Bringing its call center in-house and back to the U.S. helped boost eBags’ holiday business

During the 2010 holiday season, handbag retailer eBags Inc. found a weakness in its business operations: its customer service calls handled by its call center in the Philippines were not meeting the e-retailer’s standards.

“Management listened in on these calls last year and we definitely felt that our customer care wasn’t excellent,” says vice president of operations Rob Cassidy. “We decided at that time to make an investment and bring all customer care operations back to the U.S.”

So last fall, prior to the start of the holiday season, eBags, No. 114 in the Internet Retailer Top 500 Guide, moved its call center operations back to the U.S. The retailer primarily used in-house employees to handle calls, and contracted with HGS Ltd. to handle its overflow.

To eBags’ surprise, the shift actually allowed the retailer to shave about 34% off its customer care expenses because the U.S.-based customer service representatives were able to resolve customer complaints more efficiently. American customer service reps shaved about a minute and 20 seconds from each call and resolved customer issues on the first contact 80% of the time, compared with 69% for calls handled in the Philippines. The agents’ effectiveness enabled eBags to reduce its call center staff by roughly nine employees from its team, which reached 38 employees at its high point.

The improved customer service operations contributed to eBags’ strong holiday season in 2011, Cassidy says, as the average ticket for orders handled by the U.S.-based reps increased 11% compared to orders taken the previous year. About 6% of eBags’ orders are placed by phone.

EBags says sales in 2011 increased 26% over 2010 and December was the most profitable month in the retailer’s history.

The retailer spends around 1.25% of its total sales in a year on customer care, eBags says, which, according to Internet Retailer estimates of eBags’ sales would translate to around $2.5 million in 2011.