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Key Performance Indicator (KPI)

Definition

Key Performance Indicator definition

A key performance indicator (KPI) is a critical indicator of the progress of business processes in reaching their objectives. It is used by different organizations at different levels to evaluate each professional services that contribute to the progress of the company and its overall performance.

Key performance indicators are categorized into two categories: quantitative and qualitative.

Quantitative is based on numerical standards of a goal while qualitative refers to the quality of the performance based on physical feelings, tastes, or opinions.

They are also measured into five types: input, process, output, outcome, and project. Since this is an embodiment of a SMART goal, it measures its objectives and individual goals through the methodology and presents it in data form.

Key Performance Indicator examples

Key performance indicators may fall into different points of measurement: financial metrics, process metrics, customer metrics, and people metrics. For instance, the assessment of net profit, cost of goods sold, and the tally of revenue vs. target fall on the financial metrics.

For people metrics, there’s the average number of employee turnover, training and seminars held for employees, and the number of open positions every quarter.

Process metrics, meanwhile, measure the number of processes it has for each role over the efficiency of these processes.

Key Performance Indicator (KPI)
Key Performance Indicator examples

KPIs by industry

Regardless of whether you call them indicators or measures, KPIs are the most crucial benchmarks for the performance of an organization or industry. Using and measuring the right KPI is a key step in the success of your business processes.

Determining what indicator you want to utilize is the hardest part of workforce management. It can be financial, customer-focused, process-focused, and many more.

KPIs vary between different sectors. These industry-specific measures will enable you to analyze your data to know your performance and create concrete decisions for your company.

KPI’s meaning in the BPO sector is also different. Many call centers use metrics that are customized to their everyday processes to measure the productivity of every call agent.

KPIs in the BPO industry

In a BPO, contact center, or call center environment, supervisors usually monitor and measure the performance of their call agents through various call center metrics.

Monitoring these KPIs allows them to analyze their everyday call volume, their call setup success rate, agent productivity, customer satisfaction, and their services’ overall customer experience.

Some common contact center KPIs include the following:

First call resolution (FCR)

Also called first contact resolution, this call center KPI tracks the percentage of incoming calls or requests that were resolved during the first interaction between call agents and inbound callers.

Solving an issue quickly within the first call contributes to an excellent customer experience. This also eliminates the need for the call center agent or the tech support team to schedule a follow-up call to solve the customer’s issue.

This metric is also a great way to assess the call center efficiency and the agent performance in your company.

Generally, the industry requires an FCR rate close to 90% to consider the call center service to be excellent, while 40% is considered the “low” end.

Customer satisfaction (CSAT)

The customer satisfaction score indicates whether a product or service exceeds customer expectations. It measures the service level of every call center agent and whether they delivered a poor or excellent solution to all the calls that the center has received.

CSAT is often measured through surveys given out as a post-call work to callers. Inbound callers are then asked to rate the service level from zero to five.

To calculate your final CSAT score, use the two highest values on your feedback surveys (commonly 4 and 5). Then, follow this equation:

CSAT = (No. of satisfied customers / Number of survey responses) x 100

Net promoter score (NPS)

The net promoter score measures both customer loyalty and customer satisfaction. It answers the question of how likely a caller would recommend the call center’s services to other people.

The total NPS score helps businesses find out if they need to improve their services, customer support, and delivery, among others to increase customer loyalty.

As a contact center KPI, NPS helps companies determine how many of their callers are enthusiastic with their service, as well as how many are not satisfied with the service.

To measure your NPS, follow this formula:

NPS = Percentage of promoters – Percentage of detractors

Customer retention rate (CRR)

Customer retention rate measures the total percentage of customers that your team has retained in a certain amount of time. This can be weekly, monthly, quarterly, or yearly.

This metric is among the most important KPIs to monitor because it impacts the company’s revenue, customer satisfaction levels, and the overall growth of the business.

A high or increasing retention rate means that your clients have a positive sentiment about your brand and that they are happy with your services.

