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In Times of Economic Uncertainty, Invest in CX Technologies
Going by the classic definition of a recession — two consecutive quarters of negative GDP growth — the U.S. is now in a recession. Recessions typically necessitate a re-evaluation of spending and growth plans, and in years past, it meant a reduction in spending on technologies to address customer experience (CX).
Fortunately, that’s not the case anymore. Customer satisfaction has been the top business priority for three straight years, beating product/service quality, revenue generation, information security, employee retention, and investor satisfaction, according to Metrigy’s Customer Engagement Transformation research study of 724 organizations.
Now, despite the economic uncertainty, we’re seeing companies continue to invest in CX technologies, including contact center, CRM, CPaaS, and CRM platforms, along with associated applications, interaction channels, and analytics. As of second quarter 2022, 50.7% of companies were planning to increase their CX technology spending by 2023, by an average of 17.3%, according to the study.
What's more, our research success group (those with the highest measurable business success deploying key CX technologies) are spending 92.2% more than the non-success group. According to this data, higher spending correlates with success in revenue, costs, customer satisfaction, and employee productivity. That’s not the case with every technology, but with CX technology investment, it is.
It's important to note that the study was conducted when the macroeconomy was already questionable, but we weren’t technically in a recession at that time. (We are launching a new study to track any changes; the results will come out in a webinar in September.) As the economy worsens, it’s reasonable to question whether CX spending will decline.
I continue to be bullish on CX spending for several reasons—the most important being that customers are too powerful to risk pulling back on the technologies, agent staffs, and conveniences to which they have grown accustomed.
Some of the drivers for continued CX technology spending include the following:
- Agent turnover will be too high. Annual agent turnover for early 2022 was up to 32%. CX technologies help to automate customer inquiries (self-service knowledge bases), improve agent coaching (agent assist), issue rewards for good work (gamification), and identifies low performers (workforce optimization). These each keep high-performing agents happy, while helping to improve performance or identify those who should be terminated.
- Customers will continue to hold power. Poor customer experiences will continue to be amplified on social media and web rating sites. Without well-equipped teams to address their comments in real time or reply to ratings, customers will be wary to keep doing business with a company that is getting slammed in ratings or on social media.
- Competitive advantages will stall or end. Customers have seen rapid changes and improvement in self-service and digital-first customer service. More than 57% say they have or plan to adopt a digital-first strategy, while 69.3% say they need significant or incremental improvement in self-service. Companies that stop these projects—or worse yet, can’t support existing ones—will be at a competitive disadvantage.
- Customers will require help during down economies. Particularly in the areas of financial services, high-tech, retail, and hospitality, customers may need some extra assistance to make solid choices in investments, product purchases, and travel planning. Those who give them what they need now will find loyalty for years to come.
- Virtual communications will be key. Customers will opt for video exchanges over in-person, in part because they will save on fuel costs and in part because they expect the convenience. By offering visual engagement capabilities, companies will be able to deliver service in an interaction channel that provides significant value.
Technology and convenience go hand-in-hand when it comes to delivering solid customer service. Given there is no shortage of options to innovate customer interactions, companies that put on the brakes in their CX spending risk losing customers to more innovative competitors and setting back revenue.
Related technologies in the employee side, including unified communications and collaboration, employee experience, AI-enabled agent assistance, and workforce optimization, are critical to keeping happy employees across the board. When companies keep agent turnover rates below 15%, they see a 26% improvement in customer ratings, and these technologies help to ensure agent satisfaction.
As the economic uncertainty continues, budget cuts may be necessary. But I recommend companies find other places to make those cuts. For example, 40% of the research participants say they’re reducing commercial office space, driven by the hybrid workplace. In the contact center, this saves $8,300 per agent per year, on average. Business practices have become so technology-dependent, it’s imperative to invest, not cut, spending.
Editor's note: This article was originally published on August 8, 2022 (click here for the original article) and re-published as a part of our end-of-the-year review.