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The Dreaded PFP Model
July 13, 2018 - By: - In: Startup - No comments

Let’s get right to the point: PFP (Pay for Performance) is one of the most polarizing acronyms in the contact center industry. PFP pricing models come in many different forms, ranging across all outsourcing disciplines including inbound, outbound, non-voice and beyond. Risk sharing in outsourcing contracts is a good thing. However, I’m not in favor of PFP models that put most (if not all) of the risk on the outsourcer.

Often times, one-sided PFP models coincide with unusually challenging “vendor” management practices by the client. If you combine an unworkable pricing model with a difficult client, you know this is an unfortunate recipe.

Recently a contact center partner of ours severed a relationship with a Fortune 500 company because the PFP model and associated “vendor management” style simply did not work. In my postmortem, I learned this same client has a large “graveyard” of outsourcers who made a valiant attempt but couldn’t make the program work either.

This particular client talks of “partnership” but doesn’t practice it. To some effect, the client views outsourcers as dispensable. For instance, consider an outsourcer with very high agent attrition. That’s a red flag, right? This points to the outsourcer’s hiring and agent development practices among other issues. Well, the same holds true of clients who turnover outsourcers at an alarmingly high rate. If a client has high “outsourcer” attrition then something is clearly wrong with the client’s program and management style.

Upon further examination of this particular client’s PFP model, here’s where it all went wrong:

– The PFP rate structure was below the industry average cost-to-acquire for similar products and services
– The client didn’t quite understand the science behind data analytics
– Frequent claims of “other vendors hitting goal” but no transparent head-to-head comparatives
– The client did not allow for collaboration or idea sharing between the outsourcers
– Our outsourcer was never visited on-site by the primary client contact—this remains a head-scratcher

Put all that together and you’ve got an untenable situation, invariably resulting in the all too famous blame game directed at the outsourcer. That being said, I am not defending outsourcers outright because they’re human and, therefore, not infallible.

But, if you set them up to fail, they probably will. [Read More…]

Source: Customer Serv

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