Keith Dawson's Analyst Perspectives

Contact centers have always been very cost-centric and attuned to the kinds of constraints that they have to operate in, but many organizations were diverted from that kind of focus when the pandemic first hit. In 2020, there was a sudden need for new tools and equipment just to keep centers running, and the costs involved in enabling agents to work from home — equipping them and their supervisors with the tools they needed to collaborate and stay in sync — were unavoidable.

Two years later, interaction volumes are high across contact channels and are likely to stay that way. With consumers turning to digital channels, centers must deploy an extra layer of technology to stay current. Increased self-service means the kinds of problems that reach the agent are more complex and time consuming. Omnichannel interactions require centers to have a platform behind the scenes that integrates communications across channels and syncs up customer and interaction data.

Then, of course, we have the phenomenon of agents who are not in physical contact centers anymore or are there only part of the time. This changes the way training and team activities are structured and forces both agents and their managers to be more proactive in reaching out to each other. That consumes time and resources.

When we look at the way costs are framed these days, we have to take into account all of those macro changes in business and society and think seriously about where there is slack in the system, if there is any. When we talk about wringing more costs out of the equation, the readiest answers today are going to be in the area of automation — getting customers to do as much of the work themselves as possible and reducing the amount of labor that the organization has to provide to help them. Does that mean you can reduce headcount by replacing people with automation? Probably not, or not enough to drastically change the cost equation overall. But enough to make what you are doing look very different. You might, for example, be able to reduce the absolute number of agents in some situations, but you might also have to pay the remaining agents more because they will be handling tougher issues (the kind that automation cannot handle) with greater skills. You will have to pay to upgrade training for that same reason.

The best way to reconcile cost sensitivity with these new realities is to position contact centers internally as revenue generators, much more so than they have been in the past.

There is a steady move to reconfigure how a lot of the underlying technology in contact centers is purchased. Moving to the cloud has made buyers a lot more comfortable with shorter product lifecycles, quicker upgrade cycles and has made it possible to bring more people into the decision-making process for buying contact center technology. The IT buyer is still incredibly influential (and probably always will be), but there is a lot more input from line-of-business buyers with different experiences and needs. For example, when it comes to systems that are used for analytics and customer-data management, marketers have a great deal of interest in what is purchased. Getting their needs aligned with contact center buyers is challenging and has not always gone smoothly. From a cost-assessment point of view, the challenge — and the opportunity — is to find ways to share the cost burden across different departments and users. Marketing will never pay for the cost of agents, but they may contribute to the kinds of front-end tools like conversational bots or artificial intelligence (AI) engines that reduce the load on agents.

Many firms are looking at automating as much of the labor-intensive interaction-handling process as possible to reduce costs. AI has opened up more possibilities for collaboration between human labor and automated systems. Some savings will come from offloading tasks directly to automated systems and workflows. Other savings will come from subtle automations that push information or guidance directly to agents, saving them the time of having to figure out what is being asked of them and what they should do in response. Anecdotal evidence suggests that as many as one-half of interactions can be kept out of the agents’ way, and that is quite a bit better than the old rule of thumb that about 30% could be deflected by old school IVR. Ventana Research predicts that by 2025, one-half of all customer interactions will be entirely handled by automated systems, with no human in the loop, helping minimize the cost impacts of increasing volume.

But deflection does not mean that interaction volume magically goes away or is cost-free. Deflection to automation creates an environment for more constructive conversations between agents and customers when the point is reached where automation’s capabilities are exhausted. And those more constructive conversations can be difficult at times, and potentially expensive, unless you read the situation correctly and position assets to respond positively in which case they could, in fact, potentially generate revenue.

Another element organizations are pursuing is the transition from point solutions to broader suites for operational tools. Some of this is derived from the shift in technology to be more cloud-based and open via APIs and other integrations. It is being received well by buyers because it provides savings opportunities by encouraging vendors to include more and more components within their basic suite packages that buyers previously had to pay for separately. We see that with a number of agent-management tools that were once separate products, like call or screen recording or performance management.

The extent of a customer relationship is more than just the sum of communications that flow through the center and its agents. With the rise of customer experience (CX) as a business driver, it is more likely than ever that there are a greater number of people involved in the customer life cycle — marketers, sales teams, product development, back-office workers — all these people have a stake in the experience and often have a touchpoint or two where they are the primary player in managing interactions. Who is in charge of that broad spectrum of input? It matters, because when no one is in charge across departments then there is no one to make the case for resources that benefit everyone and that share costs.

Cost reduction is a nuanced and complex process that must be done smartly. A series of incremental improvements that involve digitization, automation and collaboration can produce efficiencies that rein in costs. And centers that focus on generating revenue can offset the costs that remain. That has the benefit of making the contact center more valuable to the organization overall and fosters a more loyal and skilled agent base which is what you need to build a loyal and lasting customer base.

Regards,

Keith Dawson