Mumbai,26th June 2023: The newfound post-pandemic resilience and adaptability are facing their biggest test as the global business landscape navigates through myriad challenges. However, amidst these transformative times, the one reign that continues to prevail is that of the customer. Engagement, retention, and monetization of customers still are the utmost priorities.
Customer experience (CX) providers have become central to this unfettered focus as they strive to deliver exceptional customer experience while accommodating budget constraints and increased efficiency demands. In this context, Boston Consulting Group (BCG) and ResultsCX have launched a report titled, ‘CXM’s Coming of Age: ‘Skin in the Game’ taking center stage’, that examines an array of commercial constructs available to service providers and breaks down some popular beliefs and myths about these models.
“Our white paper details how the business landscape is changing at a basic contractual level for the CXM service industry, ” offers Rajesh Subramaniam, CEO, ResultsCX. He adds, “Deep domain expertise and fundamental understanding of our customers’ business at ResultsCX enables us to apply an outcome-driven approach to every engagement. It also affirms how everyone benefits when a financial commitment dependent on performance and achieving success turns a mere provider into a long-term strategic partner.”
“As the CX industry goes through a transformational shift, CX providers need to take the onus on to themselves to be the drivers for expediting this change. Customers will no longer just want to simply “improve” the processes, but to transform them and drive better outcomes. The shift towards value-based models is not only inevitable but also essential for service providers who want to stay competitive in the ever-evolving business landscape,” says Vikash Jain, Managing Director and Senior Partner, BCG.
The report examines the transition from traditional models to value-based models, each offering unique pricing and engagement approaches. It also demystifies some popular myths around these models:
Margin accretive in nature: Value-based model have been found to drive uptick in margin realization when deployed effectively. Based on studies, up to 10-15% upside has been achieved over traditional models on like-to-like scope of services.
Key growth enabler, not just a margin play: Growth expectations for value-based models remain aggressive across verticals and services, with buyers expecting them to grow twice as fast as traditional models in the next five years.
Limited pureplay, mostly hybrids: Very few deals have been found to deploy pureplay value-based models. 9 out of 10 of value-based deals are hybrid in nature i.e., deploy multiple types of commercial including traditional and transaction based.
Higher win rates: A systematic approach to pitching value-based models during renewals results in higher win rates. Analysis of renewal deals revealed a win rate of 73% for incumbents, with a higher win rate (81%) when incumbents led with value-based models.
CXOs are bullish on adoption: Top leadership in buyer enterprises show optimism regarding growth and adoption of value-based models. COOs have been found to exhibit the highest level of confidence among CXOs.
Paves way for longstanding partnerships: Positive experiences with value-based models not only help maintain business in existing buying centers but also translate into expanding to new buying centers.
Lastly, the report discusses how service providers can navigate the complexities around these models and embrace the change. It elaborates upon some key factors that need thinking about, that will act as catalysts and enable both the buyers and service providers to widely adopt a “skin in the game” approach over the coming years. In conclusion, the transition to value-based models is a strategic move that benefits both providers and buyers, but it requires preparation, flexibility, and a willingness to adapt to new ways of doing business.