How do you know when it’s time to change your game? At Silverpop, a marketing automation solution provider, that realization came a few years ago when leaders found its traditional contact center infrastructure couldn’t keep up with changing customer and business needs.
That’s not good when you’re competing in the fast-growing and highly competitive marketing automation space. Features and functions matter, of course. But it’s also critical to provide a great service experience, according to Greg Harmon, a manager in the customer support organization. If customers don’t get the help they need, they’ll switch to another provider that’s more responsive.
About three years ago Silverpop turned to a cloud-based contact center provided by inContact, one of the pioneers in this space. Now Harmon says they have the “freedom to innovate” without hand holding from techies.
Solving Problems on the First Call
Like many call centers, increasing First Contact Resolution (FCR) is a big priority at Silverpop. Research has shown (see box to the right) that solving customers problems on the first call is linked to higher customers satisfaction, lower costs and other benefits.
Benefits of Improving First Contact Resolution
- Reduce operating cost: For every 1% improvement in FCR, a call center reduces its operating costs by 1%.
- Improve Customer Satisfaction: For every 1% improvement in FCR, there is a 1% Csat improvement.
- Improve Employee Satisfaction: For every 1% improvement in FCR there can be a 1% to 5% improvement in Esat.
- Increase Sales Opportunities: When a customer’s call is resolved, it increases the customer cross-selling acceptance rate by up to 20%.
- Reduce Customers at Risk: Only 2% of customers who have their call resolved on the first call expressed their intent not to continue to use the organization’s products and services.
Source: SQM Group
Silverpop business analysts were easily able to dig into inContact data, identify 23 high call volume categories and build certifications around each call type. Then—and this is the important part—calls were routed based on call type, so that the right specialists can help customers on that critical first call. All this was done in just 9 months, which Harmon estimates was half the time it would have taken with their previous premise-based contact center solution.
Now that’s what I call a Nimble Business!
More calls handled right the first time freed up time for a consultative role with users that needed help with campaigns. Put it all together, and now Silverpop offers more efficient and effective contact center service, thanks to the power of cloud computing.
Silverpop’s story is not unique, according to contact center industry analysts. To be sure, cost savings continue to be important. According to inContact’s CMO Mariann McDonagh, a Frost and Sullivan study compared cloud- and premise-based contact centers and found cost savings ranging from 30% (50 seats) to 58% (500 seats).
That said, in this age of customer experience the tide is shifting towards other issues. Forrester’s Art Schoeller advises in “Is It Time To Move Your Contact Center To The Cloud?” to “look more for agility and less for cost savings.” Indeed, in 2011 Forrester found that 72% of software decision-markers cited “improve business agility” as an important/very important SaaS benefit. That’s up from just 32% in 2009. During that same period, “lower overall cost” dropped from 71% to 60% importance.
Contact Center Industry Following Software to the Cloud
If this story sounds familiar, it should. Because the contact center industry is going through the same transition as enterprise software. In the late 1990s we saw the emergence of Software as a Service (SaaS) applications from Netsuite, RightNow and of course Salesforce.com. Now virtually every software company has jumped in, including early naysayers like Microsoft, Oracle and SAP.
Cloud-based contact center solutions have been slower to catch on, due in part to unique technical challenges posed by telephony. Industry experts say that widespread adoption of Session Initiation Protocol (SIP) has provided a core Internet-based communications standard. Adoption has also been slower because of an entrenched contact center industry that’s built on a licensed product model. Finally, risk-adverse IT executives have waited for proof that the Cloud can be trusted for mission-critical applications.
Well, the wait is over. Salesforce.com’s growth and popularity in sales automation, and RightNow’s success with large scale customer service solutions, have helped convince skeptics the Cloud is ready for prime time. Now analysts are uniformly bullish; Forrester Research estimates that 45% of all companies will be using SaaS in 2012, rising to 60% in the coming years.
Five9 CEO Mike Burkland believes the contact center market has reached an inflection point. Currently 95% of the 6.6 million contact center seats are traditional premise based. But Five9 is finding that mid-size and larger contact centers are becoming more comfortable considering the cloud during tech refresh cycles. CIOs are moving from gatekeeper to cloud advocates, says Burkland, because they like service providers that “take risk off the table.”
Like any good inflection point, the shift to cloud computing will create winners and losers in the contact center market.
DMG Consulting’s 2012 Cloud-Based Contact Center Infrastructure Market Report reveals an industry poised for growth. Report author Donna Fluss notes that initial skepticism has been replaced by “contact center and IT leaders embracing this acquisition model and regarding it as a key enabler for their future.” From 2008 to 2011 the adoption rate of cloud-based contact center infrastructure solutions nearly tripled from 2.2% to 5.9%. After a decade of slow growth, annual growth in seats accelerated to 26% in 2009, 42% in 2010 and 80% in 2011.
Scramble for Market Leadership
Like any good inflection point, the shift to cloud computing will create winners and losers in the contact center market. Having the right technology is a given. It’s no trivial feat to re-engineer contact center solutions to be reliable and responsive for voice call applications like ACD, IVR, etc.
InContact’s CEO Paul Jarman contends that, while having the right technology is obviously essential, a service-oriented culture is the biggest factor in success. Established vendors will have a tough time shifting away from a business model that rewards shipping boxes rather than pay-as-you-go relationships. As I said in a recent post, a customer-centric culture is critical.
Cloud-based software companies are built on a culture of customer loyalty. Not necessarily because cloud company leaders innately care any more about customers. No, it’s because keeping customers loyal is mission critical when your business runs on a recurring revenue model.
In his report, Forrester’s Art Schoeller says that “pure-play SaaS vendors” such as Echopass, 8×8, Five9, inContact, LiveOps and Volt Delta Resources feel their time has arrived. I agree, but don’t count out the old guard just yet. Vendors like Aspect Software, Avaya, Cisco, Genesys, and Interactive Intelligence still dominate the mid-size to large contact center market, according to Schoeller.
Genesys recognizes that past success can create a barrier to innovation, when a new market expects a different approach. Newly independent after the spinoff from Alcatel-Lucent, the firm plans to tackle the new “cloud” space with separate sales, marketing and service/support resources, according to Michael McBrien, General Manager of Genesys Cloud Connect. That’s the right approach, in my view, for contact center stalwarts to leverage their brands while targeting a new market.
It will be interesting to see which of the cloud innovators will “cross the chasm” to market leadership, and which of the traditional vendors will adapt their business models and cultures to the new opportunity. The future leaders of the cloud-based contact center industry will need to be adept at providing great technical solutions and great customer experiences.
Further Reading:
- Culture: Why Microsoft, Oracle and SAP won’t succeed in the Cloud (and contact center leaders will also #fail)
- Stop Making Excuses! Put Your Contact Center in the Cloud
Disclosure: This article was prepared through independent research. Selected companies are mentioned to illustrate specific capabilities and industry developments; no endorsement is implied. Please visit our sponsor page for information on companies that have supported the CustomerThink community in the past year.
