P.V. Kannan, Co-founder and CEO
In a previous post on self-sabotaging customer relationships, we have learned of the dangers of measuring the wrong things. But there are many other ways for businesses to self-sabotage, and unfortunately, traps and pitfalls lay everywhere. In this second installment of how companies self-sabotage, I will focus on how companies pay for agent services in a way that disincentivizes productivity. It can also increase risk. I am by no means suggesting that providers of contact center services are villains, however, some of them do have some tricks that the good guys often fall for.
Ways to Self-Sabotage #2: Disincentivize Productivity
Contact center service providers often use pricing models that are based on agent time such as per-hour billing and per-month billing for full-time employees. With the mindset that “cheaper is better,” many companies go with whichever rate they perceive as least expensive. In most cases, that’s the per-hour rate. What they don’t take into account, however, is agent productivity.
In the per-hour billing model, there is little or no incentive for the service provider to make productivity improvements and therefore no continuous improvement benefit for either the service provider or the customer. While a rate of $9 per hour may seem attractive, if only 3 transactions are completed in the hour, the cost per transaction is $3. Another service provider with a rate of $2.50 per transaction, could complete 4 or 5 transactions per hour through efficiency improvements. In that scenario, the service provider makes better margins, the client company has a lower cost per transaction, and the consumer is more satisfied because of shorter handle time and less effort.
In a real-world example, a major international hotel chain was looking to institute a live chat program to help consumers book rooms. While one chat service provider offered a per chat price of $3.50 per chat, the other provider offered services at an hourly rate of $8 per hour. The company’s leadership worked on the assumption that each agent would handle four chats in an hour, which would be less than the per-chat rate of $14 per hour (four chats at $3.50 each). There was just one problem. Since the competitor who offered the hourly rate was focused on maximizing billing, there was no incentive for agent productivity. As such, when the hotel chain went live on chat, the agents only ended up handling two chats an hour. There was no incentive for the agents to handle calls quickly, and at $8 per hour, the cost ended up being $4 per chat. The hourly model also leads to other behaviors that people don’t see. Agents would transfer the consumer to another queue, or worse -- an 800 number. These behaviors were hidden because the only thing the client company saw were the billing numbers. Needless to say, once the company realized this, it dropped the hourly provider in favor of the company whose agents moved at a faster clip. Not only did it provide a much more cost-effective service, but it was also more satisfying from a consumer perspective. More productive agents makes it easier for consumers to connect to companies to get things done.
Hourly vs. Outcome – Who Wins?
In the fight between an hourly billing model and an outcome-based model, the outcome-based model wins. A cost-per-transaction model incentivizes a service provider to continuously make improvements to gain efficiencies and deliver superior outcomes. These outcomes can include improved customer experience (as determined by CSAT and NPS scores), issue resolution, improved margins for the service provider, better costs-per-transaction and greater derived value for the client. The outcome-based model or per-transaction model incentivizes greater ownership of outcomes and efficiencies on the part of the service provider by using technology and quality improvement initiatives.The time is ripe to change the rules of the game. Specifically, here’s what you can do:
What to Look for in Agent Services
When selecting a chat service provider, take a close look at the agents. Look for agents that are digitally savvy and empowered by technology. These “digital chat agents” are focused on simplifying the consumer’s journeys, especially when the consumer crosses channels or devices to complete a task. Look at which company’s agents have the right skill sets and an outcome-oriented focus. Visit the contact centers and look for the technology to make agents more productive. Specifically, you should look for agents who are:
What’s really exciting is what the future holds in terms of agent productivity. Agents are increasingly working hand in hand with enterprise chatbots, and the handoff between the two is becoming more seamless and arriving faster than expected. In this new world, the sky is the limit for agent productivity.
If you’re looking to outgrow old habits that do not serve in building the customer engagement you are looking for, contact us.