Analyst Perspectives

Not long ago, organizations engaged with customers by meeting them in person, speaking with them on the telephone or writing to them. To be competitive today, however, organizations cannot confine customer service to those forms of engagement. Customers now engage with each other and organizations through a variety of digital channels that include email, corporate websites, text messaging, instant messaging, social media, smartphone applications and video.

Markets have become more competitive, and customers are able to switch suppliers at the click of a button; thus consumer expecta­tions have changed and businesses must keep up. Our benchmark research into next-generation customer engagement shows that customer engagement has become an enterprise-wide activity, with nearly all business groups engaging with customers. However, whether they prefer to engage through convention­al or digital channels, customers still expect their issues to be resolved quickly and to their satisfaction.

The cost to businesses of failing to meet customer expectations has increased. The fluidity of the digital marketplace makes it far easier for customers to defect to competitors and/or voice their dissatisfaction publicly on social media. Thus, maximizing customer retention has become a top priority. Our benchmark research into the adoption of contact center systems in the cloud shows that most businesses (70%) now consider customer experience a primary way to differentiate themselves from their competitors.

To manage this more complex engagement model effectively, companies need to develop new processes, integrate them into their customer service activities, train employees how to use new technologies, and make customer- and performance-related information more readily available to everyone who engages with customers. Furthermore, organizations must accomplish this within the context of improving all customer-related activities and complying with legislation and regulations.

As part of our research into next-generation customer engagement, we produced a Performance Index that analyzes and rates the performance of participating organizations in a four-part hierarchy. This analysis confirms that currently, only a minority have embraced new means of customer engagement, though most recognize that they need to. Only 14 percent of participating organizations reach the highest Innovative level of our hierarchy and nearly half (46%) rank at the lowest Tactical level. Analysis by size of company shows that very large companies have the greatest percentage at the Innovative level, and more than half (56%) of them are in the top two levels. Larger companies more often adopt innovative technologies such as mobile customer service apps, social CRM and customer-related analytics earlier than smaller ones do.

Among the four dimensions into which we further segment performance, organizations do least well in Process, where 78 percent rank at the two lowest levels and only 8 percent achieve the Innovative level. Challenges in engaging effectively with customers often arise in the processes companies use, which typically weren’t designed to accommodate multiple channels of communications or customer interactions handled outside the contact center. To meet the demands of a rapidly changing customer service environment, which technology often drives, businesses should look for new tools. Here we see signs of hope, as organizations perform best in the Technology dimension, with the largest percentage (18%) at the Innovative level. That said, organizations aren’t likely to gain maximum benefit from such technologies unless they change processes and train employees adequately.

Much is said and written about the need for organizations to become more customer-centric. Technology alone will not enable them to achieve that objective. Our Performance Index shows that organizations need to reassess how they manage customer engagement across multiple channels and business groups so they can bring about process and people changes, enabled by new technology. The research suggests that if they do that, they will reap a variety of benefits, most important being an improved customer experience.

Regards,

Richard Snow

VP & Research Director, Customer Engagement

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