Lands' End Taps
German Market
By Terri S. Heath, SERGESKETTER & ASSOCIATES INC.

Several changes have recently taken place in Europe which have created a dynamic market for call centers. The formation of the European Union (EU) has eliminated the need for trade barriers between EU countries. This has simplified the sales and distribution process for companies, thereby creating an improved system at a lower cost.

A significant change currently underway is the European telecom revolution. The successful U.S. and Nordic deregulation of the telecommunications industry has prompted the European Union to deregulate this industry. As of January 1, 1998, all telecom services in the EU will be open for competition. With competition on the horizon, there has been a great deal of investment in new technology, such as digital switches and fiber optic cables. Competition will lower telecommunications prices, which will, in turn, motivate companies to utilize telecom as a marketing vehicle.

Buyer behavior is changing with the increase in dual income households. This has caused an increase in money per household but placed a constraint on people's time. Therefore, there is a great opportunity for companies that sell their products via the telephone, such as catalog companies, to establish call centers in Europe. Hence, the retail giant Lands' End has recognized the large and expansive European market in which to sell its products.

The European Union alone is one-third larger than the United States' market. Lands' End has taken the philosophy that it needs to be local and offer local service to the customer - their sales have demonstrated that Europe is a ripe market for its products.

Three years ago, Lands' End established its first European call center in the UK to tap the British market. This call center has been very successful in Britain. As, evidence, it has grown to 350 positions in only three years.

An Explosive German Market
After establishing itself in an English-speaking environment, Lands' End recognized the importance of one of Europe's largest markets: Germany. The German market is a key market in Europe to tap. Germany alone comprises approximately twenty-nine percent of the entire European Union's GDP (15 member states.) Lands' End first entered the German market from its UK call center. Lands' End managed to hire German nationals in England, but discovered that German nationals living outside their country lost touch with their home market. The firm realized that true success would come from locating a call center locally.

Therefore, Lands' End sought the ideal location to tap the German market and found Saarland, Germany as this site. Stephen Miles, managing director for Lands' End Germany stated, "Through our call center in Saarland, our customers are talking to someone who understands the economy, the environment, the weather, the people, the customs, and everything else. Everything our German customers see or hear or touch is all local. Our marketing is done from here, our phone center, our service, our order processing, our returns, etc."

Some companies sell into the German market with people who speak German as a second language, but Lands' End feels that success comes from its local presence in the market, especially for customer-service oriented firms.

Site Selection
Once Lands' End made the decision to establish a call center in Germany, it needed to determine the exact location. Two primary reasons the company chose Saarland were the quality of the people and the work flexibility.

To Lands' End, people are the strongest consideration in selecting a location. Miles stated, "Buildings you can build, buildings you can modify, telecommunications you can paid to have anything laid in the ground. The one thing you can't do is get people unless you're in the right area.

"People here in Saarland have a smile on the phone," continued Miles. This attribute is especially important to Lands' End as it distinguishes it business with the quality of its customer service. "Our employees are thrilled to talk to customers. You can hear it on the phone…these people are bubbly, enthusiastic, hard-working and have an excellent work ethic," commented Miles. He has found that the Saarlanders have been eager to learn customer service techniques and are dedicated to quality. Lands' End has staffed its Saarland call center primarily with housewives, recent retirees and recent graduates.

Another important criteria in Lands' End's site selection was finding a location that allowed it to do business the way it wanted. Lands' End's business necessitates operation 7 days a week, 24 hours a day. It discovered that many German states do not allow continuous operation. By contrast, any call center in Saarland can operate continuously.

Site Chosen
Lands' End chose the town of Mettlach, Germany for its call center. Mettlach is a small town of approximately 15,000 people located 40 minutes from Saarbrucken, the capital of Saarland. Located less than a mile from France, Mettlach is also only a 10-minute drive to Luxembourg, and an hour away from Frankfurt. The Mettlach facility opened in August 1996, with 50 call center operators and 90 lines into the building. Rather unique is that every keystroke made in Mettlach is sent back to Lands' End's computer in Dodgeville, Wisconsin. Although Mettlach operators use dummy terminals, all of the information is processed in subsecond response time. The system was set up by Deutsche Telecom (on time) with only a few minor hiccups in communication.

Assistance In Establishing A Call Center
Land's End received help from gwSaar (Saarland Economic Promotion Corporation) in establishing its call center. gwSaar's services include aiding a firm with its telecommunications requirements: logistics; location of the right town and building; monetary issues, such as the method of payment and currency differences; and coordination of government grants. The Saarland State government pays for both training and salary costs until each employee has the necessary skills to be productive.

Peter Gross, chief operating officer of gwSaar, said that the Saarland government has placed a particular emphasis on call centers. "We have recognized that the deregulation of the telecommunications industry will have a significant impact thorughout Europe," he commented.

gwSaar researched the growth of call centers in the United States after deregulation and found the numbers staggering. One measure of call center growth is the revenue increase from 800 numbers, as they are used heavily by call centers. 800 Service has grown from approximately 3 billion to over 15 billion inbound calls per year during a 15 year period following the deregulation of U.S. telecommuncations. According to Ann Rosenberg of the San Fransisco Consulting Group, a division of KPMG Peat Marwick, companies that establish call centers in Europe experience a compounded annual growth rate of 25 to 50 percent for the first four years. With this kind of phenomenal growth potential, the Saarland government has provided companies, such as Lands' End, with quick decisions and made call centers an economic priority.

Lands' End's Results
After only a few months of operation, sales from Lands' Ends' Saarland call center have exceeded expectations. The company has already increased its number of operators. Its Mettlach facility currently uses one-half of one floor of space in the building. There are three floors in total that Lands' End expects to fill in the future.

Lands' End is optimistic about the German market and anticipates it will significantly grow its business there. Germany is one of 15 countries in the European Union, but comprises nearly one-third of the EU's GDP. This alone demonstrates the huge potential of this market, and Lands' End will certainly reap these benefits from its Saarland call center.