Successful client-supplier relationships are built on a foundation of trust. Each party places a high degree of strategic value on the other and has confidence in the other’s judgement.

In the most successful relationships, suppliers aren’t simply box-ticking to meet key performance indicators (KPIs) and service level agreement (SLA) targets. Instead, they work closely with the client as a strategic delivery partner and are focused on delivering the best possible outcomes.

With businesses operating in increasingly competitive environments, and facing growing expectations around customer service and quality brand experiences, a box-ticking approach from suppliers is unlikely to meet your customers’ needs.

Good customer service — and the brand loyalty that it delivers — comes from understanding your customer and delivering exactly what they want, when they want it.

At Datacom, particularly in our Connect business, where our teams support more than 10 million customer conversations for government departments and organisations every year, we recognise it is a privilege to act on our client’s behalf as a true extension of their brand.

We are motivated to deliver experiences that exceed the expectations of our clients, and leave their customers feeling supported.

A platform for innovation

With a high-trust client-supplier relationship in place, the question becomes: what sort of commercial model will enable the two parties to work together successfully and deliver the best results?

In our role as an outsource partner, we see real benefits from outcomes-based agreements.

From the client side, this sort of agreement frees them up to focus on their business goals and objectives — and to build these into the outcomes-based agreement — rather than getting bogged down in technical specifications and fixed minimum SLA targets.

For us, as the supplier, outcomes-based agreements give us room to innovate to achieve better results.

Setting outcomes-based specifications with our clients means we can propose innovative solutions that incorporate new technologies or delivery models because we are not restricted by rigid technical specifications.

It also makes much more sense in the context of agile, responsive solution design. Outcomes-based agreements give us more scope to iterate and make improvements throughout the project and to respond to changing demands.

We adopt an agile approach to create rapid evolutions and improvements, underpinned by a service-excellence methodology that helps us reduce customer demand, target processes for automation, and keep customers engaged and happy.

How outcomes-based agreements can work

These partnerships are often structured with a balanced and fair contract with KPI measurements, coupled with outcome-based pricing mechanisms that promote risk and rewards to be equally apportioned to unlock optimal outcomes for both parties.

Best practice for outcomes-based relationships begins with one pricing structure (i.e. hourly rates or transaction-based pricing) then, as the relationship matures and the work stabilises, moves to a different model, shifting the commercial risk more and more towards the provider.

Successful implementation of an outcomes-based model does require a lot of data and information at the outset of a project, to validate inputs and establish a baseline for outputs.

Information needed to move to this model can include:

  • Volumes
  • Average handle time (AHT)
  • Hours of operation
  • Call profile — intraday, daily, weekly, monthly
  • Grade of service (GOS) / service levels per line of business
  • SLAs for front- and back-office transactions
  • Cases opened and closed in a month.

Ultimately, the best result for the client is that the supplier delivers a project that meets their overall business goals and objectives and elevates their customer experience. Focusing on outcomes and performance — rather than delivery mechanisms and technical specs — is often a much better way to achieve that result.

James Johnstone is Datacom’s head of commercial strategy for our Connect business. He is passionate about combining his experience in IT and customer service to advise on how to improve the service experience for our client’s customers.

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