Current BPO Challenges and how to survive
Business process outsourcing (BPO) is as challenging as it can be rewarding.
Today’s customer-centric marketplace is putting even greater pressure on BPO leaders to find innovative out-of-the-box solutions to deliver a better customer experience, meet demands for lower costs, enhance wallet share, and increase margins.
The Current BPO Challenges
Large BPOs have traditionally focused on highly scalable, repeatable customer care transactions.
In many cases, the agents being deployed against these types of engagements tend to be generalists in nature and do not have the skills, training or tools to handle more complex technical support calls.
The result of the historic focus on large, scalable engagements is that many larger BPOs are faced with the difficulty of differentiating themselves from their competition.
As a result, they are facing more stringent customer KPIs, margin compression, and ultimately a commoditisation of their traditional service delivery models.
The traditional delivery structure for many customer engagements is often priced out per minute, per agent hour, or per transaction.
With high-volume, low-complexity transactions, BPOs have typically been forced to compete more on price than any other single element.
However, even with price being prioritised by the customer, performance KPIs are often made more stringent.
This inverse relationship forces BPOs to apply different operational practices, call handling guidelines, or look for less expensive labour sources, often in areas where there is no operational footprint today.
The end result is a never-ending cycle of cost structure optimization in an effort to remain competitive.
While cost optimisation efforts are a worthwhile cause, the fractional temporary gains that these changes make do not stay service delivery differentiators for long as the competition has to react to maintain their competitive position.
The end result is a price/support paradigm that continuously erodes margin.
6 Ways to Overcoming the Current BPO Challenges
To overcome the current BPO challenges BPO’s need to come up with innovative ways to break away from the cycle of decreasing margins.
1. Open new, higher-value service lines
When it comes to entering new, higher value market segments, BPOs have had limited success.
The change in focus from high-volume/lower complexity segments to lower-volume/higher complexity segments is challenging due to current structural limitations such as site location, skill set availability, technology limitations/requirements, and contact centre operational practices that do not necessarily align with supporting non-traditional market segments.
Changing the price/support paradigm has proven to be just as challenging since reporting/billing environments may not support creative methodologies.
This concept initially drove BPOs offshore; however, once this became the status quo, a new differentiator was needed.
BPOs have experimented with variations of success-based billing, but the risk of accurately assessing your success and KPI changes versus the cost associated with achieving that success and those changes has been high.
2. Tech Support as the Solution
Because of its specialised nature, tech support operations often require different personnel skills and tools, and unique operational processes.
As a result, larger BPOs have traditionally deferred this market segment to “boutique service providers” who are less concerned with scalability.
If large BPOs could easily support higher value markets and leverage their existing operating efficiencies with the same agent base they use today, would that solution be worth considering?
3. Agent Empowerment Technology as an Enabler
BPOs can use innovative customer support technologies to enhance their current service offering and provide a wider range of solutions.
For example, visual support enables more affordable customer service generalists to handle higher-value technical support calls with minimal training.
When agents can see technical issues and guide end users to solutions, a BPO can extend its service capabilities beyond their current service delivery limits.
This opens up new service capabilities with their existing customers, along with new markets and revenue streams that were, until now, unfeasible and inaccessible.
Savvy BPOs that use technology to empower their agents to provide more complex services and increase success rates also stand to reduce agent churn through increased job satisfaction.
This has a follow-on effect of earning greater customer wallet share and positions these BPOs as industry thought leaders.
The integration of intelligent visual support also wins customer mindshare.
This solution demonstrates a strong ability to think outside the box, and, because it clearly improves customer experience, it allows BPOs and their customers to engage in conversations they may not be able to have otherwise.
4. Rethinking the Pricing of Customer Experience
While customer experience is generally stated as one of the most important factors in the enterprise decision-making process, ultimately service delivery cost becomes the dominant factor when organisations are choosing a BPO.
That being said, when considering two vendors at equal cost, the ability to deliver an improved customer experience in given situations will have a significant impact on an enterprise’s decision.
BPOs that can provide enhanced first-call resolution, reduce on-site service calls, repeat calls, and reduced average handling times have a clear advantage.
Those BPOs that can find creative ways to structure their fees so they can offer enterprises a win-win scenario stand to gain a considerable competitive advantage, and greater wallet share..
5. Offer New Success-Driven Pricing Models
Using on-site servicing calls as our metric, let’s look at how visual support technology can change the traditional price/support paradigm and drive savings.
Even though performance-based pricing is difficult to implement and monitor, a BPO that can demonstrate consistent, significant savings by preventing the need for an on-site technician is in a much more knowledgeable position to implement an innovative billing approach.
For example, if a BPO can reduce service calls by 20%, where one service technician dispatch can be 15x the cost of a support call, it can propose to reduce agent fees in exchange for taking a percentage of the savings on on-site servicing calls.
Revenue generated in this way could boost a BPO’s margin, lower operating costs, while at the same time delivering significantly improved customer satisfaction – creating a win-win situation.
6. New Market Segments
The contact centre outsourcing business is shifting and leading BPOs have to stay ahead of the curve to maintain and grow their market position.
New markets are emerging such as the Internet of Things which industry analysts say will grow to 20+ billion connected devices by 2020, demanding more and different types of support.
Large BPO’s are ideally positioned to support this emerging market with their scale and breadth of services.
However, this segment will require a different approach to maximise customer value.
To effectively compete in this burgeoning market, BPO’s will have to deploy a combination of their operational expertise coupled with the correct technology to maximise their value.
Innovative technologies such as a visual engagement platform can help BPOs extend their services beyond general customer service calls and compete in higher-value call segments.
As active service providers in these segments, BPOs can propose win-win price-support structures that increase their margins, save their customers money, and deliver an exceptional customer experience.
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