For a firm to attain its profit maximization objective, the management must determine how to attain customer loyalty (Christopher & Jochen, 2007, p. 357). This will ensure repetitive buying amongst the customers and hence increased customer retention. A firm can attain customer loyalty through effective marketing. One of the strategies that the management should consider is customer care. Customer care refers to all the activities that are aimed at increasing the level of customer satisfaction in a firm (‘Manage your customer care, n.d, ¶ 1). In the current market, there are a number of firms that have been established with the objective of helping other firms improve their marketing and customer care services. These firms are either contracted or outsourced. One such firm is One Touch Direct Limited Liability Company. The firm was established in 1998 with its founders being Joe Mole and Ron Benson (‘Case study: competition, 2009, p.2).
The firm offers sales services through the call centre and marketing services to its customers. Through these services, its clients are able to increase their level of revenue by gaining new customers and increased customer loyalty. The firm’s headquarters are at Tampa, Florida. The firm has over got 1000 employees. It has established other offices in New Jersey, Ontario, New York and St. Catherine’s. The paper entails an analysis of One Touch Direct, LLC. In this case, the firm’s customer base shall be analyzed, along with the type s of services the firm offers. In addition, the local, national and global rivalry that the firm is faced with shall be examined, as well as the key competitors to the firm.
Firm’s in the call centre industry serve a large number of customers within different economic sectors. These sectors include finance, manufacturing, information technology, utilities, public services, food production, construction, entertainment and motoring amongst others. With regard to OTD, LLC, its clients include other firms within the telecommunication, financial services and entertainment (‘Case study: competition, 2009, p.2).
Analysis of call center industry
Globally, the call center industry is very large. This has resulted from the increased rate of globalization. The high rate of globalization has culminated in an increase in the degree of volatility within the industry. On the other hand, the degree of industry concentration is not high. This is due to the fact that there are a large number of small firms which are globally dispersed. This has made the market to be highly fragmented. Market fragmentation is evident from the fact that firms in the call centre industry are established in line with the different economic sectors. This means that there are a large number of firms that outsource call centre services and also a large number of suppliers of outsourcing firms. Examples of these sectors include manufacturing, finance, motoring, public service, and entertainment. Market fragmentation enables firms to effectively customize their services. This enables them to offers services related to the promotion of products and services to their customers more effectively.
To attain a significant market share, firms in this industry have formulated different competitive strategies. These include improving the quality of customer services, offering a variety of services, and product /services differentiation.
Globally, firms in the call center industry have got similar characteristics despite serving clients in different economic sectors. It is estimated that 86% of firms in this industry mainly serve their local, national or regional market.
Types of services offered in the call centre industry
Currently, the call center industry offers a diverse number of services (Mercedes, 2009, ¶ 8). Examples of these services include technical advice to their client’s customers. This enables the customers to be able to understand the proper usage of the product or services. They also operate as collection agencies. As collection agencies, firms in the call centre industry enable their clients to collect debts that have not been paid in time. This enables the firms to minimize their debts in form of bad debts. Firms in the call centre industry also provide a call centre helpline. This enables the consumers to obtain information about products and services effectively through inquiry (Mercedes, 2009, ¶ 8). These firms also provide reservations services to suppliers within different industries. For instance, firms within the tourism industry conduct a lot of outsourcing from the call centers. The call agents make effective reservations in relation to hotel and air travel booking.
The firms also offer a variety of pre-sale and post-sale services. The pre-sale services include planning for the call, identification of potential customers, and market research in relation to the competitors. Through the integration of lead generation services, firms in this industry are able to identify prospective customers.
On the other hand, the post-sale services include the gathering of feedback from customers to determine their level of satisfaction. This enables their clients to make the necessary improvement to their products and services.
In relation to rivalry, OTD, LLC faces stiff competition in its Florida local market. This is due to the fact that there are a large number of call centre firms in Florida. The high number of call centers results in price wars within the local market. This is due to the fact that these firms compete to attain a significant market share. On the other hand, their customers are demanding high customer care services at a low cost. This means that the customers are becoming more price sensitive. A price war is intensified by the fact that these firms intend to reduce the cost of operation and attain competitive advantage (‘Case study competition’, 2009, p.3). The effect is that the customers attain a high bargaining power. The call centers established in Florida offer their services in different languages (Florida call centers, 2009, ¶1). This enables the firms to differentiate their services according to the market needs. This means that these firms are able to attract a large number of clients globally.
In the US, the call centre was established in the 1960s within the airline industry. Due to increased growth within different sectors of the economy, the Call Center industry in the US has undergone rampant growth. By 2006 a total of 56,900 call centers were established within US. The finance sector has the largest number of call centers at 11,000. The Entertainment and Leisure sector has 1,500 call centers while telecommunication has 6,250 call centers. This is due to the fact that these economic sectors were amongst the first to adopt the call centers strategy. This means that the degree of rivalry within the industry is very high. As a result of intense competition, firms in the US call centre industry are experiencing a decline in their level of revenue. This means that the domestic operations of One Touch Direct will be affected.
Firms in the US are increasing outsourcing call centre services from various regions, that is, off shore outsourcing. Amongst the regions that these firms are considering include Canada, Ireland, the Caribbean region and India. The effect is that there is an increase in the level of competition within the call centre industry. The increased offshore outsourcing arises from the fact that the multinational companies in the US have perceived the possibility of saving the cost of operation through services of the call centre. The call centers help in saving costs in that the firm will not have to train a large number of employees to undertake sales and marketing services globally (Paola, 2003, ¶ 3).
