Essential Priorities for Optimizing the Business Value of Customer Interactions in 2010
March 03, 2010

For many years experts and executives have expressed the view that customer service is the only basis for differentiation between companies in highly competitive markets. The main drivers of this view are that product innovation, for both soft and hard products, now occurs in days or weeks rather than months or years, making it very hard to compete on products, and that at the same time customers have become much more demanding. This reality has been underscored by the economic downturn. As a result, retaining customers and increasing wallet-share for existing customers have become greater priorities than signing up new customers. To meet these goals, companies have to pay more attention to managing all customer-facing activities, and this translates into paying particular attention to the customer’s experience each and every time a customer interacts with the company. What is more, companies have to pay more attention to interacting through the channels of communication that customers prefer and must adapt their customer service strategies accordingly. Within this context, here are some of the important trends I expect to occur in customer management during 2010:

1. Multichannel Customer Service – Over the last few years the number of communication channels has proliferated, and customers now communicate using fixed and mobile telephony, written documents, fax, e-mail, the Internet, instant messaging (chat), mobile text messaging, videoconferencing and, the latest trend, social media forums. Although my research into the use of technology in contact centers called Customer Interaction Technologies showed that many companies have implemented additional technology to support these channels, the reality is that many have done it to reduce costs rather than to match customer demand or improve customer service. During 2010 we expect this motivation to change, as companies examine ways they can track customer interactions across these channels to improve the experience at each touch point, to synchronize activities across channels and to align the business outcomes from interactions to their business goals. We expect the debate about “social CRM” or “social customer service” to rage on (See: “Social Customer Service a – Fantasy or Reality?”), as companies try to get a grip on how consumers are using sites such as YouTube, Facebook, Twitter and LinkedIn.

2. Customer Experience Management – For more than 20 years the business world has talked about customer relationship management (CRM) as the process and technology that would drive companies to become customer-focused and improve relationships so that customers would stay loyal longer and spend more. But CRM has focused on internal processes, improving marketing, sales and customer service while doing little to directly impact the customer. As I discovered in benchmark research, customer experience management (CEM) redresses that balance and focuses entirely on proactively managing the handling of interactions. In practice this means improving how customer service agents (and others) handle interactions (see “Contact Center Agent Performance Key for Customer Experience”) and how interactions are handled by various forms of self-service. During 2010 we expect companies to invest more in technologies such as smart agent desktops, natural-language-driven, smart customer portals and customer performance management; these  approaches should not only help increase customer satisfaction but help drive down average call-handling times and increase first-interaction-resolution rates.

3. The Voice of the Customer – It is hard, if not impossible, to develop a coherent customer service strategy without knowing your customers. We have found several fundamental obstacles that get in the way of companies achieving understanding of their customers. First, customer data sits in multiple systems in multiple formats, many of which are unstructured, such as call recordings and the images of written documents; this proliferation and diversity of sources make creating a single, consistent, high-quality source of customer data a mammoth task. Second, as a consequence of the former, deriving a comprehensive, 360-degree view of customers (fashionably called “the voice of the customer”) is also extremely difficult.  We see three ways to produce this analysis: continue to expend a great deal of effort to extract data manually and use spreadsheets to provide the analysis; use an enterprise business intelligence (BI) tool to develop specific customer-related analysis; or deploy a specialized product for BI and analysis. During 2010 we see the specialist vendors integrating more data sources into their products, including text-based data, call recordings and social media extracts, bringing the full 360-degree view of the customer closer, which will increase adoption of these solutions. Third is the explosion of consumers using social media sites to gather information and opinions about companies and their products, and to express their views bluntly. This channel takes some key elements of customer service out of the control of companies, making it hard to understand what is happening and how best to respond. During 2010 we expect vendors to selectively extract data from these sources and include it as part of the “voice of the customer” and for companies to use this information to identify their strategies for what is termed “social CRM.”

4. Agent Performance Management – Our benchmark research in agent performance management showed that companies recognize the impact that contact center agents, or anyone handling customer calls, have on the customer experience, while at the same time recognizing the cost of handling one-on-one calls. During 2010 we expect companies to seek a better balance between these costs and the need to provide customers with an excellent experience and deliver targeted business outcomes. We see this effort increasing the adoption of smart call routing to ensure the best-qualified person handles a customer interaction; of a smart agent desktop to make handling of interactions more efficient and effective; of formal workforce management tools to optimize the performance of all resources that interact with customers; of quality monitoring driven by analytics (especially speech analytics) and accompanied by training, coaching and agent reward management; of real-time operational performance management; and of customer analytics to support more granular customer segmentation and personalized customer service.

