Pay-per-Resolution (PPR) Model
What is the Pay-per-Resolution (PPR) Model?
A pay-per-resolution payment model allows the technological service provider to bill the customer only for the tickets or cases that are received. In such a model, the emphasis would be on achieving desired outcomes or resolutions rather than the time spent or the volume of transactions. The client is relieved of the obligation to pay an hourly/FTE/Transaction fee in addition to the cost of hiring additional agents or associates. For the client, this is an affordable invoicing solution that guarantees the best use of resources.
Challenges in Pay-per-Resolution (PPR) Model
While the pay-per-Resolution Model offers a valuable benchmark for assessing support efficiency, its implementation faces many challenges. Key challenges include:
- Balancing Cost and Quality: Maintaining balance between minimizing costs and maintaining excellent customer service is of high importance. However, excessive focus on cost reduction may lead to compromised support quality, negatively impacting customer satisfaction and loyalty.
- Reduced Employee Wellbeing and Employee EX: Employees who have positive EX are found to be happier with little or low attrition and burnout. Stringent performance targets based on PPR metrics can lead to agent burnout.
- Resource Allocation: Identifying specific support areas that require additional resources and attention can be complex.
- ROI Analysis: Calculating the Return On Investment (ROI) from PPR initiatives can be challenging, especially when cost per ticket remains unchanged while customer satisfaction levels fluctuate.
Why and where do we need pay-per-resolution model?
According to a global cost management report by Deloitte, 86% of global respondents said their companies are likely to undertake cost reduction initiatives over the next 24 months, underscoring the heightened importance of effective cost management. The PPR model is required to understand the efficiency of a contact center in resolving customer issues. The lower the cost, the better the efficiency.
The PPR model can be very successfully implemented in businesses where CX is used to measure efficiency and performance. It is applied in a wide range of industries, including healthcare, where it is used in managing patient inquiries, resolving insurance-related issues, and addressing concerns regarding medical procedures. It is also used in telecommunications, retail, and e-commerce, as well as hospitality and allied areas.
The future of the pay-per-resolution model
Artificial Intelligence (AI), Machine Learning (ML), and analytics are expected to influence the PPR model in the future. AI and ML models are expected to be used to understand, analyze, and improve predictability and performance, which may lead to a great reduction in costs. Other market developments include holistic cost measurement and cross-channel calculation, which considers the associated cost per contact for each channel used.
Benefits of pay-per-resolution model
Despite the challenges associated with the PPR Model, its implementation has many benefits:
- Efficiency Measurement: Provides businesses with a clear understanding of the cost associated with resolving customer issues, enabling them to identify areas for improvement and optimize support processes.
- Cost Reduction: By tracking PPR, businesses can continuously refine their support processes, leading to faster, more effective support resolution and ultimately reduced costs.
- Quality Assurance: Encourages a focus on providing quality customer support since the cost factor has been taken into consideration with effective management.
- Real-time feedback: This model allows organizations to track customer behavior and tailor products and services based on real-time feedback.
- Risk Mitigation: Only successful resolutions are paid for by clients, which helps reduce financial risk and allows them to concentrate on delivering quality products.
- Rewards for results: Encourages service providers to deliver high-quality, effective solutions, as the compensation is invariably connected to successful resolutions only.
This model serves as viable alternate to current business models, for businesses to assess the efficiency of their customer support operations and optimize resource allocation. It can be used to improve their customer quotients, maintain consistent CX levels, all the while balancing costs and revenue. As technology advances and organizations gain a deeper understanding of customer support dynamics, the PPR Model will evolve, becoming an even more refined instrument for driving customer satisfaction and operational excellence.
The right partner who can provide excellent contact center services including consulting, migration, integration, and transformation services, is critical for any business. An efficient model enables businesses to boost revenue by achieving lower costs per resolution and higher efficiency.