Carlson Raises Call Center Flag

<B>Carlson Raises Call Center Flag</B>

By Megan Hjermstad

Carlson Wagonlit Travel's move away from onsite travel agents has reinvigorated the debate among travel managers as to whether or not onsite service levels outweigh the cost savings that are associated with using large reservation centers.

While some travel managers still are skeptical about moving to call centers, new technology and online booking systems promise to improve service and offer the personal control many said the call centers have lacked.

Carlson Wagonlit is marching forward with an initiative begun earlier this year to move the majority of its clients to a network of five call centers (<I>BTN,</I> March 6). "From a directional standpoint, we are moving faster than ever in that direction," said Ron Merriman, executive vice president of North Americas sales and account management. "We have made a few strategic decisions in the past few days indicating that we are more committed to this than ever."

Merriman said that all five regional call centers will be fully wired with its proprietary Traveler Service System (TSS) by the end of the calendar year. "The call centers will be fully integrated and connected together. If there is overload, the caller will immediately be redirected to somebody else in the system."

Merriman said callers will experience an improvement in speed of answer, as well as quality of answer. "The Traveler Service System allows us to be able to bring up traveler information anywhere that call is directed. The traveler profile and preferences are all there, in addition to normal travel policy," he said. "We're actually able to improve customer service without having personally assigned agents."

<B>Client Reactions</B>

Carlson Wagonlit has been discussing its new strategy with clients on an individual basis, Merriman said, and found that client reactions to the strategy have run the gamut. "Some of them were very impatient for TSS," he said. "If they didn't already have the call center, they pushed very hard in that direction. Some have said they don't want it."

Tom Wilkinson, president of the Travel Management Group in Alexandria, Va., said three different companies told him they have been visited by Carlson people who said that over time they are not going to support onsites.

"Companies want to know, 'Is this what everyone else is doing,' and 'Should we be talking to other agencies?' " said Wilkinson. "The rational part of me understands what Carlson is doing. Call centers are going to be less expensive. Managing onsites, bringing corporate resources to thousands of different locations and translating them, is always going to be difficult, but ultimately it is one of the real values a company can add."

John Heilner, vice president of Management Alternatives Inc. in Princeton, N.J., has spoken to one or two Carlson customers who were unhappy with Carlson's move to reservation centers.

Merriman said that some of the benefits of the call center approach include the ability to capture travel spend, negotiate on a client's behalf, use the best available technology and retain relevant information about travelers.

"Trying to negotiate with airlines for smaller clients is fiction over fact," Merriman said. "When you go and talk to individual carriers about a $7 million client and then go back and have conversations about $100 million customers, outcomes are very, very different. We are building a model that allows us to talk in multimillion-dollar increments."

Merriman added that the call center model is very consistent with self-booking tools. Whether travelers do their own booking or through TSS, it captures spend information, meets corporate policy and gets all of the spend data.

"There is somewhat of a belief that with an onsite you get a heck of a lot better service than a 250-person call center," said Merriman. "If you look at turnover, and the difficulty of hiring people, it is very difficult to keep those locations staffed up. People don't get what they believed they were getting in the first place. There are a lot of illusions that don't hold up in reality."

Carlson Wagonlit, which for very large accounts is adamant about onsite service, still will manage onsites. Wilkinson said that it is about economies of scale, as large onsites are essentially mini call centers. However, Wilkinson said, "Carlson is really showing a distinct lack of flexibility and tending to create some situations where they are offending people purely in the way they are delivering the message. They tend to be very blunt in delivering strategy."

And, said Heilner, "Carlson's unique at this point in that they are certainly pushing hard in that direction." Heilner added that there was a period two to three years ago when American Express was moving toward call centers, but they were being flexible.

"From our standpoint, we continue to believe the customer landscape is so broad that we offer travel service on a number of different kinds of platforms: large reservation centers, midsize centers, onsites and some hybrid," said Mike Woodward, vice president and general manager of the Central region for American Express Corporate Services. "At the end of the day, our role is to clearly define the options available to customers."

Woodward said slightly more than 50 percent of American Express customers still are operating onsites or dedicated offices that vary in size from dozens of travel counselors to one or two counselors.

"A lot of customers feel the need for more customized, dedicated travel operations. The large call centers have to be fairly standardized," said Woodward. "For companies that feel the need to build unique capabilities, we build a customized platform to meet their underlying requirements."

Ultimately, the decision comes down to price/value, Woodward said. As a way to offer substantive operational savings, American Express last year introduced the concept of a shared service environment, pooling reservationists across multiple customers.

However, 90 percent of American Express customers using call centers still have dedicated teams assigned to them within reservations centers. "The market has not responded to moving to a shared services environment," said Woodward.

Heilner said a company should get fairly personalized service in a well-run call center with a dedicated client team. "If 90 percent of calls are handled by that desk, you can still get people familiar with the account," said Heilner.

