The customer experience technology market has ballooned in the last ten years, but given the current economic climate sales are cooling for this once unstoppable industry. What does that tell us about how decision makers are buying customer experience software today?
The last few years have seen an explosion CCaaS “Contact Center as a Service” in the customer experience technology stack. CCaaS is a cloud-based customer service solution that allows companies to leverage a contact center without the need to maintain physical infrastructure or extensive on-premises equipment. Many of my own clients – leaders at these CCaaS companies, have described their current selling cycles – as “weird.” It feels that inflation and global economic instability has finally caught up with customer experience tech.
Salesforce’s chief operating officer Brian Millham recently said Salesforce is experiencing “elongated deal cycles, deal compression, and high levels of budget scrutiny.” That means it takes a very long time to get a b2b sales prospect to a yes, the clients are paying less, and there are more people involved – which makes everything take longer. That means frustration for software sales, uncertainty for marketing budgets, and tangentially related industries being impacted.
SaaS application business Workday is lowering revenue forecasts for the year after saying it is feeling the squeeze of larger customers taking longer to sign off on deals amid a wavering economy. Carl Eschenbach, CEO at Workday said, “..we closed fewer large deals than last Q1, notably in EMEA. When purchase decisions are being made, our win rates remain strong. But within the quarter, we experienced increased deal scrutiny as compared to prior quarters.” Every vendor selling customer experience or employee experience software to clients is in the same boat.
Two clients who are marketing leaders at customer experience software companies use the phrase “tin-can” as they describe looking for marketing budget. While many companies say their customers matter more than anything, when they are feeling anxious and uncertain, anything with the word customer in it is the first to go. Leaders are asking themselves, how much do we really need this customer experience technology? Is it critical? And the answer right now for many industries is, maybe not. At least in the current way leaders make technology purchasing decisions for their companies.
Many had high hopes for new AI additions to software products, only to be disappointed by their actual muscle. Cosimo Spera, founder of copilot and agent assist software Minerva CQ said, “Many companies who have tested AI solutions to elevate and improve customer experience, have reported mixed results. Adoption from the agents has been slow, resulting in increasing AHT (agent handling time) and related costs with no real improvement neither in CSAT nor in NPS. Joe Fernandez started Klout (a website and mobile app that used social media analytics to rate its users according to online social influence) that sold to customer experience technology company Lithium in 2015. He is now building a company called AllUp, a professional network like LinkedIn – a place for broader connections and career growth. He said, “there is so much changing with AI that I think a lot of companies are in a wait and see mode – they want to see where the dust settles before they invest time and effort on ramping up a new product.” One thing is for sure, b2b buyers are not spending money as quickly and freely as they once did.
WSJ Reports Customer Service Declines For The Third Year In A Row
A WSJ article last month called “Customer Experience Gets Worse, Again” reported that customer experience in the U.S. has declined for the third year in a row, according to a report from Forrester after they analyzed 98,363 consumers’ perceptions of 223 brands across 13 sectors. Principal analyst at Forrester Pete Jacques told the WSJ, “Consumers now are skeptical…Somebody is paying more, but then they’re not seeing the benefit of paying more…They’re not getting a better experience that they think should accompany that higher price.” The world has become increasingly small and connected, so global incidents that impact one industry have a ripple effect on other industries.
While many companies are cutting costs and reducing what they see as risk, there is more than one way for contact centers to not just survive this weird time, but actually come out ahead.
How Contact Centers Can Rethink Their Approach During An Uncertain Economy
Michele Crocker is a contact center consultant that has worked in the industry for almost 30 years. She started off on the phones at British Airways and was sent to the U.S. to open contact centers here. She advises clients on contact center digital transformation and believes companies can rethink how they run their contact centers instead of making sweeping cuts. She offered an alternative approach. She said, “By focusing on optimizing the organizational design and staffing with A, B Players, slash any unused or un-necessary recurring subscriptions, renegotiate price cuts with vendors, audit IT current expenses and consider more shared services. Crocker advises that moving to the cloud requires less IT people. She also advises a leadership talent assessment for managers and above companywide so CEO’s can answer this key question- “do we have the right leadership bench strength to implement our strategic growth agenda?” She says that given the pace of transformation in contact centers, there are many leaders in positions where the job requirements have outgrown management – think of new AI additions. She believes monthly or annual recurring subscriptions are out of control, many companies don’t even closely monitor auto renewals or ask what each software license is used for. She helped one company find $165,000 by canceling software that nobody could answer who needed it and why. She wants contact center leaders to re-negotiate existing license fees just before renewal since SaaS companies are desperate to keep customers in this market. If a client is paying $200 a seat for CCaaS omni channel with one of Gartner’s magic quadrant vendors she advises to negotiate that down to $100-$125. Crocker believes there is so much waste, the result of IT leaders who are protecting their fiefdom and own jobs by holding onto their Managed Service Providers and outdated technology platforms.
My view is that when everyone goes left you can go right. Even though b2b buyers are not spending like they once did, if you take this time to double down, you will be happy you did later. Customer experience has a significant impact on your ability to retail customers and grow through word of mouth. These happy and referred customers spend more, stay longer and tell their friends. Customer experience is an open field, and because so many companies are cutting their customer experience programs, if you don’t, when this messy economy is over you will be well positioned to win.
Thanks to CCNG colleague Michele Crocker, a decisive, results driven Call/Contact Center operations leader with a track record of developing strategic plans that make profitable growth goals a reality, for sharing these insights.