Most commonly, people associate Contact Centres with the long-established, bums-on-seats “cost plus” model, where clients are charged based on the cost of agents plus overheads and a margin, for an agreed contract or campaign period.
However, our industry is changing. You only have to read some of the articles on CCP’s News pages to understand that the dynamics around the introduction of automation technologies, the need to add value and planning for the future mean that traditional commercial models have to be challenged by Contact Centres and clients alike, to achieve the best results going forwards. If clients and are going to keep customers happy and Contact Centres are going to remain profitable, the charging regimes need to reflect the clients’ desired results much more closely.
To get a perspective from within the industry, we looked back at some research from within the sector and spoke to David Gauntlett, Managing Director of The Prospect Factory.
The Prospect Factory is a business built on outbound calls aimed at generating leads for business-to-business (B2B) clients. David set up the business in 2008 following a number of years in the Contact Centre industry, where he’d worked to generate sales leads for some of the biggest brands. Initially, on the client side for large automotive brands, David employed telemarketing agencies using a traditional retainer model and became frustrated that the charging models didn’t always reflect performance. As a result, he chose to set up The Prospect Factory to focus on results-oriented lead generation for clients who preferred to pay for qualified prospects.
David’s perspective should give some food for thought if you’re thinking of moving towards a payment-by-results model… although it’s important to remember that not all campaigns are outbound lead generation, so there are clearly environments where other commercial models will work best.
What makes a pay-per-prospect model different?
David explains: “We use a pay-per-appointment low risk telemarketing model to get appointments for our clients’ sales teams. This contrasts with the fixed price per day or hour that most Contact Centres charge, regardless of success.
“We agree in advance what a good prospect appointment looks like and we audit against those criteria, so we only send results to the client if they meet those criteria. Then our clients are billed per appointment each month. Any appointments that get cancelled are rebooked, ideally, or credited if we can’t reschedule them.”
As you’d expect, every appointment-generation job has a different level of complexity and difficulty, so the commercial model has to be adapted to reflect the client’s needs and the characteristics of the prospect audience. David gave us some examples, but it’s vital to use experience and industry knowledge to set pricing and expectations, which is where an in-depth knowledge of the client’s sector can be very handy:
“The price depends on the difficulty of the task. In the automotive industry, for example, there is a wide range of prices per appointment, averaging less than £300 but ranging as high as £700 for the most complex (but most rewarding) appointments.
“It’s also possible to have a tiered approach, where a lower price is charged, for example, for a webinar or conference call for a smaller opportunity or more exploratory sales conversation. This reflects the size of the opportunity or the stage in the sales funnel.”
What types of client do cost-per-result models suit best?
“Any business with a tangible product offering which salespeople need to be outselling can benefit from a cost-per-appointment arrangement. The salaries earned by salespeople in high value markets mean that their time is not well used prospecting – they can add value much more effectively when they’re in front of their targets having sales conversations built on high quality, qualified appointments.
“There are many sectors that don’t suit the model though. These include the Telecoms, IT and Software, Management Consultancy and other sectors. Also, it’s virtually impossible to apply a cost-per-appointment model to any sector that isn’t B2B as there simply isn’t the value per sale to justify it.”
Considering newer commercial models
David’s opinions about the future are worth noting: “The Contact Centre and Outsourcing sector is fairly settled, with most large operators continuing to price on an hourly retainer basis. It’s not very easy to find a great Contact Centre that’s happy to charge on a per-success basis. I don’t envisage much change in the short term, because the traditional retainer model is what most Contact Centres have built their business around. It’s what they do and it’s what they’re going to prefer to carry on doing.
“That’s what makes businesses like the Prospect Factory different. We’ve built our business on a cost-per-result basis and whilst that makes us careful about who we work with, it’s what makes us different and the right match for our clients.
“There are some very useful extensions to the cost-per-success commercial model though. Contact Centres like ours are also able to offer complementary services such as mid-life customer retention calls, renewal solutions for clients with near-expiry customer contracts, and customer satisfaction calls. These all build on the positive strengths of our pre-sales appointment-setting work and add value for clients who are looking to maximise returns from their outbound Contact Centre work.”
As well as the value-adding outbound services mentioned by David, there are a number of other commercial charging models that can be applied to Contact Centre and Outsourcing work. The right model to choose depends on factors such as what a good result looks like, agent availability, industry served and the length of the campaign/relationship, but typical examples include:
• Cost plus – The more traditional approach, agent costs plus overheads plus margin, based on volume forecasts and agreed in advance;
• Unit pricing – Per call/second/minute/incident – or per appointment/sale. This model can also be adapted by volume steps or complexity levels e.g. Lower cost per sales call than for a full meeting
• Fixed price – Typically per agent hour, especially useful for inbound work
• Incentive based – Per sale/appointment, but also rewards for other metrics such as First Call Resolution, Time per call etc. Payment for results, not for time
• Gain sharing – The client and outsourcer share a proportion of the results or cost savings, often beyond a minimum threshold
• Managed service – A fully customised payment regime based on client/outsourcer partnership agreement
How can Contact Centre Panel help?
At the Contact Centre Panel, it’s our role to find the perfect match between a client’s needs and a Contact Centre’s strengths. Ultimately all negotiations about commercial agreements are between the client and the outsourcer, but we are able to help in a number of ways.
At the outset of working with any client, CCP holds a consultative discussion around the pro’s and cons of various commercial models which might be able to meet the client’s needs. The general commercial terms of engagement are then set out and reflected in the brief we send to appropriate members of our Network of over 80 Contact Centres and Outsourcers. We’ll only approach businesses that can meet the needs of the brief, including the commercial model/s chosen.
We’re profiling all of our Network Members to establish which of our 80+ partners can satisfy a wide-ranging series of client requirements, from commercial models to compliance, from lead generation to excellent customer service.
It is important to us that our clients are able to compare potential partners fairly. We carefully prepare our briefs to ensure that apples are compared to apples, that fair comparators are included in our brief so that results are expressed properly.
Following receipt of responses to the brief, CCP collates all commercial solutions in a comparative matrix, allowing the client to compare like for like. Within this stage of the process, CCP will point out any obvious anomalies. This gives our clients the best possible information to choose their preferred Contact Centre partner, to meet their own specific needs. One size does not fit all!
If you’re not sure whether your Contact Centre is meeting your needs, talk to us here at The Contact Centre Panel for an unbiased review of your current status – just contact us by email or call 0114 209 6120 to talk about your needs. We won’t push: we will only help if you need it.
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