Strategic Analysis Report
16 November 1998
Customer Service and Support: Morphing the Call Center to the Contact Center
ColleenAmuso, DonnaFluss, DavidHope-Ross, CarterLusher, CarrieSmith
Management Summary
Leading enterprises are budgeting millions of dollars and devoting substantial resources to developing strategies for delivery of customer service in the next century. Customer service is the enterprise department attracting attention and resources as enterprises attempt to improve overall profitability. However, it is increasingly difficult to provide differentiation through customer service. Service excellence is a moving bar that constantly is being raised by customers and by the best service providers in any industry. Enterprises must constantly improve service quality just to maintain the status quo and their market share. This migration or transition is changing the way enterprises are reacting to customer and competitor demands, and affecting enterprise profitability. The transition is transforming the single-function, telephone-based call center into a multifunction, multichannel customer service contact center. This Strategic Analysis Report looks at this transition in six key areas: technology-enabled relationship management (TERM), customer service and support (CSS) vendors, CSS systems integrators (SIs), the World Wide Web, management and future trends.
TERM will drive customer service and challenge enterprises to manage the transition from an enterprise-centric view of customers (i.e., how does the enterprise want to maintain the customer relationship) to a customer-centric view of customers (i.e., how does the customer want the enterprise to maintain the customer relationship).Simply put, TERM is a concept whereby an enterprise takes a 360-degree view of a customer to maximize the customer's relationship with the enterprise and the customer's profitability for the enterprise. In the TERM-driven service paradigm, the opportunity costs of maintaining stand-alone servicing suites will be too high. Integration will be a critical success factor for CSS installations, but the challenge and cost of implementation and maintenance continue to be underestimated by vendors and buyers. Selecting the right tools is difficult as more than 170 vendors jockey for market position and mind share. However, market dynamism will rise as enterprise resource planning (ERP) vendors enter the fray and introduce fundamental market shifts and force some vendors out of business and other vendors to be acquired.
It is impossible to have a discussion about customer service without discussing the impact of the Web on servicing environments. New emerging technologies will help enterprises manage this challenging customer channel, and become requirements for innovative enterprises that want to differentiate themselves based on service. Enterprises that receive many prospects or customer contacts through electronic means, where speed and quality of response are critical, or where manual response is expensive, will need technology to manage the E-mail and Web inquiry channels. New technologies will lead the challenge, but their value to enterprises will be greatly enhanced when fully integrated into the CSS enterprise platform.
The combination of these changes will push many enterprises beyond the limits of internal capabilities and competencies, creating opportunities for external consultants and outsourcers to supplement resources. The use of consultants and SIs in this capacity will add complexity to call center integration efforts, as their presence requires an additional investment by the internal organization to share business process and institutional knowledge. This lack of institutional memory will affect post-implementation services as well; once the system is live, there still are maintenance requirements to be met. SIs, consultants and outsourcers will be quick to exploit opportunities created by the increased technical and organizational complexity of TERM. A wide variety of external service providers already have begun to market themselves as front office, call center, or TERM experts despite limited experience in these fields. Enterprises will be increasingly challenged to differentiate among these vendors at precisely the time at which their importance to the enterprise is rising.
This Strategic Analysis Report presents the following Key Issues:
How will communications, business functions and IT converge through 2003 to form the customer service contact center?
What architectures and technologies are critical for a world-class customer service and contact center environment?
What will be the challenges in incorporating the Web into the customer service call/contact center structure?
What is the return on investment of third-party labor providers in the contact centers?
What are the management issues confronting contact centers?
What are the key trends that will affect customer service and contact centers through 2003?
This Strategic Analysis Report presents the following Strategic Planning Assumptions:
Through the second half of 1999, the major ERP vendors will not have deployed sufficiently credible CSS application modules to win a significant percentage of bids, but will influence the marketplace through fear, uncertainty and doubt. Tier 1 TERM and CSS application vendors that do not develop an effective strategy to combat the ERP vendors' message will find revenue growth difficult to maintain (0.7 probability).
By the first quarter of 2001, 50 percent of CSS application revenues will be concentrated in the top five TERM vendors, with ERP vendors accounting for another 10 percent (0.8 probability). This concentration of revenue will force market consolidation with at least 25 percent of CSS application vendors either being acquired or ceasing to operate (0.6 probability).
Due to the inexorable increase in the demand for customer service and technical support, enterprises that do not exploit the self-service capabilities of the Web by year-end 1999 will find themselves stuck in a losing battle against costs (0.8 probability).
By 2001, enterprises will receive 25 percent of all customer contacts and inquiries through Internet E-mail messages and Web forms. Enterprises that do not use E-mail response management systems (ERMS) will be unable to meet customer expectations for responsiveness (0.8 probability).
Some 70 percent of enterprises with 500-plus E-mail messages per day will use ERMS (0.8 probability).
Through 2001, the use of consultants and SIs for customer service implementations will grow by at least 55 percent annually, as vendors are not able to grow their professional services as needed, and contact centers become more complex integration projects (0.8 probability).
