Case Study: ClientLogic and Logitech

Wednesday Feb 12th 2003 by Bruce McCracken
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Utilizing a powerful established customer care service provider with vast related competencies has proven to be the winning formula for PC accessories manufacturer Logitech.

Utilizing a powerful established customer care service provider with vast related competencies has proven to be the winning formula for Logitech of Fremont, California, a manufacturer of PC accessories. With limited expertise in customer care and the related technologies, Logitech chose to outsource the processes involved to ClientLogic of Nashville, Tennessee in 1997.

Since then, as the knowledge of processes and understanding of technology grew, some processes were brought back in-house while more advanced processes and technologies were subsequently implemented by the outsource provider. Along with producing a fine product line, the strategy has yielded double-digit growth with increased customer satisfaction and reduced costs proving that a winning formula can produce results even in repressed economic times.

Shoring Up Shortcomings
Michael Doyle, director of customer support for Americas region at Logitech, recalls the circumstances that led to the decision in October 1997 to outsource ClientLogic. "We had an internal help center with technical support being a separate entity from customer service. It was myself and another guy trying to figure stuff out that had already been solved before and it didn't make a lot of sense. We were not set up to work on a large call center. We were growing quickly and have seasonal fluctuations, which makes staffing a challenge. We needed to do a better job in flexibility and data collection."

Doyle relates that there were additional considerations. "Infrastructure was the big motivator. We had a homegrown call tracking system that we barely used. We weren't tied too much to technology at that point. We could take advantage of the systems and processes that they have in place."

Ramping up the processes was unconventional and would prove to be effective for Doyle. "We went about it in a backwards way compared to many folks, as we gave everything to them, then figured out what we needed to do internally instead over time as we gained expertise and understanding. We didn't specify a lot on our end as we felt that those guys were the experts on these things. Frankly, at the time, our knowledge on those kinds of things was pretty limited. Initially, we pretty much dumped everything on them; IVR, knowledge base, everything, to use their existing systems."

Brian Bingham, program manager for CRM and customer care services for IDC of Framingham, Massachusetts explains the upside in this approach. "The biggest challenges are always managing the resources and the capital expenses associated with the infrastructure, personnel and facilities. With any technology investment the decision always carries along the opportunity cost in investing in some other area. What is the true effect of how the technology will enhance the business process and is it really applicable to the industry that the company is competing in. Then there are the challenges that arise in which systems for the organization to use and how do they implement them to optimize the existing customer facing processes."

Bingham specifically cites the diverse competencies offered by ClientLogic that make them an ideal fit for the needs of a firm like Logitech. "ClientLogic is within the top ten service providers in the world. They are clearly differentiated from some of their competitors in that they can provide customer interaction services, sales/marketing, and customer service/support. They are also tie that in with analytic services, customer value analysis, and customer value optimization that can be integrated into a logistics fulfillment offering."

The Call Center and Assimilating the Agents Into the Logitech Culture
ClientLogic operates call centers in Las Vegas, Nevada and Dublin, Ireland for Logitech consumers with inbound customer service and technical support in English, French, and Spanish. The call center and the personnel interacting with the consumer are the bedrock of customer care. The call center was the first phase to be implemented. Amit Shankardass, solution planning officer for ClientLogic, explains the processes in accomplishing a successful ramp up of a call center. "Start up is one of the most challenging things in an outsourcing relationship. The ramp up process becomes a very key piece with issues around culture, training, and hiring."

"There are three parts of training. One is the general CSR training. Then we go to client specific product training. They need to think like a customer. We immerse them in the client's product and the experience of the customer. You cannot do that by putting an instructor in front of a classroom. You have to take the agent into the product environment. The third part is the culture of the client so they not only understand the customer experience but also the persona of the organization that they are representing."

Doyle relates to these tenets. "We went over there a lot to train the agents on our policies and procedures. We try to keep close ties with the agents to make them feel like part of our company. All of the agents have Logitech mice and digital cameras in their workplace and at home. We are big within our company and our partners to make our products available to them as it solidifies the relationship and enhances product knowledge. The agents feel like they are Logitech employees as much as they are ClientLogic employees. We both try to foster this."

