Call centers are the front lines of businesses. They drive customer satisfaction. That’s why organizations that deploy call center activities have to get the most value from their service provider contracts. But doing that is a major challenge. In fact, studies indicate that you can lose anywhere from 40% to 70% of the value of a contract over its life. That’s a big value leakage from a contract as important as this. So if you’re leaking value from your contact, you need to plug the leaks now.
Fortunately, strategies exist to help you do that cost-effectively. Doing so provides a huge return on investment.
Forms of Value Leakage
Several forms of value leakage exist. They all eat away at a contract’s return and it doesn’t matter what industry sector you’re in. Below is a list of the most common sources of leakage:
- Failure to achieve efficiency through key metrics and SLA agreements
- Poor performance in innovation deployment
- Non-performance in the use of emerging technologies
- Failure to meet goals through the non-compliance of regulatory activities
- Non-performance because of industry or regulatory changes that render contacts unworkable
- Failure to fully leverage a service provider’s talents
You can also lose value from a call center contract when providers transfer key resources to new opportunities outside your organization, as well as when organizational issues prevent effective communications.
Factors Affecting Value Leakage
Many factors can cause value leakage. Needless to say, the factors affecting leakage from your contract depending on your specific situation. Since everyone’s situation is different, you’ll have to determine the key ones that affect you.
But in general, the factors creating value leakage fall into three broad categories: contract challenges, operational challenges, and relationship challenges. The most common triggers of value leakage include:
- Inflexible contract terms
- Change control procedures
- Talent retention (provider)
- Role instability (both organizations)
- Organizational misalignment
- Strategic misalignment
If the issues created by these factors are spotted early in the contract’s life, you should address them head-on to avoid costly and time-consuming interventions.
The key to spotting issues early is to be alert to the telltale signs that leakage is occurring. Signs to look for include: (1) questions arising about the sourcing strategy or basic reason for the outsourcing decision, and (2) a lack of fact-based data regarding issues resolution between the provider and you.
Other signs include operating procedures that don’t fit the contract terms and a mismatch between what the provider’s reports say and how the relationship feels to you.
Regular reviews at inception and along key milestones can help you spot these signs before they do severe damage.
Strategies For Addressing The Leaks
No matter how vigilant you are, however, leakages will occur. Addressing these leaks early goes a long way to helping you squeeze the most value from your contract.
The four strategies below can help you optimize contract value:
- Agree on a multi-dimensional approach and a set of tools for assessing the value of both the exchange and the provider relationship
- Create a fact-based, repeatable reporting mechanism that goes beyond traditional tools like your SLA dashboard
- Be consistent and open when focusing on critical contractual, operational, and relational factors that impact the contract
- Apply the tools and share results with all key stakeholders. You want to drive out silo thinking at multiple levels and eliminate key sources of pain points.
Stopping value leakage over the life cycle brings a high return. It’s critical to realize a high value from any contract you sign with a service provider. When the contract covers your outsourced call center, getting the most out of your contract is a must.
After all, outsourced call centers are the lifeblood of all organizations. That’s because they’re major determinants of customer satisfaction and customer loyalty—two major drivers of an organization’s profitability.
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