Through 2000, customer service organizations will only be able to obtain reliable post-implementation and support from CSS vendors (0.8 probability). Fewer than 10 percent of consultants and SIs will have the skills and bandwidth to offer post-implementation services in this time frame (0.7 probability).
CONTENTS:
1.0Introduction
1.1Customer Service: From Service Calls to Enterprise Contacts
1.2 Adaptive Sales and Service: A Change in Customer Service?
2.0Customer Service Contact Center Convergence: Making the Transition
2.1 Is Return on Investment the Right Question?
2.2 Why ROI Alone Will Not Justify Contact Center Investment
2.2.1 Cost Reduction
2.2.2 Revenue Enhancement
2.2.3 Soft Benefits
2.2.4 Timing of Customer Service Investments
3.0Technology and Architecture
3.1Customer Service Infrastructure Within the Context of the Front Office Architecture
3.2Timing of Building a CSS Infrastructure
3.3 Building Blocks for a Contact Center
3.4CSS Suites: Critical Gaps Remain
3.5The Invasion of the ERP Vendors
3.6Merger Mania
4.0Web and Customer Service and Support
4.1Value Proposition
4.2Five Levels of Customer Service Web Sites
4.3E-Mail Response Management Systems
4.4E-Mail Response Management System Vendors
4.5Customer Service Web-Site Best Practices
4.5.1Web Site Personalization
4.5.2Customer Data Access
4.5.3Integrating Web Sites With the Contact Center
5.0SIs and Consultants: TERM Providers of the Future?
5.1Realistic Expectations for Customer SIs
5.2SI and Consultant Selection Criteria
6.0Management
6.1Changing Management Requirements
6.1.1Contact Center Management Salary Ranges
6.2Shifting Vendor Selection Criteria for CSS Applications
6.3The Cost of Deploying CSS Applications
6.4Year 2000 Customer Service Management Issues
6.4.1Year 2000 Customer Service Technology Planner
7.0Future CSS Trends
7.1Introduction of Customer Service Self-Serve Technologies
7.2Directed Speech Recognition
7.2.2ROI for Directed Speech Recognition
7.3Quality and the Contact Center
7.4Who Should Invest in Self-Serve Technologies for Customer Service?
8.0Summary and Conclusions
Appendix. Acronym List
1.0Introduction
As customers find new and exciting ways to demand service, and as competitors and other enterprises continue to raise the bar, customer service managers struggle with the new definition of providing customer service. Customer contact has moved beyond the telephone to include fax, E-mail, Web, video and even face-to-face contacts, and the traditional call center must be re-engineered, becoming a multichannel, multifunction customer service "contact center." For this reason, the term "contact center" is used to encompass the activities of the traditional customer service call center, as well as the new channels of customer and prospect communication. While traditional call centers handle voice-only customer contacts, the term "contact center" is meant to include all types of channels of customer contact, including voice, E-mail, Web, faxes, video kiosk and mail. This is an inbound and outbound service-based environment where agents handle all types of contacts regarding sales, service and collections.
1.1Customer Service: From Service Calls to Enterprise Contacts
The contact center has grown from the customer's desire to obtain service anywhere and any way they can, on their own terms. It also has grown from business requirements that give customer service more organizational impact. In some instances, this change will be in an automated fashion, such as interactive voice response (IVR) and the Web. At other times, it will be agent-intensive, requiring high levels of person-to-person contact. While having a customer profile and pattern analysis (enabled by customer service and support or CSS applications and customer databases) will help contact center managers track preferences, contact centers must be equipped to handle the unpredictable nature of customer contacts. What this means for customer service managers, however, goes beyond simply adding technology or agents to the contact center to handle the variety of communications. Customers will also expect the enterprise to be able to track and respond to the multiple channels. For example, a customer can begin a transaction with an E-mail, follow up with a fax, and finally call in to check the status of the request. All of these interactions must be seamlessly integrated by the contact center to provide best-in-class customer service.
Moving directly from a traditional call center to a multifunctional, multichannel contact center is a complex journey that will be influenced by customer expectations and forced by business requirements. Call centers will react to these forces in separate ways, affecting their path to a contact center.
Strategic Planning Assumption: By 2003, 15 percent of enterprises will have migrated to multifunctional, multichannel contact centers, gaining competitive advantage and significant revenue increases (0.6 probability).
In these call centers, the emphasis will be on increasing the number of functions (e.g., sales and service) as well as the technology channels (e.g., Web and phone). Contact centers in this area will best be poised to address customer satisfaction and impact revenues.This migration will require two events to happen in tandem:
There will be a need for technology investment to increase the channels, as well as to integrate them.
There will be a need to staff and skill adequately, impacting the amount and intensity of training for agents.
However, the number of call centers to pursue this migration will remain small. This migration requires proactive steps, and will bring with it a high degree of risk and complexity. However, the payoffs in terms of customer satisfaction and potential revenue impact will enable these centers to become best-in-class and best-in-industry.
Strategic Planning Assumption: In the same time frame, customer expectations will cause 45 percent of call centers to increase their communications channels to the call center, creating contact centers (0.8 probability).
