A Cheaper Alternative To Outsourcing

When calls to the reservation line at Choice Hotels International Inc. surged after an ad campaign earlier this year, Don Brockway, Choice’s vice president of world-wide reservations, found his call centers short-staffed. So he quickly arranged to add as many as 20 agents per shift.

Mr. Brockway didn’t call a temporary-help agency or an outsourcing firm. Instead, the additional workers were employees of 1-800-Flowers.com Inc., a provider of flowers and gifts, through an unusual arrangement under which the companies essentially rent call-center employees to one another.

“I just picked up the phone,” recalls Mr. Brockway. “They were able to turn it around in three days.”

Noah Gans, an operations professor at the University of Pennsylvania’s Wharton School, says he has never heard of such an arrangement, but he can see the advantages.

Companies with call-center operations typically accommodate peaks and valleys of call volume by hiring employees seasonally or contracting with outsourcing firms. But those tactics have disadvantages: Uneven schedules may deter high-quality applicants, and outsourcers can be expensive.

Choice — a franchiser with brands including Comfort Inn, Quality and Clarion — and Flowers say the deal helps them reduce reliance on outsourcers.

It also helps bolster recruiting and retention because call-center employees have more varied work and are less subject to a seasonal business cycle. Other companies with call centers are seeking similar arrangements “to save money instead of having to outsource at higher rates,” says Lou Orsi, Flowers’ director of vendor relations and strategic projects.

The companies share workers at three facilities: Choice call centers in Grand Junction, Colo., and Minot, N.D., which together employ about 500 to 700 agents, and a center in Alamogordo, N.M., with about 400 Flowers agents. They are discussing adding a second Flowers site. At a given time, as many as 100 agents may be taking calls for the other company.

Each company hires and pays its own employees. When they tap the other’s employees, they pay a per-minute fee. The companies typically lend each other employees for weeks at a time; in some cases, though, a worker might be asked to change assignments in the middle of a shift.

The changes can trip up employees. Once, Rick Hillman, a Choice agent in Grand Junction, accidentally gave the wrong greeting to a caller. Now, he puts a card with the Flowers greeting at his desk when he is answering Flowers calls. The former teacher likes the variety. “When you sit down and sell hotel rooms for eight hours a day” selling flowers is “a nice break,” he says.

The deal works in part because Choice and Flowers have complementary business cycles. The high season for calls to Choice is mid-May through early October, while Flowers’ call volume increases between October and May, with surges at Christmas, Valentine’s Day and Mother’s Day.

Indeed, before they found each other, Choice and Flowers were looking for partners.

With the help from Flowers, Choice no longer uses outsourcers. Flowers does, because Choice doesn’t have enough employees to satisfy its peak-season needs. Mr. Brockway says the Flowers workers are about 15 to 20 cents per minute cheaper than U.S.-based outsourcers, and they are more effective. Choice’s own call-center workers in Grand Junction and Minot start at about $8.75 an hour, plus incentives.

Mr. Brockway and Mr. Orsi study each other’s “conversion rates” — or the percentage of calls that result in a sale — daily. If a performance or discipline problem arises with a loaned agent, managers from the two companies discuss it together. Managers may bolster training for a broadly recurring problem, offer coaching to individual laggards, or decide a person isn’t meant to switch-hit.

Choice and Flowers have had to overcome some hurdles. For one, executives at both companies agree the Choice agents were generally better salespeople than the Flowers staffers, because it is easier to sell flowers than hotels. Most people call 1-800-Flowers to make a purchase, while many Choice callers are shopping around. Typical conversion rates are around 75% at Flowers and about 40% at Choice.

When the companies began sharing workers, Choice agents handling Flowers calls racked up conversion rates as good or better than the Flowers in-house staff. But the Flowers agents selling hotel rooms lagged behind experienced Choice agents by about eight percentage points; with additional training, they have closed the gap to about two percentage points.

Both companies learned to train more workers than they think they need because some agents who seem promising during training find the dual duties too difficult. “There have been some folks that couldn’t get it,” says Mr. Orsi. Those agents go back to handling calls exclusively for their employer.

Former teacher Rhonda Wheat has worked for Choice for four years and taken Flowers calls for two. She usually takes Flowers calls for six to eight weeks a year, around Christmas, Mother’s Day or Valentine’s Day.

She has had to learn new techniques. “Selling flowers is a lot different than selling rooms,” she says. Pitching hotel rooms usually involves finding the right amenities for customers, while selling flowers is “a lot more visual.” She has learned, for instance, to give callers detailed descriptions, such as “very lovely, delicate red fragrant flowers,” and suggests add-ons such as balloons. “We’re getting excellent-quality people,” says Mr. Orsi.

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