get converted into customers. What is the general advice to the sales rep to get through a day of rejection? “They aren’t rejecting you, they are rejecting your proposition.” That is easier said then done.

If your company is in B2B there is less telemarketing hang-ups since businesses hire and pay people to answer the phone. They also pay these people to screen, block and filter sales reps from talking with the decision makers. So while it is easier to get in it takes generally multiple calls to get to the contact that you desire to begin a meaningful dialogue. It then generally requires a waiting period while your offer is evaluated before a decision is made. If your company is in B2C there is a lot of telemarketing hang-ups, but if you get past the first 15 seconds, you generally get to the decision maker, can discuss your offer and usually have some type of decision: yes, no, I’ll think about it, call me tomorrow. In either scenario your internal sales personnel, spend a lot of time (remember you can’t buy this) and physical and emotional energy getting rejected and abused by the universe of potential customers. This is not a good way to use your company’s resources. Stop doing this.

Instead outsource your cold-calling, sales prospecting to a telemarketing company or buy qualified sales prospect leads that have been verified via telemarketing (third party outsourced). Want more control of process? Have the telemarketing call-center provide your sales personnel live transfers to interested prospects, who want to discuss the product now. While a good sales prospect lead list is filtering a lot of sales noise, your sales team still has to get in contact with them. This is time-consuming and takes resources away from closing business. You will find that the cost of a live transfer sales lead is probably double that of telemarketing verified sales lead. You will find however that the conversion rate to a sale is much higher with the live transfers, generally resulting in a lower cost per sale conversion. In either case, you will improve the productivity of your sales personnel, increase revenue and reduce your cost per sale.

For any business today this translates into higher revenue and lower costs. That’s the name of the game.

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With the US economy on life support mode, your business should be thinking “outside the box” with a variety of strategies to survive, grow and prosper. This is important since the US economy is in a long-term, structural recession, implying that business growth will likely come from a combination of increased revenue per existing customer and taking business away from the competition. It is not likely that the “economic pie” will grow substantionally (1-2% per annum), forcing businesses to adopt an eat thy neighber mentality or be eaten first.

Let´s start with existing customers, the hanging fruit. Whether they purchase a little or a lot from your business, you probably need to “touch” them with more frequency and tell them how much you love them. They are keeping you and your employees with paychecks and keeping the lights on. It is pretty rare that a customer will say “Man, abc company is always contacting me about something, I wish they would take a break.” If your business has gotten that type of feedback, congratulations, you´re probably one of the first and you can mark that customer´s file as “contacted enough”, for a while. Remember your customers are what your competition is hunting for, to woo, to begin dancing with, to consumate, to get a first purchase. to get a second purchase, to get your business thrown out of the account. Face it, your competition wants to eat your lunch by getting your customers. So, you better protect your customers by reminding them all the time why they are so important to your company and why your company is best for them, now and in the future.

But we haven´t discussed how you contact your existing customers, or why you haven´t been loving them to death as you should. Yes, we know that most businesses are too busy focusing on getting new customers, but that is really an excuse for not prioritizing resources to leverage the current customer base. Since your current customers have names, addresses and telephone numbers, its prudent to start with the basics. Send them a note (regular mail or fax has more impact but an Email will also suffice) or make a telephone call letting them know that their business is appreciated. Let them know about something new about your company´s products or services and ASK THEM them if is there anything that your company could do to improve the relationship with them and then listen. Amazing what the human voice will discern that a chat, tweet, an Email will not provide.

So your time and resources are limited to make this outgoing touching excercise? Then hire a call-center outsourcing company to do this under your direction. The cost versus benefit is easily justified. As an example, assume that your company has 1000 custromers, an average sale is $500, with a 30% margin and via an outbound telemarketing campaign you increase sales 5% within a 30 day period. This corresponds to $25,000 in additional revenue (1000 x 0.05 x $500) and $7,500 in gross profit ($25,000 x .3). However, if you have a longer view of your marketing investment, some percentage of those existing customers that you “touched” will make purchasing decisions with a 3 to 6 month timeframe. Also, you will likely lose less customers to your competition (remember they are out there all the time trying to find the crumbs of where you last ate your lunch), since your customers have you positioned in a positive, warm and fuzzy light.

Remember all those existing customers that did not purchase in that initial 30 days? That is, the 95% that were not sufficiently motivated or needed to make a purchasing decision at that time? If you planned well, you also took the time to ask them for a referral, that is a potential new customer. This is probably the least expensive means of prospecting for new customers and one of the most effective since there is tremendous credibility when you subsequently do the not so cold, cold call. Don´t want to do the cold call at this stage? Ok, then hire the call-center outsourcing company to do the follow up cold call and simply pass back to you the “hot leads” for your internal staff to close. By the way, these potential new customers are some of the crumbs left behind by your competition where they last ate lunch.

What are you having for lunch tomorrow?

Nexus Teleservices

When a US company chooses to outsource some portion of it´s business activitiies, there is an implicit interchange of trade activities between the two parties. The level of trade activity will reflect a variety of factors, including a hard to quantify cultural affinity. That is, the cultural distance or trust between the US and another country will be a factor in the level of trade activities. Given that companies rather than individuals determine the level of international trade, what factors influence this level of “cultural trust”? These would include: race, nationality, networks, recognized group associations, with attributes as reliability, good communications, references, etc. In many instances these are the result of cultural lore and personal experiences, that is, public perceptions and beliefs.

In a study of US public attitude of cultural affinity with other countries, factors that influence this (in declining importance) are: political, ethnic and religious similarity, per capita income and English as a language. The political axis ranges from most democratic (+10) to least democratic (-10) reflecting the openness and competitiveness of political participation and whether it is a Communist regime. Other factors that negatively influence the perception of cultural affinity and the corresponding the degree of business activity are both physical distance and genetic distance (correlate negatively).

What might be driving this? This might be attributed to greater trust and reduced assessment of risks and costs between the parties (company and outsourcer).

How does the cultural affinity fare for Nexus Teleservices as a provider of offshore call-center outsourcing services for a US company?

Nexus Teleservices is located in Nicaragua, Central America. Politically Nicaragua has been democratic since the early 1990´s with various issues related to stability and governability as to be expected in a new democracy. Ethnically its population is heavily Hispanic, with a large US and European influence due to population emigration in the 1980´s. This can be contrasted with the US as it increasingly has a greater Hispanic cultural footprint given the rapid growth in the Hispanic population. Nicaragua´s population is predominately Christian, similar to the US. Per capita income is much lower than US, with the labor cost differential allowing Nicaragua to offer competitive outsourcing services. Spanish is the dominant language in Nicaragua, with increased English usage due to growing emphasis in educational programs and influx of returning expats from the US. However, in Nexus Teleservices it is the reverse. More than 85% of Nexus employees have previously lived in the US, with English being their primary language. Since Nexus Teleservices offers a US nearshore location, the distance by air is roughly 2.5 hours from Miami, FL, shorter than a commute from Chicago to LA. And while electronic communication is now “instant” there is much to be said for communicating between business parties in the same US time zone (MST). Genetically Nicaragua is a mixture of races and cultures, very similar to the US Hispanic communities.

When all is considered, Nexus Teleservices demonstrates a high cultural affinity with the US and is well positioned to offer companies a successful outsourcing business strategy.

Nexus Teleservices