As well as struggling with these key business issues, companies have to address a number of technology-related issues related to handling customers:

1. Analytics – The contact center is one of the most metrics-driven business units, with a heavy focus on efficiency (as measured by average queue lengths, average handling times and time to complete after-call work). However, my research shows that the main tool used to derive these performance metrics is spreadsheets. As companies transition to a set of metrics that focus on the customer experience, spreadsheets will no longer be viable because they require too much time-consuming manual effort and cannot incorporate unstructured data. During 2010 we therefore see the increasing adoption of specialized analytics products that can include more structured data sources, text data and voice recordings. We also expect companies to demand more root-cause analysis capabilities to help improve their business processes and predictive analytics to help define future customer service strategies. This sort of analytics can help companies avoid losing valuable customers.

2. Unified Communications – Customers now use multiple channels of communication, and these various interactions may be handled in a formal contact center or centers, or by knowledge workers working in other departments, by home workers, and in many small and midsize businesses by anybody tasked with handling customer calls. There is a challenge in handling all these channels, routing the calls to the best location and person to handle an interaction and supporting multiple personnel trying to resolve an interaction; most companies also want to make doing it cheaper and simpler. Therefore during 2010 we see the trend continuing to adopt a VoIP-based infrastructure and more companies adopting unified communications systems that will allow them to know who is available to handle an interaction (using presence technology), to make the transfer of interactions smoother and to allow individuals to collaborate in their resolution. Reducing operational costs will also drive greater adoption of real-time operational intelligence.

3. Cloud Computing – Building a customer-centric architecture to support the full range of customer interactions through agents, knowledge workers and remote workers has long been a challenge. Companies typically have had to purchase systems from several vendors and then integrate them into a single architecture. The traditional model has been to purchase licenses for on-premises solutions, but this is changing. Many vendors are now making their solutions available for “rent” through software as a service (SaaS) or cloud-based solutions that operate outside of the enterprise, in a third party’s location. In 2009 we saw the emergence of vendors such as LiveOps, NewVoiceMedia and offering components of a “call center in the cloud.” We see this trend continuing and expect a full cloud-based contact center to be available within two years, including a full range of customer service applications.

4. Information Management – The foundation of excellent customer service is information. It is needed to drive more segmented customer service strategies for different groups of users, to provide more personalized experiences at every touch point and to assess which channels and individuals are delivering the best results. Information is derived from data, and my research into customer information management showed that collecting it is a major challenge for companies since many have customer data sitting in up to 22 different types of systems (ERP, CRM, billing, network management, data warehouses, spreadsheets and many others). To meet this challenge companies need to develop a data governance strategy that in providing people with information and processes through technology also ensures that they have a high-quality, single source of customer data that is synchronized across all systems. During 2010 we expect more companies to invest in customer master data management (MDM), data quality and data integration tools so that they can build this vital source of data and information.

5. Information Applications – Information application is a new class of applications that address the information availability requirements for a range of customer information needs (See: “Better Customer Management using Information Applications”). Making information more readily available to customers and the workforce interacting with them can help reduce time spent, even in the interaction itself. This information can range from support information on the product or service purchased to the details of the customer’s relationship with the organization and additional options for acquiring new services. It can be found in documents, reports and facts that can be accessible from a Web browser or a mobile device and easily searched and navigated. Making an investment into information applications can dramatically reduce the costs of customer related operations from customer service to marketing and sales.

6. Social Media – There is no doubt that the last 12 months has seen an explosion of people using social media like Twitter, Facebook and LinkedIn, to name a few, for various purposes: to find information about companies and their products, to interact with their peers to answer questions they are unable to find answers for elsewhere and to vent pent-up feelings about companies. This trend presents two major challenges for companies: understanding what is being written and deciding how to use it and respond or take new actions. During 2010 we expect companies to focus on understanding the “what” of social media using general text analytics technologies and purpose-built products that can use data from these sites; as it becomes clearer to how people are actually using the sites, they can decide the best ways to respond. Also during this period we expect some companies to try using these sites for marketing and sales purposes in what is being called social CRM; engaging this new channel of the customer’s voice could provide a method to make social customer service a reality.
Let me know your thoughts or come and collaborate with me on Facebook,  LinkedIn and Twitter.


Richard Snow
VP & Global Research Director


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