American Express also has invested heavily in satellite-based telephony technology that enables the company to link centers to load level calls across the centers, Woodward said. One of its goals is to use this technology to link small onsites to big centers, so that call centers can take overflow from the onsites as well as each other, and onsites no longer have to be overstaffed in order to manage service levels. "We have the ability to use some of the technology and techniques and apply each of them to an onsite environment as well," said Woodward.

The industry, Woodward added, is paying a lot more attention to going to more consolidated centers. "The trend is sort of predictable if you think about the economics of the business," he said. "As travel moves from being a profit center, a prudent travel manager considers transaction costs, operating costs and direct costs, and is adopting strategy in the face of needing to drive down costs."

Earl Foster, global travel manager for Joseph E. Seagram & Sons, agreed that there definitely is a trend toward call centers. "It is being driven both on the agency side by cost savings and on the corporate side by cost and service level improvements," said Foster. "There are much more economies of scale."

Foster said he is a fan of call centers, as he himself takes a multi-platform approach with call centers in the United States and in London for the spirit business. He has onsite operations for his other two businesses--music and entertainment--but is considering switching them to call centers as well.

Heilner said customers with onsites rarely are interested in removing them. "We certainly hear from customers in general that if they have an onsite, they want to keep an onsite," said Heilner. "They want the service."

Woodward agreed that "there is not a huge migration of customers with onsites to large res centers." However, he said that new technology, such as online booking systems, is creating more interest in call centers. "There is a whole lot of autonomy and personal choice through online booking systems, so it is a little easier to go to a consolidated center."

Wilkinson agreed that the call centers make sense if a company has integrated online booking, as some agents specialize in online booking fulfillment. "With new technology, the ability to book online and enhancements in telephony, more and more people are understanding the concept of doing business remotely," said Wilkinson. "Whether the agency is across the building or across the country is counting less."

However, others see online booking as a means to cut costs and retain the service level of an onsite. Diane Calvert, director of travel administration for Santa Barbara, Calif.-based Tenet Healthcare--who is in the process of selecting an online booking system--said that if online adoption reaches above 40 percent, she will definitely move out of the call center environment.

"Usually the onsites tend to have better agents, while in the call centers the level of expertise is not consistent," she said. She said travelers' usage of booking systems will free up agents' time, so she will be able to fulfill all travel using her existing onsites. Calvert operates an onsite at the corporate office in Santa Barbara, Calif., and at the major operating center in Dallas, Texas, and also uses a call center for the employees of the company's 113 hospitals.

Travel management companies that support onsites for existing clients are taking advantage of the opportunity afforded by Carlson Wagonlit to attract new clients as well.

"We continue to be dedicated to the onsite approach, although we are working on making them more cost-effective through an Internet approach and maybe turning three-person onsites into two-person ones," said Vince Vitti, CEO of VTS Travel Enterprises Inc. in Mahway, N.J. "If we can keep the customer service onsite, there's a real return. We're delighted Carlson Wagonlit is moving in this direction. We haven't had a single customer say they want to follow suit."

At Milwaukee-based Adelman Travel Group, 80 percent of clients have dedicated onsite travel centers in addition to four reservation centers in Boston, Milwaukee, Denver and Orange County, Calif. Adelman, which has more than 100 onsite locations now, plans to have 200 locations by the end of 2001.

"We believe this is the way to give specialized personal service to clients. We plan to build more and more of these," said Albert Adelman, chairman of the board of Adelman Travel Group. "As others are getting out of the onsite business, we are going to get into it deeper and deeper."

Adelman said the company is organized to provide onsite service with a general manager of national onsite accounts, and 12 national account managers. "These are the guts of our company," said Adelman." We have expertise in this onsite business with managers, supervisors and a set staff of support agents, so the company always gets the same service."

Adelman added that in the last 60 to 90 days he has had at least 30 inquiries about onsite capabilities and has added 10 new onsites. "If you deal with an agency or if you call an airline, you are never going to get the same person you spoke to before," he said. "The megas are going out of the business--that's not going to make people happy. It's like taking a step backward. The ones who have onsites already are not anxious to switch to some big res center."

Service is the biggest benefit of an onsite operation, said Adelman, but it can provide economies as well. As volume increases, online booking is one way for companies not to have to add people to onsite staff.

Meanwhile, St. Louis, Mo.-based Maritz Travel Co. also is continuing to implement new onsites. In the past four months Mary Lake, manager of national onsite implementation for Maritz, has been involved in two onsite implementations, each of which took 90 days to implement. Lake said the last six new customers have been divided between onsites and res centers, reflecting an overall 50-50 split.

According to Lake, clients with about $10 million to $12 million in sales find the onsites work well, while larger clients and smaller ones tend to move toward one of the seven Maritz-operated res centers throughout the United States.

Volume of the account, of course, is a deciding factor, Lake said, but so is how the company has set up branch offices throughout the country.

"A U.S. coast-to-coast company that is headquartered in New York or Philadelphia, but has a branch office in California in order to serve West Coast employees, will have to stay open later hours," said Lake. "We have to ask, 'What are their needs?' If they really want dedicated service, than they may want an onsite. But if pricing plays more of a factor, a res center can help control costs.