The increase in offshore outsourcing arises from the fact that foreign call centre firms are relatively cheap compared to firms in US. For instance, in Jamaica, the hourly charges of the call centers range between $15.50 and $16.50 compared to that of US which ranges between $27 and $ 29. According to Paola, India, call centers’ hourly rates range between $10 and $16.50 (2003, ¶ 4). Increased offshore outsourcing means that firms in the call centre industry such as One Touch Direct, LLC are experiencing intense competition in the domestic market.
Apart from price, there are other reasons which make firms within the Indian call centre industry to become attractive for outsourcing. India’s education system is producing a large number of people who can be able to communicate in English effectively. This means that the labor force is more effective. Due to the increase in population levels, the rate of wages in this industry is relatively low. Wages represent the largest percentage of expenditure of firms within the call centre industry (‘Case study competition, 2009, p. 4). It is estimated that agents’ salaries form the largest percentage of the call centre firm’s budget at 55.1%. On the other hand, the country’s technical infrastructure is more improved. This increases the efficiency of the firms in the call centre industry.
In the recent past, the Canadian dollar has been appreciating relative to the US dollar. This has made the Canadian outsourcing firms operate within their domestic firms and compete more effectively in relation to those in US. In addition, the Canadian call centre firms are more preferred for outsourcing by diverse clients. This is due to the fact that their human resource is more effective in relation to communication since they have a neutral accent in communicating in English (Vancouver, 2006, ¶ 11). This has culminated into a large number of US firms shifting their operation into Canada. According to Christopher and Jochen, (2007), US call centre industry is expected to shrink with a margin of 2% by 2010. On the other hand, the Canadian call centre industry is expected to experience a growth of 8.6% by 2010 (p.360).
OTD, LLC has got two main competitors. One of the firms that present intense competition to OTD is Talk2Rep Company. This is due to the fact that this firm offers services that are similar to OTD’s especially the financial services. Talk2Rep Company is located at Miami, and is privately owned. Talk2Rep Incorporation was established in 2001 and had revenue of approximately $6,000,000 during the 2007 fiscal year (‘Florida call centers, 2003, ¶ 4). This makes the firm have sufficient financial resources to undertake its operations effectively. The firm is fitted with advanced contact technology to enable effective offering of services to its clients. The management of the firm has also ensured that the firm has effective human resources. The firm has multilingual human resources to enable it serve different customers.
Another local firm that presents intense competition to OTD includes; Concenex, Concenex Company was established in 1999. The operation of the firm is made effective due to its qualified human resource.Its research and development department enables the firm to develop effective communication software giving it a higher competitive edge. In its operation, Concenex has also integrated the most current communication technologies to help it in its operation. Other resources that the firm has included the unified and traditional call centers. The traditional call centre enables the firm to provide a number of web based operations such as e-mails, fax and web chat. The unified call centre enables the effective operation of the Customer Interaction Management Systems (CIMS). The communication software that the firm utilizes is mainly from Microsoft and Linux which are well designed (‘Unified and traditional call centers’ 2009, ¶ 1). The increased degree of rivalry results from the fact that the industry is becoming very lucrative and there is ease of entry into the industry. There is also increased technological growth within the supporting industry. For instance, the software industry and telecommunication network are undergoing rampant growth hence the increased effectiveness within the industry.
Customer loyalty is a paramount aspect in the financial success of a firm. This is due to the fact that it results into increased sales. One of the methods that have been identified to improve customer loyalty significantly is through improving customer care services. Different firms establish their own customer care departments internally or outsource. This enables them to reduce the cost of operation through elimination of wage costs in relation to customer care agents. Currently, there is a large number of outsourcing firms that have been established within the call centre industry. This enables them to offer customer care, sales and marketing services to firms in different economic sectors. Through customer care services, firms are able to increase their customer retention level. These firms also conduct sales promotions thus enabling firms in this industry to attract new customers. OTD, LLC offers call centre service to clients in the telecommunication, financial services and entertainment sectors. The services offered include both inbound and outbound services. The call center industry is very large due to the large number of firms in this sector. This has resulted into a low concentration within the industry. The call centre industry is also very fragmented. This is due to the fact that there are a large number of firms that are globally distributed. The degree of rivalry faced by OTD, LLC on local, national and regional scales is very high. This is due to the fact that there is ease of entry into the industry. The industry is also lucrative due to the fact that firms in other industries are incorporating the concept of outsourcing in their operation. This tends to make the industry become very lucrative. Other factors contributing to the growth of the call centre industry include increased technological innovation.In its local Florida market, the firm faces stiff competition from other firms in the industry. This is due to the fact that the services offered are slightly differentiated. Most of the firms customize their call centre services by being multilingual. This enables them to serve clients in different markets. In the national market, OTD, LLC is experiencing intense competition from a large number of firms within the sector it operates. On the other hand, the degree of rivalry is intensified by firms in the foreign market. This is due to the fact that the domestic clients are outsourcing call centre services from foreign markets especially from India, and Canada. India is more preferred in outsourcing since its prices are relatively low. On the other hand Canada’s human resource is very effective in relation to communication and hence its high rate of preference.
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