Achieving High Value through a Total Cost of Operations (TCO) Pricing Model

14 Nov 2019
by Shirley Hung, Skand Bhargava, Vani Oswal

Traditionally, a key objective for enterprises was to achieve significant cost efficiencies by partnering with service providers. However, with labor arbitrage benefits flatlining and customer expectations on the rise, enterprises are now pushing service providers to explore innovative ways to reduce costs and deliver enhanced CX. In this scenario, a pricing model that links the entire payout to the provider’s ability to reduce the Total Cost of Operations (TCO) can help deliver both cost and CX benefits, as well as reduce the risk associated with delivery transformation. This viewpoint delves into the growing popularity of outcome-based pricing models, with a special focus on the TCO-linked pricing model.

TCO-linked pricing models – which help reduce costs by leveraging non-voice channels, chatbots, self-service solutions, or automation technologies – are a win-win for both enterprises and CCO providers, as enterprises can minimize risks associated with driving transformation, and CCO providers get greater control to redesign their delivery models.

Drawing from Everest Group’s extensive research and discussions with CCO providers and enterprises, our study answers the following key questions:

  • What is driving the adoption of outcome-based pricing for CCOs?
  • What is the value leakage associated with a hybrid outcome-based pricing model, and how well is the TCO-linked pricing model placed to bridge this gap?
  • What are the challenges associated with the TCO-linked pricing model?
  • What are the key considerations to keep in mind when implementing a TCO-linked pricing model?

Membership(s)

Customer Experience Management (CXM) Services, including Contact Center Outsourcing

 

Page Count: 13