Addressing customer expectations will be the driver for call centers in this segment. In this scenario, multiple technologies (i.e., Internet, telephone and mail) are incorporated in the attempt to provide customer service. For ease of migration, this method is preferable, as technologies are available to implement multiple channels, and middleware is enabling smoother integrations. However, integration will be the key, and extensive use of systems integrators (SIs) or vendors' professional services group will be necessary. This path ignores the enterprise's increasing requirement for customer service to impact revenue for the enterprise; a singular focus is maintained in the contact center, even though multiple media are used. The opportunity to cross-sell or upsell a customer at the point of contact is lessened, as the focus remains on customer service.
Strategic Planning Assumption: Also by 2003, 15 percent of call centers will concentrate on increasing the functionality of the customer service center, forced by business requirements (0.7 probability).
Inbound and outbound sales and telemarketing are incorporated into the capabilities of the contact center, allowing for revenue-creation opportunities, and the ability for the contact center to be a profit center for the enterprise. This does not mean, however, that all the functions of sales and service must be completely integrated at the agent level; however, it does mean that at the very least, agents must be trained for multiple functions. This path toward contact centers ignores customer expectations for service any time, anywhere. It also is more difficult to implement, because it relies more heavily on capable and well-trained agents. However, it is important to note that not every agent is suited to handle every task. It may be necessary - depending on the results of agent skill assessment - to segment the agent pool according to functional as well as channel skills, and limit cross-training to those agents who fit a designated profile.
Strategic Planning Assumption: Finally, by 2003, 25 percent of call centers will not make a migration toward a contact center, opting instead to continue to provide traditional phone-based service (0.7 probability).
There will be enterprises, however, that will avoid the complete migration to a contact center. Reasons for this will include unique customer requirements, or a decline in the strategic importance of the call center to these enterprises. However, this does not obviate the integration requirements for these centers; there will be a need to integrate to other parts of the enterprise for data access for customer information. Nonetheless, the focus of these centers will remain on traditional, phone-based service, negating any competitive advantage that the call center could provide to the enterprise.
As traditional call centers are forced to include multiple access channels - including fax, E-mail, Web, and video - for customer service, contact center managers must be able to address customer inquiry (no matter the request) in any format. This will require process, staffing and technological changes to infrastructures. Contact centers must begin to evaluate technologies that will enable multichannel contact routing and queuing, as well as contact fulfillment. Managers also must begin to train and hire agents to handle multiple methods of communication. There will be some call centers that do not make the full migration, due to unique customer and enterprise requirements. For the majority of contact centers, however, a migration will be a requirement to address customer needs and business requirements.
1.2 Adaptive Sales and Service: A Change in Customer Service?
Strategic Planning Assumption: Enterprises that adopt a technology-enabled relationship management (TERM) philosophy and implement an adaptive service and sales approach in their contact centers by 2000 will see a revenue increase of 10 percent to 20 percent, due to increased cross-selling and up-selling and better customer retention than enterprises that continue to separate the sales and service in different departments within the enterprise (0.6 probability).
Thought by many as separate activities, sales and service activities that are blended in the contact center will improve customer retention, increase revenue and profitability, reduce expenses and improve customer satisfaction. However, blending sales and service is more than the integration of inbound and outbound calls and ranges from the simple to the complex.
While some enterprises have the vision to pursue this type of integration, the realization of it is made more difficult by the vendors and offerings. As enterprises seek this type of integration, they must be mindful of market realities as well as their own capabilities. Here, the technology requirements are reviewed as well as user challenges, and recommendations are made for Type A, Type B and Type C enterprises. Type A enterprises are technology-driven; they use technology to gain a competitive edge and often are willing to risk using immature technology to gain this edge. Type B enterprises adopt technology when it has been proven. Type C enterprises are risk-averse and usually price-sensitive.
The technology required to achieve basic call blending, fully integrated sales and service, and adaptive sales and service include: automatic call distribution (ACD), Outdialer, computer-telephony integration (CTI), and TERM/CSS/technology-enabled selling (TES) suite. The TERM-empowered CSS/TES application must include inbound and outbound service and sales functionality, scripting capabilities, integration with CTI provider, knowledge- and case-based reasoning (CBR) capabilities and the fully automated sales and service pop-up capabilities.
The marketplace is rich in vendors that can achieve basic call blending. Most of the ACD vendors work with CTI providers and sometimes outdialing vendors to provide this functionality. Basic call-blending vendors include:
Switch vendors
Aspect Telecommunications
Lucent Technologies
Rockwell
Nortel Networks
CTI vendors
Genesys Labs
Nabnasset
Prospect
However, the marketplace is lacking in vendors that provide "out of box" adaptive sales and service tools. More than 170 vendors provide CSS solutions and more than 1,000 vendors sell TES products. A growing group of some 20 vendors has functional components of both sales and service and are striving to provide a full TERM suite. However, only one TERM-empowered CSS vendor, Versatility, has an out-of-box solution for adaptive sales and service, but it has not been implemented yet at a customer site.