The Stella Connect team recently had the privilege of hosting a live webinar on the complexities of BPO relationships with Mark Harmon of Choice Hotels. Choice is one of the largest hospitality chains in the world with close to 7,000 properties in over 40 countries.
Mark, Director of Partner and Performance Management at Choice, has deep industry experience navigating the dynamics of BPO relationships and provided a lot of valuable insights during his chat with Chris Vodola, Stella Connect’s Director of Client Success.
Because BPOs are such a rich and nuanced topic, we’re splitting this webinar recap into two parts. The first will focus on Mark’s advice on deciding whether or not to work with a BPO and how to choose the right one. In the second part we’ll take a deep-dive into how most effectively manage those relationships once in place.
To BPO or Not to BPO?
That is the (big, daunting, multi-faceted) question. As of today, Choice Hotels works with seven separate BPOs handling customer interactions spread across several different countries. The brand has found that these relationships, once refined, benefit the business, the workforce, and the customers in a multitude of ways.
Getting to this point didn’t happen overnight, and even the fundamental decision of whether or not to use BPOs wasn’t a simple one.
For Choice, the why always boiled down to cost-savings which, for a company as expansive and geographically diverse as they are, were poised to be significant.
Once the decision had been made to pursue a BPO relationship, Choice spent a great deal of time analyzing the pros and cons of different BPO formats, from onshore to nearshore to offshore. That careful consideration – and some trial and error – paved the way for Choice’s ultimate decision to work primarily with outsourced providers.
Offshore, Nearshore, and Onshore…Oh My!
By the time Mark landed at Choice, the BPO selection process was already underway. “They were really cautious,” he says, “and had selected a few small providers at a few sites in the U.S. to see how successful it could be and how well they could manage it.”
Initially, Choice Hotels viewed the BPOs as extensions of their existing internal call centers. Says Mark, “The BPO providers were […] managed like auxiliary sites of the internal sites we had at the time.” After growing adept at a more hands-off approach to BPO management however, Choice eventually moved to an almost fully outsourced model.
Embracing the Partnership Mindset
After a couple of years of evaluation, Mark knew it was time to identify BPOs Choice Hotels could truly partner with as opposed to manage. Says Mark, “We shifted into a true partnership mindset. That’s where the selection process had to become more robust and we had to evolve it. We started to develop a more comprehensive selection process.”
The process Choice embraced had traditional roots – sending out RFPs, reviewing terms, scheduling site visits – but, says Mark, “That model and that approach made it really difficult to figure out if we had the right cultural alignment with a BPO…How do we figure out if they’re actually the right fit for us?”
Naturally, relationships have always been the bedrock of Choice’s success as a hospitality provider. Mark knew it was important to carry that same ethos into building relationships with BPOs. Over time, Choice’s selection process has evolved into more of a courtship. Explains Mark, “We do a lot more due diligence in understanding, do they get us? Do they understand who we are? Are they relational? Do they have a good cultural affinity? Do they have a similar mindset to Choice as an organization?”
Though this approach to BPO selection is certainly more subjective (and more time consuming), Mark says it’s yielded undeniably positive results for Choice. “It’s proving to us to be significantly more successful than the overly methodical approach.”
The Nitty Gritty Details of Final Selection
Of course, Choice’s BPO evaluation process isn’t just a love fest. Structuring financial terms is always a huge part of the equation. Says Mark, “The first question for us is how are we actually being billed? [There is] per minute pricing, per billable hour, per productive or staffed hour, and all these different variations.” After careful financial analysis, Choice decided on the cost-per-call model.
Cost-per call isn’t the right pricing structure for most businesses. However, it solved some of the continued challenges Choice was running into in regards to managing the offsite workforce as well as opacity surrounding the BPO’s operations. “We’ve found this to be a much less risky pricing model than others. It puts the accountability of that piece directly on the provider.”
Mark underlines how important it is for every business to do their own analysis, understanding all the factors that might impact the terms such as forecasting, infrastructure, and protections. He also emphasizes how these financial analyses can actually steer the geography conversation, and in fact determine which BPO model makes the most sense. “We’ve had success mitigating some of the financial risk and improving geographical diversity as well.”
The Benefits of Working with a Partner, Not a Vendor
When assessing a new partner, Mark says Choice Hotels always reviews a number of factors such as workforce engagement, coaching competency, HR function and philosophy, retention, and organizational and cultural alignment. He asks, “Do they think like Choice? Do they fit with us? Do they have the same perspective about where the industry is headed and what we need to accomplish from a customer experience standpoint?”
Spending so much time on the selection process pays dividends for Choice, whose ultimate goal with any partnership is to reduce the workload for the internal team. Says Mark, “We’re not running a contact center anymore, we’re managing strategic partnerships.” Paying such close attention to cultural alignment upfront means the Choice team can really lean on the experienced professionals at the BPO. “We have somewhere in the neighborhood of 1,500 frontline reps, and those are really effectively managed by only two people now [on the Choice Hotels side].”
“We really are only doing high-level escalations in-house at this point,” says Mark. “I found that selecting the right partnerships means you can move a lot of the frontline work out of the organization.” Once a trusted provider proves they can execute, explains Mark, it’s in Choice’s best interest to just let them do what they do best.
Read Part II of the Choice Hotels BPO webinar recap as it focuses on Mark Harmon’s advice for the next step: Effectively managing a BPO partnership.