To know your CRR, simply follow this formula:

CRR = (Total active customers at the end of a given period – No. of new customers during the same period) ÷ Total customers at the beginning of the period X 100%

KPIs in the BPO industry

Average speed of answer (ASA)

The average speed of answer, or simply ASA, calculates the average time that agents take before answering a customer’s call. This includes time spent waiting for a call agent to answer the customer’s calls.

Here is a simple formula to know your ASA,

ASA = Wait time for answered calls ÷ No. of answered calls

The industry standard ASA average speed is generally 28 seconds. A longer time than that could lead to a low customer satisfaction rate and generally a bad review from a caller.

Average abandonment rate

A call center service’s abandonment rate determines the percentage of abandoned calls made by customers who have already ended the call before even reaching a call center agent.

Abandoned calls are not uncommon in call centers as callers tend to be held up for several minutes to an hour before getting connected to a human representative.

Monitoring your team’s abandonment rate allows you to see how many callers became angry or impatient enough to leave before receiving assistance from the company.

A high abandonment rate signals that you mostly have frustrated customers which in turn, affects your customer satisfaction rate.

Here is how you calculate your abandonment rate:

Abandonment rate = (Number of calls – Number of handled calls) ÷ Number of calls x 100

Average response time

The average response time refers to the average time it takes to respond to an incoming call and the time the agent spends completing the whole conversation. It does not include time spent waiting for an agent to answer.

The most ideal response time in the call center industry is 30 seconds. The shorter your average response time is, the higher your customer satisfaction gets.

Calls blocked

Call centers can sometimes get overwhelmed when fielding calls from their customers. This is where a busy tone or signal goes through. This usually occurs when the call center cannot handle answering more calls.

Usually, the call center software is not capable of handling the current amount. When you measure KPIs for the percentage of calls blocked, you must determine if the problem is department-wide or only to an individual employee.

Additional training can be offered for call center agents who are struggling with an excessive number of active waiting calls in their lines.

Customer effort score (CES)

Customer effort score (CES) is a KPI that measures the amount of effort the customer had to apply to be able to use a product or service, have their concerns or questions answered, or get their issues resolved.

Sometimes, any call centers or contact center platforms are hard to reach. Callers had to make extra effort to get their calls answered by an agent that could help them with their concerns.

Measuring your CES can help make accurate predictions of your call center performance. Typically, callers are asked to rate the ease of their customer experience through a numerical scale or an anger-to-happiness scale.

The higher the CES a call center has, the better. A high customer effort score means that your call center provides an effortless experience for customers.

KPIs in the BPO industry

Aligning BPO employees with your KPIs and metrics

It is always advisable to track call center KPIs. It helps organizations know what to do when measuring customer satisfaction, the center’s and agent productivity, the effectiveness of their services, how many calls are being answered in a timely manner — or as soon as the agent’s phone rings, how agents are working to resolve customer issues, and how they avoid reaching even one blocked call.

BPOs have different ways of measuring their call center effectiveness, but all have standardized metrics for the industry. Typically this measurement combines specific focus areas and provides important insights about customer experience, putting equal emphasis on quality and quantity.

One of the most complicated parts of working in the call center industry is knowing and understanding call center KPI and metrics. Comprehending them makes it easier for call center agents to align themselves with the contact center and the goals that the company is working for.

This responsibility mostly falls on call center managers. They are obliged to study the different call center KPIs deeply to train their agents to work according to the specific metrics.

If you are still confused, you can ask for advice from outside consultants about measuring your call center KPIs.

Outsource Accelerator connects you with the best outsourcing companies in the Philippines, where you can save up to 70% on staffing costs. We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,500 BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing.

Outsourcing FAQ

What is What is business process outsourcing?

What is Business Process Outsourcing BPO?

Business Process Outsourcing (BPO) is the delegation of business processes to an external service provider to a nearby or farther location. BPO uses various technology-enabled services to optimize the delivery of services.

Some of the usual outsourced business functions are the following.