Strategic Synergy
Beyond the call center, Logitech has given ClientLogic additional roles to play over time. In 1997 included roles were in email tech support and end user sales. End user fulfillment was added in August 1998. In the spring of 2000, ClientLogic assumed responsibility for fulfillment of all product replacements as well as the ownership of the customer satisfaction survey process.

Shankardass explains the ability of the outsource provider in wearing many hats. "This is what we do for a living. We know what interactions and technologies will work for the client, as we know the consumers. In technology we can make a significant investment and know that we can leverage that technology across multiple clients. We essentially become an application service provider of sorts for our clients in various technologies. It is around economics where outsourcing invariably works in the economy of scale, ability to leverage across multiple agents, and clients not having to build capacity."

A major contribution to Logitech success in customer care has been in giving the fulfillment process to ClientLogic. Davi Rawlings, outsource account manager for Logitech, is pleased by ClientLogic taking over fulfillment and integrating it with customer care. "Logitech is served well by ClientLogic as its fulfillment center boasts an impressive 99.98 percent outbound order-accuracy rate. ClientLogic approaches fulfillment as a vital, integrated piece of the Logitech customer experience, not a disconnected back end or operations function. ClientLogic understands that the accuracy and timeliness of the 31.1 million packages it shipped during 2001 are the most tangible, memorable part of the customer purchasing experience."

Conversely, as the time and circumstances opened the window of opportunity, Logitech brought other processes back in-house, as Doyle explains. "Initially, we pretty much dumped everything on them; IVR, knowledge base, everything, to use their existing systems. We have moved some of those systems back in-house. An example would be knowledge management. The domain experts need to handle that and we brought that in-house. We brought the call tracking in-house when Web based applications became available. That technology was not as developed before as it is now. We brought in the tracking so that we could have flexibility in our data mining and analytics."

The changing roles have produced challenges in coordination that are pivotal to success of the team in communication. Shankardass explains that the dynamics are overseen by a group of account managers responsible for the ongoing relationship and client satisfaction. "They coordinate with the members of the customer care team within Logitech, Logitech vendors and within ClientLogic. They are the glue that holds that relationship together."

Brainstorming between all of the parties is fueled by reports generated by ClientLogic from its unique perspective from the frontlines of customer interaction. "We create very robust processes around escalations, sharing of information, reports and data. The data is done in several different ways and that is the challenge with so many disparate databases. Our architecture allows us to trap all of the data points needed to manage the relationship. One part of what the account management team does is to analyze trend data to report to the appropriate parties. As we have a birds eye view of the customer, we are in many ways the feedback mechanism for the customer to Logitech."

This dynamic growing relationship reflects the concept of operating as a team for a central purpose with changing roles as dictated by capabilities of the business, forces in the marketplace and technological advances over the continuum of time.

Katherine Shariq, industry analyst in the information and communications technologies for Frost & Sullivan out of San Jose, California, says "ClientLogic has created a very successful business model, which allows companies to enter into a working relationship with them at any level of operations. Like many clients, Logitech originally hired ClientLogic to perform multi-channel customer services. However, ClientLogic's scale and capabilities enabled it to offer Logitech a multi-facetted, dynamic partnership. Not only was ClientLogic able to provide an integrated view and analysis of the customer, they were able to segment and define the customer base and work with Logitech to design a highly-specific customer loyalty program, matched to each customer's personal preferences."

"This partnership demonstrates the dynamic evolution possible from a successful outsourcing relationship. While the model provides a map to the future for a successful collaboration, it also tracks the evolution of the ClientLogic/Logitech interaction."

Moving Beyond Contractual

Doyle simply points out, "It works better as a partnership rather than a client/vendor relationship." The results would tend to indicate that the summation by Doyle is very understated, as Logitech has seen enviable growth, from $471 million in fiscal year 1999 to an estimated $960 million for the 2002 fiscal year.

Doyle further adds, "We have reduced expenses by two thirds versus revenue in the last three years, and consumer satisfaction has gone up. It's less measured in dollars than in customer satisfaction. I could not have done this in-house given the way we operate. There is no way I could have maintained the service level doing this in-house."

Bruce McCracken is a business writer with specialization in outsourcing. His coverage areas are primarily in IT, eCommerce, CRM, HR, and supply chain/distribution with focus on small to mid-sized companies. He may be emailed at abatar@bsn1.net.

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