Before you start your outsourcing journey, it’s helpful to have a foundational understanding of SLAs and KPIs in BPO. Key performance indicators (KPIs) and service level agreements (SLAs) are both important tools for establishing expectations and monitoring output when using third-party outsourcing solutions. They provide a key framework for BPO contract management, increase transparency and visibility, and ensure that you’re getting the most out of your outsourcing experience.
So which KPIs and SLAs should you include, and how should you set your benchmark? Explore Confie BPO’s guide to establishing metrics for your BPO contracts, including helpful BPO KPI examples to keep your outsourcing operations fully aligned with your needs and goals.
How KPIs and SLAs Work in BPO Contracts
Before you can dive into the details of KPIs and SLA metrics in BPO contracts, it’s important to understand the role of both of them. KPIs and SLAs are both focused on metrics and performance, but they have different functions when it comes to managing outsourcing results.
What Are SLAs and How Do They Govern Outsourcing Agreements?
Outsourcing service level agreements are concrete terms in your BPO contract that outline what you expect from your outsourcing service. They can define several different aspects of BPO performance, including:
- Descriptions of services provided
- Responsibilities for both the service provider and the client
- Project and implementation timelines
- Performance measurement metrics and expected benchmarks
- Action plans and penalties for missing benchmarks
Clearly defined SLAs encourage communication, transparency, and accountability for both you and your BPO partner. They provide a valuable framework for aligning expectations and ensuring that you get the results you want out of outsourcing.
What Are KPIs and Why They Matter in BPO
Key performance indicators are concrete metrics designed to measure success, track progress, and identify potential issues. While SLAs establish expectations for service, KPIs actually measure performance and determine if your BPO partner is meeting those expectations.
Reputable BPO providers will track their business performance indicators and call center analytics and transparently share the results with their clients. This proves that they’re getting results and helps to verify alignment with SLAs. Along with the SLA metrics in BPO contracts, providers may use additional KPIs to support quality control even further.
Core KPIs To Include in BPO Contracts
Which KPIs are the best BPO performance indicators to include in your SLA? It’s important to tailor your KPIs and BPO outcomes measurement strategy to your unique business needs. You want the metrics you select and the success rates you establish to reflect your specific outsourcing goals.
There are a few key metrics that provide a strong high-level overview of BPO success. You can use these BPO KPI examples as a baseline, then adjust or add new metrics as needed.
Customer Experience & Quality Metrics
Many BPO providers use call centers to manage outsourced customer service and other back-office tasks, making call center metrics especially important. In particular, quality and customer experience KPIs in BPO are critical for maintaining call center performance.
- Customer satisfaction score: This is calculated by asking customers to assess their interactions with company reps, often using a scale to rate different aspects of their experience.
- Net promoter score: NPS assesses how likely a customer would be to recommend a service to others, giving an important glimpse into brand image and trustworthiness.
- First contact resolution: Customers are more likely to be satisfied if they can get prompt assistance. First contact resolution measures the percentage of customer issues that are resolved within one interaction.
- Quality assurance score: QA scores use call monitoring systems to rate representative performance based on a standard scorecard.
Operational Efficiency & Productivity KPIs
Efficiency and productivity are always top priorities for outsourcing providers. BPO teams use several metrics to assess operational efficiency in call centers and beyond, including:
- Average speed of answer: This metric measures how quickly agents are able to respond to customer calls and messages.
- Average handling time: Handling time refers to how long it takes to resolve a customer issue.
- Call abandonment rate: Your call abandonment rate refers to how often customers hang up or leave a customer service chat before they’re connected to an agent.
- Cost per call: This calculates how much it costs to handle each customer call (or other interactions when using omnichannel support).
Essential SLA Metrics and Contract Guardrails
Getting the most out of outsourcing service level agreements involves having clear, detailed guidelines. Once you determine which metrics you want to use for BPO outcomes measurement, you need to establish specific targets and guidelines to govern your business relationship. You’ll be able to refer to those guidelines if you run into quality issues, communication breakdowns, or other challenges.