Payroll Accounting Human resources Customer service Sales Marketing

In the case of content providers, these could mean hiring writers, remote editors, or virtual assistants.

BPO speeds up processes and enhances efficiency. Companies that outsource some of their business processes use their time on core services and competencies.

With this shift in focus, companies improve their current processes which may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies.

Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so. Outsourcing services can also help them save costs and resources in hiring suitable employees.

How does Business Process Outsourcing work?

Business process outsourcing happens when a business taps a third-party service provider to operate some of its internal processes. Such ‘processes’ include customer service, accounting and finance, or sales.

It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.

Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.

What are the benefits of business process outsourcing?

There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:

Cost savings

Companies can enjoy savings of up to 70% by leveraging the salaries and costs in countries such as the Philippines and India.

Global market

Businesses get to access a bigger pool of talent that can fit their requirements. They can have better options in hiring employees since they are not limited to what is available in their home countries.

Global presence

At the same time, business process outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area.

Flexible workforce

BPO reduces internal local compliance obligations including providing additional office spaces to employees. Instead, organizations can hold their business operations on a remote setup, most usually having their teams in an office provided by the BPO firm.

Leverage skill

Companies cannot always do everything on their own. BPO enables them to leverage the skills of other specialist companies on more complex tasks such as accounting and IT.

Focus

Lastly, BPO enables organizations to focus on their core business functions. This is since most of their non-core business operations are done with the help of a reliable service provider.

Business process outsourcing examples

The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing millions of people worldwide.

BPO can be seen in different forms and contexts, from hiring single staff to getting an offshore team. Some examples of BPO include:

Big enterprise

Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber

Medium-size businesses

A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.

Small business and entrepreneur

It is common for small business owners to have a Virtual Assistant (VA) working for them full time and remotely from the Philippines.

What are the different types of BPO?

The type of business process outsourcing can be characterised by their specialisation, location, and size.

Generalist or specialist BPOs

Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalists, in that they offer a full range of professional services.

Meanwhile, some specialise in certain verticals such as the following.

Legal process outsourcing

Legal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area.

Knowledge process outsourcing

Meanwhile, knowledge process outsourcing enables companies to outsource knowledge-related work including research and development, innovation, and creatives.

Location

Business process outsourcing typically operates from developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.

Size of BPO

The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.

Functions of business process outsourcing

Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:

Finance and accounting

Outsourced finance and accounting services help businesses manage their books, monitor cash flow, and keep up with corporate income tax compliances without fuss.

Healthcare

Healthcare outsourcing, meanwhile, organizes various back- and front-end functions done for the healthcare and insurance industries.

Creative and content

Creative services outsourcing covers everything from post-production of Hollywood movies to newspaper and website content.

Tech, IT and development

IT outsourcing involves delegating network management, web and app development, and cybersecurity protection to IT firms in different countries.

Sales & customer support

Some BPO providers specialize in sales and customer support for pre- and post-sales transactions. This helps companies meet the expectations and demands of their customers, keeping them satisfied even after their purchase.

Marketing

BPOs and marketing firms can help in ongoing marketing, communication and branding activities for their clients. This helps them attract more suitable leads in a cost-efficient way.

Talent and HR

Businesses can delegate HR, recruitment and compliance to professional employer organizations to maximize recruitment and workforce management.

Administration

Generalist BPOs help organizations accomplish general business administration and operational activities. This includes data entry, appointment setting, and other related functions.

Supply chain management

Lastly, e-commerce stores benefit from outsourcing supply chain management to manage warehouse and delivery processes.

Top BPO companies in the world’s top outsourcing hubs

A wide range of business process outsourcing companies in different parts of the world provide utmost services to their Western and local clients. Many of them even earned recognition by award-giving bodies due to their performance in both their roles and their level of care for the employees.

Check out the top BPO companies in several outsourcing destinations below.

