The Pay-Per-Resolution BPO
One of the greatest innovations AI brings to outsourcing.
Why It Matters: Under the traditional model, BPOs are paid an hourly rate. While this model has been successful in the past, it often results in misaligned incentives. Clients impose Average Handle Time (AHT) goals for the BPO to meet. But there is no incentive for the BPO to introduce innovation that reduces the AHT below the goal set by the client. In fact, any additional efficiency reduces the BPOs hourly billings.
The New Approach: The cost-per-resolution model aligns incentives. Under this model, BPOs are paid a flat fee for each query successfully resolved. And agents are paid a percentage of the revenue for each resolution. This means that the client, the BPO, and the agent all benefit from increased efficiency.
AI - The Necessary Ingredient: For this business model to work, the BPO must identify three different prices:
(1) the client’s current cost of resolving specific query types;
(2) an accurate estimate of how much it will cost the BPO to resolve the same query; and
(3) A “middle-price” that both provides cost savings to the client and provides sufficient margin for the BPO.
Artificial intelligence is required to both perform steps one and two of the pricing analysis. BPOs must also rely heavily on AI to drive operational efficiency in order to provide a “middle price” that is attractive to clients.
The Benefits: The cost-per-resolution pricing model has two major benefits for clients:
It generally brings tremendous cost savings because the BPO is committed to driving efficiency with AI;
The agents communicating with your customers are happier. There are lower attrition rates among agents that work with AI tools to improve their performance and receive direct financial reward for efficiency.
Limited to Digital Channels:
So far we are only seeing this model successfully implemented with chat, email, and SMS support. That is because these environments allow for AI to drive the greatest efficiency. We look forward to the technology improving so that more efficiency is driven for voice support.
Let’s Talk
If you want to explore BPOs that provide a cost-per-resolution model, let’s talk. You can send an email to jwalter@zmaxinc.com or schedule a time to talk below: