Watermelon Metrics and Other BPO Pitfalls

Along with my Opus Research colleagues, I’ve been doing a lot of research on the future of contact center outsourcing. We’ll have something published on that soon. But in that research, two words kept cropping up: “vendor managers.”

When a company works with a business process outsourcer (BPO), the vendor manager is usually the one minding the meter. They keep an eye on the numbers, track contract compliance, and make sure the company gets the most value possible for every dollar spent. They negotiate hard, push for better rates, and know exactly what the budget looks like at any moment. It is an important role and often extremely thankless. The trouble comes when financial vigilance starts stepping on the toes of customer experience goals. That is when customers notice something feels a little…off.

This isn’t about lumping all vendor managers into one bucket of CX destroyers. Most can balance cost control with service quality. Consider this more of a “hey, watch out for this” than a finger-pointing exercise. Even the most skilled budget hawks can get so focused on short-term savings that they chip away at the experience keeping customers loyal.

One common pain point is when saving money means fewer staff, shorter training, or cheaper tools. On the spreadsheet, that looks like a win. In real life, it can mean slower responses, less confident agents, and conversations that feel less personal and less useful. It creeps up quietly. One day the average handle time is great. Six months later, customers are drifting to competitors who answer faster and solve problems on the first try.

Contracts can also set traps. If the deal is built only on rock-bottom pricing and strict penalties for missed KPIs, the BPO’s priority shifts. Instead of aiming for service that wows, they work to meet the bare minimum needed to avoid a fine. That is where the dreaded “watermelon metrics” show up. On the outside everything looks green. Cut it open and you find a lot of red. Reports may show perfect handle times and adherence rates while customer sentiment quietly erodes.

The short-term versus long-term tradeoff is another repeat offender. Deferring investments in better technology, deeper training, or smarter processes can make quarterly numbers look fantastic. Over time, it leaves outdated systems, clunky workflows, and missed chances to improve the customer journey. The decline is slow at first, but eventually it becomes obvious. By then, fixing it is more expensive and harder than doing it right the first time.

Working with multiple BPOs can be another double-edged sword. A little competition can be healthy. It can push partners to up their game. Too much price pressure, though, and you have a race to the bottom. Corners get cut, coaching time disappears, and agent turnover shoots up. Constantly switching providers to save a little more can also create instability and sap morale among the people talking to your customers every day.

The real issue isn’t that vendor managers don’t care about customer experience. It is that their incentives and KPIs are sometimes tilted more toward short-term savings than long-term loyalty. Managing costs will always be important, but if it becomes the only priority, the harder-to-measure qualities that make customers stay get lost in the shuffle.

The best vendor managers can live comfortably in both worlds. They know how to keep spending in line while still protecting the moments that make customers feel valued. They avoid the false economy of cheap service that drives people away. And the smartest of them know the most powerful number they can deliver is not just a lower bill this quarter, but the kind of repeat business that keeps those numbers looking good for years. Every brand should be lucky enough to have one of those on their side.

Ian Jacobs is vice president and lead analyst at Opus Research.