Imagine business models as the rudders of a cruise liner navigating the ever-changing seas of CX. Business models are shifting course for clients and service providers when it comes to customer experience management, especially on the business services front. Both parties are vested in driving similar or mutually agreed upon business objectives. Outcome-based engagements incentivize success by aligning partner rewards with client-defined outcomes.
In this blog, we unpack digital transformation through the concept of this model and why it matters more than ever in today’s market.
The limitations of the traditional approach
This model is costly and labor-centric, entailing a fixed service fee hourly or transaction-based pricing broken down to every minute. With capped stipulations and penalties, the traditional model doesn’t consider the big picture of vendors’ and clients’ interests. Both parties tend to tug away in the opposite direction as they solely focus on meeting the business objectives or outcomes to keep their end of the bargain.
Typically, this starts with the RFP process: requirements gathering, scoping, questions, proposed solutions, and quotations based on the limited information from the client. In this scenario, both parties guard much information unknown to the other. As the RFP process wears on, both parties agree upon a set of requirements within a fixed budget and time. The service provider proposes a fixed cost structure to deliver on the requirements. Despite well-meaning intentions of driving better experiences to the end customers, clients and their service partners tend to focus on meeting deliverables within the limited confines of a contract.
The problem with the traditional model is that the client and service provider are trying to manage this whole engagement in relationship to the letter of the law as dictated by that contract.
And while there’s nothing truly wrong with the basic premise of how this model operates, stepping back and taking a bigger picture tells a lot more. There’s a minimal zone where the clients’ and vendors’ priorities square up. Why is that? Both organizations have a business to run, and typically, when the foundational metrics and goals are managed using a contract’s conditions being met, the vendor has little incentive to go above and beyond the project’s defined scope. Hence, a lot of the ownership to drive “change” or new initiatives falls on the shoulders of the client. What happens is they take ownership of the implementation and the adoption, and they’re the ones ultimately responsible for the outcomes of such transformation.
In the traditional model, while most service providers and partners have the right intention to drive adoption and help customers obtain their intended ROIs, they aren’t necessarily fully vested in ensuring that these outcomes are met…
… nor are they included when these outcomes and benefits are determined by whoever they choose as their to-be transformation partner.
The service provider handles the largest customer-facing piece of a client’s organization. It makes sense to discuss with the client the outcomes of the transformation they intend to deliver to their end customers. However, this is a rare scenario.
Transformation via outcome-based engagements
There’s an evolution in how the contracts are being structured and the business models that are being applied. There is a shift in terms of where the best outcomes are going to be delivered and how they’re going to be delivered. In contrast, the outcome-based model transforms how both organizations plan and execute in each other’s best interest because each party in this equation will truly be vested in the same outcomes.
The basic premise of a robust outcome-based model is the element of shared risks and shared rewards as both parties have mutually vested interests around the same criteria and business outcomes as they lay the foundation for the engagement with the end goal in mind—with trust and transparency.
Outcome-based models will succeed or fail on the premises of trust and transparency. They are the core foundations of building a long-term, sustainable, mutually beneficial model.
Having a clear-eyed view of the business outcomes that matter most to the clients and their end customers, chalking out goals at the initial stages, helps in ascertaining the right technology partner to start working backward in this engagement model. Both parties will need to step into a zone of discomfort as they discuss and disclose sensitive information such as cost structures, profitability, and other variables. Doing so helps craft a win-win transformation strategy by identifying critical levers each party has at their disposal. Both parties are hand in glove, thanks to a clear understanding of exactly what each other is trying to accomplish with negligible scope for misalignment. A strong outcome-based engagements model hinges on aligned objectives, outcomes, and incentivization to deliver agreed-upon outcomes.
Movate supported a client offering subscription-based services to dwindle customer churn rates and maintain and grow the monthly desired active subscriber base
Let’s consider the case of a support environment. Integrating the key levers include workforce optimization involving the agents or associates, technologies/tools or platforms, and the gig workforce.
- Agents: Keeping CX and budgets in mind, right shoring is the key, depending on the location where the client delivers services and plans to spread out their support in other locations. Optimization of processes or workflows drives efficiency.
- Technology: Look at transformation from a CX practitioner’s lens rather than just a tool or service provider’s lens. Let the CX provider be involved in the whole process to drive transformation. The focus will always be to guarantee and drive CX-focused outcomes versus the technology or CX platform.
- Front-end customer-facing solutions matter as they touch, feel, and interact with and want to solve issues autonomously (self-healing component) instead of waiting on agents to assist them.
- Backend automation (powered by GenAI) that drives a better employee experience (EX) makes contacts more effective and efficient with the help of data-driven insights. GenAI’s role includes faster call summarization, translation enhancements, process automation, etc.
Doing more with less—GenAI-based LLMs (without hallucinations and bias) augment agent support and enhance their tools for optimal resolutions and higher productivity.
- Gig workforce: Leveraging a flexible, gig-based, on-demand workforce to manage the suitable types of intent with the ability to scale up and down based on need versus being very fixed and rigid. The traditional rigidity of the BPO model with forecasting, staffing, and scheduling falls short of flexing based on seasonal demand fluctuations. In today’s hybrid world of work, a flexible gig workforce is a great overlay on top of the traditional BPO model to scale up or down when needed but also provide a very high degree of support.
Gig workers who are subject-matter experts passionate about the products/brands they have used or experienced the products themselves bring an elevated support experience to their customers. The high quality of gig talent undeniably contributes to the outcome-based model.
The ability to integrate all the above levers and ensure a seamless customer journey holds the key.
The next aspect of the model is progressive value realization, which should be the goal of every technology partner on an ongoing basis. Instead of bursts of innovation at the onset and later fizzling out with the passage of time, service providers should focus on building progressive value at every partnership phase. Outcome-based models are not a “once done and over” approach.
Movate’s cost-per-result contract involved a blended approach: GenAI, Directly On-Demand gig network, and traditional BPO expertise that guaranteed the client’s cost reduction.
They never turn stale. Service providers engaging in this model often course correct and ask themselves: “What else can we do to enhance the outcome-based engagements or make the customer journey an experientially better one?” This means stretching within and outside your sphere of influence to consider the overarching customer journey to drive mutually aligned objectives: Voice of Customers (VOC), employee experiences, omni channels and touchpoints, sentiments, customer surveys, and data-driven insights.
The partnership in the outcome-based engagements model goes much deeper than the traditional models often seen in the IT or BPO industry. Movate has partnered with marquee clients in transitioning away from the conventional model.
Contact us for details on use cases or schedule a time with our experts.