Why Some Businesses Prefer In-House Customer Service Over Call Centers

Customer service is more important than ever—all the data backs this up. Take, for example, recent surveys that show: 

• 78% of customers say customer service is a factor in determining whether or not to shop with a given company 
• 68% of customers will pay more for a product or service if the brand is known to offer great customer service 
• Companies who prioritize exceptional customer service experiences tend to see revenues 4-8% higher than the market. 

So, managing your customer service is no insignificant task. As a result, it should definitely be kept in-house, where it can be closely managed and controlled, right?  Maybe so. Maybe not.  In this article, we’ll give you a closer look at why some teams prefer to keep their customer service in-house, and why others outsource to a call center. We have decades of experience managing outsourced call center teams, so we’ve talked to a lot of companies—both those who decided to outsource and those who didn’t.  What are the differences, and which one aligns with your business needs and goals? Here’s what we’ve found. 

Advantages of In-House Customer Service

Without a doubt, managing customer service in-house offers plenty of advantages. The big three are:  Greater control and oversight. As with any part of your business, when you manage it yourself, you have complete oversight and control over any questions, decisions, operations and management. This can also allow you to make faster decisions, since there may be less people involved to work with.  Enhanced knowledge of your products and services. When you keep your team in-house, they’re fully integrated with all of your other employees—sitting in on the same meetings, receiving the same quarterly updates, and going through the same new-employee onboarding. They’re also more likely to mix and collaborate with members of other teams, thereby creating deeper knowledge of your company, brand, operations, policies and products. The depth of internal knowledge is difficult to outsource.  Deeper integration with other areas of your business. Similarly, internal teams are easier to integrate with other business functions. Want your customer service team to collaborate with your marketing? Want your sales team to gather customer feedback from your customer service team? In-house operations are the easiest way to make that happen.  

Scenarios Favoring In-House Customer Service

In-house customer service—and the advantages it offers—can be a great benefit for some businesses. Some of the most common examples of in-house customer service that really works include:  Startups and Small Businesses. If you don’t need many agents—or perhaps don’t need even full-time customer support right now—in-house customer service can be more cost-effective. Perhaps your marketing and sales team can manage customer service part-time, alongside other responsibilities, or perhaps you just need one or two agents who can manage phone lines for your small startup. In some cases, outsourcing to a call center that uses a per-usage or shared model is just as cost-effective, and relieves internal resources.  Highly specialized or technical industries. In a few cases, training an outsourced team can be highly-demanding and require significant time and resources. This is most often the case with highly specialized or technical industries, where in-house experts would be able to provide more specialized support through deep knowledge of the product or industry. In these cases, an in-house customer service team makes sense, though it can be helpful to outsource some of the less technical aspects of customer service, such as telemarketing, lead generation or order taking, in order to free up time for internal teams.  Businesses with specific privacy or security concerns. Outsourcing can provide great privacy and security for both internal and customer data, and in some cases even improve upon in-house models. However, if your business has specific reasons for needing exceptional privacy or security, it may make sense to maintain all of your data and customer service in-house. Either way, more trust is required when outsourcing and you need to ensure you find the right partner who can prioritize safety and security for your data and operations. 

Challenges of In-House Customer Service

On the flip side, in-house customer service brings some significant challenges as well, especially as your business starts to grow and customer demand increases. Some of the challenges we see frequently with in-house teams are:  Resource allocation and operational costs. When you crunch the numbers, it’s pretty clear that managing your customer service in-house is much more expensive, especially on the front end. There’s more overhead and startup costs, and you have to manage the full cost of everything internally—software, licensing fees, physical office space, equipment—whereas with outsourcing, these overhead costs are baked into their monthly costs and spread amongst all their clients.  Staff recruitment, training and retention. This is a huge aspect of in-house customer service that requires significant time and additional resources. Team management can make or break your customer service, but that means you have to have HR staff, recruitment strategies, a focus on employee development and training, management and so on. Not only does this take time away from other priorities, it can be difficult to get right, which can make adequate staffing and training for your call center difficult. Ultimately, this leads to understaffing, burnout, and reduced customer service quality.  Scaling operations. As your business grows, customer demand and communications typically grow proportionally. However, finding ways to scale your operations when you’re managing things in-house can be costly and time-consuming. For example, adding on a new hire means committing to another full-time salary, as well as recruitment, benefit, training and retention costs. Scaling too soon can lead to more non-productive time, reducing cost-effectiveness, but scaling too late reduces customer service quality and increases risk of burnout and agent turnover.