What to Make of Zoom’s Contact Center Announcement

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Recently, Zoom launched its contact center software. The announcement was inevitable after their deal to acquire Five9 fell through last year.

Zoom’s entrance into the contact center market is sure to stir the space in all sorts of interesting ways. We all love Zoom and use it all the time, but can their success as a meetings solution provider translate to contact center software? My thoughts on the announcement as it relates to the larger contact center space:

1. Contact centers are all the rage. When I joined Talkdesk seven years ago, a smart VC looked at me as if I had lost my mind. Five9 had just gone public at the age of 15, with a value of $250M. Other CCaaS (Contact Center as a Service) players like InContact and Interactive Intelligence did only marginally better. Seven years later, those four companies are worth something like $60B collectively. When a company like Zoom – one of the fastest-growing SaaS companies with $2.78B in revenue – enters the race, it further validates the change in perception about customer service.

2. Contact centers are now strategic levers. Amazon, Twilio, and now Zoom have all entered the contact center space in the last few years. Long gone are the days when this market was considered niche, run by people wearing pocket protectors who liked to geek out about media servers. Today, companies understand that customer service is no longer a cost center but is a key differentiator for brands vying for loyal customers in today’s ultra-competitive market.

3. Wow, that’s sticky. One of the main attractions of contact centers for companies like Zoom is its stickiness. Replacing a telephony or video conferencing system is a pretty simple IT decision with almost no migration or retraining costs. No one knows that better than Zoom, which converts Webex and GoToMeeting customers in days. But, just like pharma companies and patent cliffs, they know someone may one day come out with a better or different product and outzoom them. Contact center software is inherently a workflow product. It takes months to implement, integrate and train agents and supervisors. Customers will happily choose one and never switch. Case in point, I just talked with a Chief Customer Officer today who spent four years with a product he actively hated, seven with one he just “liked,” and is only now switching to a new one that better fits his company’s needs.

4. Three challenges persist. 1) For the vast majority of B2C customer service interactions, video is not a preferred channel. 2) CRM integration is critical for almost all companies and definitely every enterprise contact center – without it, productivity gains are limited. 3) Zoom’s IT buyer is VERY different from the contact center buyer. Integrations and sales cycles become much more complex.

5. A word about Pareto. Everyone knows the famous 80/20 rule, and it applies nicely to contact center software. Building a simple contact center software that focuses on SMBs is straightforward, and the market offers many options. But larger contact centers have particular needs and workflows, and building proper software for them takes lots of time and a significant R&D investment. It took Talkdesk years to move upmarket, despite a massive R&D investment. Zendesk Talk, now ten years old, is still primarily an SMB product. Zoom Contact Center may be a success, but gaining enterprise traction will be a multi-year endeavor.

6. Automation is vital to contact center optimization. Zoom joins one of many products on the market that connect callers to agents. But the issue all contact centers face is that they can’t hire enough agents nor schedule them in a way that will prevent long wait times. Without automation, a new contact center software can offer a fresh new UI, but will not alleviate the customer pain of waiting hours on hold, only to speak with an overworked agent, while trying to rebook their 100th meeting for that day. Customer service automation already offers much-needed relief to agents and consumers by fully resolving common tasks in minutes and with no wait. Agents can now focus on what matters most: to resolve complex, unpredictable problems and deepen the connection between the brands they represent and their customers.

In summary, I am thrilled to see this important software sector getting so much attention from multi-billion dollar companies. More importantly, consumers will greatly benefit from a more intense competition in this space and better tools for the agents. As the Contact Center as a Service goes mainstream, a new era of customer service automation starts. Together, these two can offer great relief to the customer service crisis we see today and offer a future with faster, easier connections between contact centers and consumers.

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