Pondering 2018: Transitions in the Customer Interaction Management Space Part 2

Image: Metamorphosis by Escher

Let’s continue our tour of the 2018 market transitions. After covering business communications in part one, I want to discuss customer service.

The rise of automation

A year ago, I made the prediction that 2018 would be the year automation would take off in the customer service space. I was wrong. However, I want to reiterate this prediction for 2019. But before that, let me explain why automation didn’t soar as expected.

My forecast was based on the conjunction of three factors: the need for automation, the maturity of Robotic Process Automation (RPA) technologies, and the possibility to quickly deploy an RPA solution on top of existing investments. I thought vendors would address the missing element: poor awareness of RPA among customer service professionals. RPA did take off in 2018 but in the back-office. Its explosive growth drove Automation Anywhere and UiPath, two of its emerging gorillas, to raise $1B last year. It also led vendors to stay concentrated on the back-office and develop platform strategies to go after enterprise deployments. Software became more sophisticated, making implementation more complex.

This left the front-office market underserved. However, a few vendors, such as Jacada or NICE, have remained focused on it. In 2019, the need for customer service automation has gotten bigger. Besides RPA, two other options are available: Artificial Intelligence (AI) and bots from the likes of Digital Genius and Helpshift, and low-code platforms from companies such as Appian and Pegasystems. This is why I expect automation to make inroads this year. I will moderate with Sheila McGee-Smith a panel at Enterprise Connect on these technologies.

Omnichannel outside-in

Throughout 2017, contact center vendors have been touting omnichannel as the way to go. The vision calls for customer organizations to not only support all the available communication channels but also enable customers to switch seamlessly from one to another. If customer service practitioners subscribe to the vision, its implementation has remained a challenge. Most agents excel in either talking over the phone or writing, seldom at both. Furthermore, staffing for omnichannel is more difficult and service levels are harder to sustain.

In 2018, we saw a growing number of companies flipping their stance. Their approach consists of selecting a few critical customer journeys and engineering the desired experience. It might entail switching channels but in a more focused way. Actually, these experiences often stir customers towards certain channels over the others.

Context is king

Handling customer interactions in context has always been very important for good service. The challenge of providing consistent service across many channels made it even more critical. So far, the prevailing approach consisted of pulling the customer history and case information from the CRM application of record. Alas, with the proliferation of applications, the customer context is spread across an ever-increasing number of applications making its aggregation much more difficult.

2018 witnessed several moves from vendors to tackle this issue. Salesforce leveraged its Mulesoft $6.5B acquisition to introduce its Customer 360 platform. It joins customer data from multiple cloud and third-party applications. Zendesk launched its Sunshine platform to connect customer data living in multiple applications and databases. Some contact center vendors such as Bright Pattern or Kustomer, that just raised $35M in Series C, have baked data integration capabilities into their interaction management software. These platforms let you create data objects tailored to your customer service processes, populated with data from multiple sources and enriched with interaction data.

AI everywhere

2018 marked also an inflection for AI. It is now everywhere. All vendors have shared their roadmap to incorporate its capabilities into their software. AI also reached the top of the hype cycle. Expectations have been overset and many organizations are reporting that projects require a lot of effort and deliver disappointing results. Gartner predicted that, by 2020, 40% of bot and virtual assistant applications launched in 2018 will have been abandoned.

While the industry is learning the criticality of data quality, use cases are blossoming. Besides virtual customer assistance, another breed of self-service is emerging with answer bots. Machine Learning (ML) is turning call recordings into precious insights. If AI-driven routing remains nascent, AI is proving itself very effective for classifying customer service requests. Agent assistance is another growing application of AI. This is particularly promising for organizations eyeing a world where automation and self-service will take care of the lion's share of customer inquiries while agents focus on complex and high-value interactions.

CX transitions into projects

The importance of the Customer Experience (CX) has been looming over customer service for many years. It is a strategic priority for every executive team. However, most businesses are struggling to translate it into projects and actions. A search for “customer experience” on LinkedIn returns almost 2 million people with CX in their title. Many large companies have named a CX leader, tasked to translate this imperative into a more actionable strategy and orchestrate action plans across all departments.

These leaders started by aligning the organization on a common measurement framework. It drove the blossoming of Voice of the Customer (VoC), Customer Feedback Management (CFM), and Customer Experience Management (CEM) software. I am now counting almost 100 technology providers in the category. Last year saw a noticeable number of companies transitioning from measurement into specific projects, most often for transforming the most important customer journeys. This coming of age triggered a wave of acquisitions: SAP acquired Qualtrics for a staggering $8B and Verint napped Foresee. I expect more mergers and acquisitions as CX becomes the driver of more projects.

It is challenging to cover properly each topic in a short paragraph. You can expect deep-dives on these topics in future articles.