Is outsourcing a better option for in-home tech help?

Discussion
Photo: Puls/CellSavers
Aug 31, 2017

While Amazon and Best Buy have started up services that send employees out on-site to help set up smart TVs or install and configure IoT services, some big tech companies are outsourcing it.

Samsung, Google and other tech companies have begun working with Puls (formerly CellSavers) to bring an experience patterned after Apple’s Genius Bar into individual residences, according to CNBC. The in-home solution provider relies on freelancers for its technicians rather than full-time staff. Technicians offer free in-home demos and charge between $30 to $200 for repairs and installations.

In mid-August, Puls closed on $25 million in funding from an investor group that includes Red Dot Ventures, Samsung Ventures, Maverick Capital, Kreos Capital, Sequoia Capital and Carmel Ventures.

“While tech products are becoming smarter every year, it’s getting harder to configure or fix them,” said CEO and co-founder Eyal Ronen in a statement. “We’ve cracked the code on how to deliver same-day service that’s seamless to the customer, rewarding for the technician, and scalable as a business.”

Other competitors in the outsource tech space include Enjoy, run by former JC Penney CEO Ron Johnson, as well as HelloTech and Eden.

Puls claims that its software can streamline such problems by matching the skills of individual technicians to the problems faced by a given residence, ensuring the right technician with the right tools is sent out, according to CNBC.

Samsung already has a well-established relationship with Best Buy, which is rolling its own team of in-home tech advisors. Samsung Experience shops have been one of the central features of Best Buy’s turnaround over the past few years.

Google, meanwhile, seems to be embedding itself with Walmart by making thousands of items available via its voice-activated feature, Google Assistant. And while there have been no announcements to indicate Google leveraging Walmart as a base for IoT device maintenance or services, such a brick-and-mortar presence could provide advantages in competing with Amazon.

DISCUSSION QUESTIONS: Rather than build their own tech service teams, does it make more sense for retailers to outsource in-home demos, installation and repair for smart-home devices? What are the advantages and disadvantages of vendors partnering with outsourced services of this kind?

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Braintrust
"Nothing is more important than the quality of the customer experience in the customer's own home."
"Maybe it’s a Miami thing, but (wait for it) I have found Sears delivery and installation services to be far superior."
"If a retailer can place stringent enough controls and measures on an outsourced group, that strategy will be the strongest."

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15 Comments on "Is outsourcing a better option for in-home tech help?"


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Kim Garretson
Guest
4 years 8 months ago

In addition to the retailers, brands and services mentioned here, another likely source for freelance tech service providers comes from the very active sector of freelance techs serving businesses. One of the leaders in this space is Minneapolis-based Field Nation, which has raised more than $30 million in venture capital. It has the vetted techs that could be deployed to homes, too.

Chris Petersen, PhD.
Guest

For Best Buy and Amazon, there are considerable revenue and profit opportunities with in-home services. Even more important are the customer relationships which create life time value and a future portal to the home for new products and services.

The critical question with outsourcing in-home tech to third parties is — who owns the customer relationship? If the retailer does not have access to the customer relationship created via the in-home service, they have lost a gold mine of future opportunity for both services and product sales.

The other question for retailers is the quality of the experience provided by the third party. Any fails or negative experience with the in-home service will come back to haunt the retailer that recommended/sold the third party. Nothing is more important than the quality of the customer experience in the customer’s own home.

Bob Amster
BrainTrust

Outsourcing in-home tech services makes good sense if the products are not proprietary to the retailer. Proprietary brands need to be guarded more jealously than commodities. Any function that is not the core competency of the retailer can, and should, be outsourced.

Nir Manor
Guest

Clearly in-home demos and installations are not core business for retailers and specialists would have better expertise and economies of scale, so it makes sense to outsource that.

Having said that, retailers must ensure service quality since it is providing services to their clients in their name. Quality issues may negatively affect the retailer brand.

Bob Amster
BrainTrust

My sentiments, exactly.

Lyle Bunn (Ph.D. Hon)
Guest

Outsourcing and managing the process is the only way that does make sense. These skills have been well developed for corporate support of technologies and there are many examples of their use. Ongoing skill upgrades, knowledge of how to access additional information and even certification requirements, as in the case of security system installation in some states, will continue to grow. Meanwhile the collaborations among installers that enable better service reach are continuously improving. Contracting out such services is one of things that Sears did right, and which other retailers from lumber to electronics are picking up on.

Lee Kent
Guest

As long as the tech service teams are vetted and know their stuff, they can certainly get the job done. The one disadvantage that pops into my head is a third party being able to deliver the brand’s experience and culture.The brand no longer has direct control over the experience. Brands must be very careful to make sure that these outsourced parties understand and deliver the experience they expect. For my 2 cents.