Defining SLA Targets and Benchmarks
When establishing your specific targets for KPIs in BPO, research standard benchmarks for similar businesses in your industry. You can also refer to internal data and aim for targets that improve upon your previous performance. Your BPO provider will also be able to provide you with a realistic range of results in different categories.
For example, call abandonment rates often range from 5% to 8%. BPO providers with greater call volume capacity may set lower targets and vice versa. It’s important to have clear definitions for every aspect of your SLA, including what kinds of metrics to track and what constitutes successful service delivery.
Remedies, Incentives, and Reporting Requirements
Your SLA should also have a framework for what happens after service delivery. This should include both incentives for success and potential consequences for missing critical benchmarks. Don’t simply assume your BPO partner will share necessary information; explain exactly what kind of transparent reporting you expect in order to properly assess SLA alignment.
Once you establish expectations for performance, outline rewards for success and consequences for under-delivery. Your SLA should provide you with an exit plan if your BPO partner fails to deliver on the agreed-upon metrics. Additionally, you may want to offer incentives and rewards for over-performing and offering above-and-beyond service.
Aligning KPIs & SLAs With Business Goals
Successful BPO contract management involves fully customizing your KPIs and SLAs based on your long-term outsourcing strategy. There are several techniques you can use to optimize your SLA for maximum alignment and transparency.
Tailoring Metrics by Function (Customer Service, Finance, Back Office)
Internally, you use different metrics to track different areas of your business. It’s no different when working with an outsourcing provider. Establish multiple metrics to evaluate success for each function. Don’t only look at overall spend or customer satisfaction rates; use department-specific and project-specific KPIs to implement BPO outcomes measurement on a granular level.
Review, Adaptation, & Continuous Improvement
Every time you renew your contract, you should adjust your SLA. If you find that certain elements of your SLA no longer align with how your business operates, be sure to communicate with your BPO partner and make updates. Ultimately, BPO contract management is meant to benefit both the client and the provider, and regular updates ensure that everyone is on the same page.
Ready To Turn KPIs and SLAs Into Measurable Outsourcing Success?
Establishing the right KPIs in BPO and setting up a strong service level agreement is essential for creating a strong partnership and getting your desired results from outsourcing. By setting up crystal-clear, data-driven expectations based on your goals, you can operate with full confidence in your BPO provider. If issues do arise, you’ll have clear pathways toward finding a resolution, limiting friction as you embark on your outsourcing journey.
At Confie BPO, transparency and communication are key. We’ll help you navigate the complexity of SLAs and KPIs in BPO and offer full visibility to deliver the results you need. Learn how you can use metric-driven outsourcing to enhance your business operations today by visiting us online, calling 800-684-2276, or emailing us at contact@confieBPO.com.
FAQs
Discover how KPIs in BPO impact outsourcing performance through this additional Q&A.
What Is the Difference Between KPIs and SLAs in a BPO Contract?
SLAs outline ideal standards for success, while KPIs measure actual performance. SLAs should include KPIs alongside other information, including lists of services provided, conflict resolution pathways, and potential incentives for success.
Which KPIs Are Most Important for Outsourced Call Center Operations?
The most important call center KPIs for your business will depend on your goals, but they often revolve around customer experience, quality control, and operational efficiency. Examples include customer satisfaction score, average speed of answer, and average handling time.
How Often Should SLA Performance Be Reviewed With a BPO Provider?
You should review BPO performance indicators annually as your contract renews. You can also re-assess SLA standards as-needed if you experience sub-standard service or experience major business changes.
What Happens If a BPO Provider Fails To Meet SLA Targets?
The consequences of missing SLA targets depend on the consequences outlined in your contract. This can include fees and refunds, credits toward future service, more strict reporting requirements, or even contract termination.