Top BPO companies in the Philippines Top Indian BPO companies Top South African BPO companies Business Process Outsourcing (BPO) services

With the rise of new offshore outsourcing locations, companies can have better options in terms of location and services they can delegate. However, finding a suitable BPO company can be a daunting task to be done on their own.

Good thing advisory services such as Outsource Accelerator is there to help them.

Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,500+ BPOs from different locations.

Outsource Accelerator's offerings make it easier for clients to learn about, and engage with, business process outsourcing companies worldwide.

Want to learn more about outsourcing? Check out the Inside Outsourcing book as well as the Inside Outsourcing book review today!

What is Fully Managed Outsourcing?

What is fully managed outsourcing?

Fully Managed Outsourcing is one of the many services offered online by various outsourcing companies. It is a kind of laser-focused management that takes over the business process and tracking of the organization’s KPI metrics, training and development of employees, and quality assurance for the client. When routine tasks and jobs are outsourced, the company will have more time to focus on the more essential aspects of the business.

Fully managed service

Working with a fully managed outsourcing can be beneficial to any specific organization. Despite working offshore, Business Process Outsourcing (BPO) companies can still provide a fully managed service to their clients. They ensure the best operational structure, competitive pricing structure, proven processes, and guaranteed results with their operational overseers. They can build a team and hierarchy; they do well-prepared implementation and alignment; and are also aligned to their high-quality mission, objectives, and culture. This kind of partnership promises a deliverable-based solution that can hit KPIs, targets, and metrics. Lastly, they can ensure continuous improvement as you go along with your business.

Outsource Accelerator provides you access to the best outsourcing companies in the Philippines, where you can save up to 70% on staffing cost. We have over 3,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with fully managed outsourcing.

What is a Knowledge Base?

What is a knowledge base?

A knowledge base is a system of related information. Promoting the gathering, organization, and retrieval of data about a service or a product FAQS, tips, guidelines, and rules or standards in an organization. It can also support computer system information retrieval on various matters. These data are readily available - anytime & anywhere to provide employees and customers with easy access to the information.

With modern technology, there's almost a limitless availability of knowledge base information on the internet. Consumers demand not only effectiveness but efficiency, with just a point and a click, people can already know what's the benefit of a product, know the list of cool places to visit, even the steps on how to cook a perfect dinner. Additionally, a knowledge base can be used by companies to easily keep track of all work-related information about the employee.

Knowledge-based outsourcing

There is a need for users - both internal (ie. agents), and external (customers) to effortlessly access information. Both have the primary goal of data-sharing so that information is made readily available for satisfying user query. Businesses have improved over the years through better management and usage of a knowledge base system.

Outsource Accelerator specializes in helping small & medium sized enterprises (SMEs), with 2-500 employees, typically based in the high-cost English-speaking world. We are the experts in transforming these businesses with outsourcing.

What is Standard Operating Procedure (SOP)?

What is a Standard Operating Procedure?

Standard Operating Procedure (SOP) is a set of instructions that explains how to do a critical process or workflow. Its purpose is to follow processes according to the standards of a company, organization, or industry. This helps to protect the employees, processes, and customers from errors throughout a normal workflow and create a safe work environment for the company. 

SOPs are sometimes required for compliance with the industry regulations while some institutions suggest them as a company’s best practice. This is mostly used to maintain safety and efficiency in different departments such as production, sales and marketing, customer support, finance, and legal.

Standard Operating Procedure template

For small teams and solopreneurs, SOPs are made through writing a checklist of routines that should be done. For bigger enterprises, thorough planning and taking note of processes are needed to ensure proper carrying of procedures. The integral parts of an SOP are the roles that will do the task, the frequency or how often will they do it, and the expected outcome or the deliverables in finishing the task.

SOPs in BPO companies have different standards. Their SOPs need to include compliance with administrative policies, metrics on performance management, and training and coaching sessions. 

Outsource Accelerator provides you the best outsourcing companies in the Philippines, where you can save up-to 70% on staffing cost. We have over 3,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, outsourcing.

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

The #1 outsourcing authority

Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 3,000+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.