Art Suriano
Guest

There are pros and cons on both sides. My first thought is to look at the headaches retailers have today because almost all of them outsource their delivery and installation of products. So many issues have occurred because they can’t find competent people and, after the success of pleasing the customer during the sale, they now have a very unhappy customer if the delivery of the item did not go well.

Tech service is a very specialized skill. So the question is, how do they manage the outsourced service? Do they have the outsourced company do it as a “pass through” so the customer believes it’s the retailer providing the service and not a third party? The days of seeing the company names on the delivery truck are gone but perhaps at least seeing the name of the company on the technician’s shirt will be a nice thing to have.

Ryan Mathews
BrainTrust

Outsourcing models are only as good as the screening allows. Freelancers have almost none of the corporate concerns that actual employees have and therefore potentially less accountability. When demand for services increases beyond the supply of qualified highly-vetted service people, it’s an open invitation for trouble.

From the retailer’s — and potentially manufacturer’s — position, outsourcing offers all kinds of advantages — lower labor costs, fewer benefits, reduced HR costs, etc. But in the end all outsourcing systems depend on two critical dynamics — the skill of the recruiter and the competency and integrity of the freelancer. And in the end, the danger to the brand is equal whether the “tech” is on staff or just a digital gun for hire. If there’s a problem the consumer is going to blame the brand, not the freelancer.

Paula Rosenblum
BrainTrust

Amazon has outsourced its “enhanced” delivery services. Home Depot has outsourced its installation services. Both were, in my opinion, utterly awful. Quality control is imperative, and I just don’t see it with outsourced services. Maybe it’s a Miami thing, but (wait for it) I have found Sears delivery and installation services to be far superior.

Mark Price
BrainTrust
Mark Price
Chief Data Officer, CaringBridge
4 years 8 months ago

There are benefits and drawbacks to outsourcing tech services for retailers. The benefits include not having to continuously retrain a team to address the latest technology, not carrying additional headcount on the books and being able to flex staff costs as demand fluctuates. The final benefit is recognizing that most retailers do not have heavy service delivery as a core competence.

The drawbacks focus on handing over a key element of customer experience to an outside team, which may or may not represent your values. Remember, customers will see the tech services team as an extension of the retailer’s brand, not as an outside group. Any misstep falls on the retailer’s head.

If a retailer can place stringent enough controls and measures on an outsourced group, that strategy will be the strongest.

Ken Morris
BrainTrust
Ken Morris
Managing Partner Cambridge Retail Advisors
4 years 8 months ago
While it may make sense to outsource installation and repair services, I think the sales process is important for brands and retailers to perform with their own dedicated staff, if at all feasible. Installation and repairs are a very technical skillset that can be effectively performed by trained technicians. These services can be very cost-effectively outsourced to companies like Puls who have a trained network of technicians. However, most of these networks are not nationwide and available in remote areas, which may limit the scope of services offered to major metropolitan areas. Sales is a different story. I think is important for companies to “own” the customer relationship and control the sales process to protect the reputation and maximize sales conversions. Cross and up-selling is an art that requires CRM data, customer context, purchase history and customer preferences that are all critical to success. Capturing the expert capabilities of an A associate and sharing that with B, C and D associates can only be done effectively with permanent associates. Smaller retailers or brands that don’t… Read more »
Shep Hyken
BrainTrust

This is simple. Does it make economic sense to outsource or hire employees? Outsourcing means pay-as-you-go. You may not make the margin, but you don’t risk the profit. Bringing it in-house could cost less. If the volume is there, that’s something to be considered.

Jett McCandless
Guest

It really comes down to quality control. If retailers partner with heavily vetted, proficient people, this is an excellent idea. Providing customers with the best service possible should be the highest priority. When a product doesn’t work as a customer anticipated, whether it’s their own fault or not, they’re going to blame the retailer. Providing them with an excellent solution makes all the difference in the world. If a customer knows they’re going to be taken care of even after the credit card is swiped, they’ll return to your store next time they need to make a purchase.

Darren Knipp
Guest

I think the pros and cons of this approach are captured well in the discussions above. I would add that the decision to outsource in-home services should also consider:

  • How robust is the offering? Is it simple enough that the risk of an outsourcer messing up is very low?
  • How differentiated is the offering? If there is “magic” and you can expect a premium, then it might make sense at least early on to invest in internal services for the adoption stage, and then maybe transition to lower-cost options as some of the fairy dust rubs off over time.
  • Lastly, you need to look at the overall margins for the business. If the core business margins are substantially higher than what you could expect for your own service, then you’d have to really be sure it was essential to the success of the offering to do the service in house. Even then, you still might be better off outsourcing, but “bulletproof” the offering further before doing so.
wpDiscuz
Braintrust
"Nothing is more important than the quality of the customer experience in the customer's own home."
"Maybe it’s a Miami thing, but (wait for it) I have found Sears delivery and installation services to be far superior."
"If a retailer can place stringent enough controls and measures on an outsourced group, that strategy will be the strongest."

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