Choosing the right pricing model for outsourcing your contact center is critical to the long-term success for the client as well as profitability and business stability of the outsourcing partner. The pricing model can also be a performance driver if the right model is chosen.
The type of pricing model you choose for your engagement needs to align with the nature of your contact center requirements and unfortunately a lot of the times its not! Outsourcing organizations often tend to create a perception of choosing the “easy way out” than “bang for the buck” pricing models.
The complexity of reporting and forecasting is often pointed out as a limitation to freely explore the right model that gets the best of your outsourcing engagement. For some of these models your outsourced partner is going to need an accurate forecasting (+-5 to 7% variance) to be provided by you for effective planning & staffing. So for this discussion, lets assume that you have the ability to provide a stable forecasting to your partner.
With that said, the nature of your business does have a strong correlation with the cost model that will support your outsourcing needs. Does your outsourcing engagement only require inbound answering or does it involve extensive outbound calling and follow-up with your customer base etc.?. Does your contact center deal with basic enquiries, troubleshooting or consultative? Are the nature of issues your customer base contacts your organization a high volume + low variation type or low volume + high variation? Is the support model more weighed towards live support or offline support?
The four most prevalent pricing models in the industry are,
- Pay Per Transaction
- Pay Per FTE
- Pay Per Minute
- Pay Per Hour
Similar to all other pricing strategies, there is no one size fits all. The most effective pricing model for your business is dependent on the type of contact center support your business requires and also heavily rely on the nature of your business itself.
Below are some examples of industries where specific pricing models are more prevalent than the others inline with the nature of these business processes
It is a meaningful exercise to consider all aspects of outsourcing in terms of your business type, outsourced location, issue types etc. and evaluating those against the different pricing models. This will help you identify the model that will provide long terms gains for your outsourcing engagement.
Below is a sample evaluation of different pricing models compared against the potential aspects of your outsourcing engagement.
A pay for performance layer on top of the pricing model will further enhance the drive and drive a reward based performance culture for your partner base.
Advanced Pricing models and the future of contact center pricing?
Contact center pricing models are becoming advanced and sophisticated as the conventional vendor – client relationship is fading away. As the organizations continue to figure out how critical the contact center efforts (customer service) are in enabling to remain competitive and to grow the business further, the pricing models are also evolving in parallel.
Organizations are heavily investing to engage, empower and involve the outsourced partners to be a part of the holistic customer service journey and to be strategic partners rather than just be “service providers”.
To achieve the above said, there are higher-level conversations already initiated by the industry experts and consulting leaders to revolutionize the pricing models. Some examples are;
Profit sharing model? : $X paid to the partner for every $Y revenue that is generated by the outsourcing organization?. This model exists in manufacturing and distribution environments, Can this work in a customer service / contact center environment?
Pay per resolution? : Moving away from a pay per transaction pricing to a pay per completed transaction (resolved) model? Will product and process issues impact the partners ability to resolve?. Or because of the per resolution revenue model the partner will play a more leading role or VOC gathering with regards to product improvement?
Pay per satisfied customer: Partner paid for every satisfied customer instead of just HC or transaction? Will drive a more customer centric culture among the partner enterprise?
I am sure there are a lot more options to explore and evaluate than the ones mentioned above. Identifying and experimenting these options at scale requires significant modeling and monitoring but will set a revolutionary trend in taking the partnership and pricing to a whole new level in the contact center industry.
About the Author: For more information, contact Balakarthik Venkataramanan at firstname.lastname@example.org. LinkedIn Profile: https://www.linkedin.com/in/balakarthikv.