Can contact centres survive the recession?
We asked ContactBabel’s Steve Morrell for his insights in our latest Q&A…
As contact centres and customer experience teams prepare for the year ahead, what does one of the leading authorities in the industry think about what they should be prioritising in the next 12 – 18 months?
We sat down with ContactBabel’s Managing Director Steve Morrell to find out. Founded in 2001, ContactBabel is an industry analyst firm that conducts research across the UK, US, Australia and New Zealand, to build an accurate picture of the global contact centre and customer engagement industries.
Here’s what Steve and Customer Touch Point Founder Rick Kirkham had to say about the major challenges and opportunities facing the UK CX industry in 2023 and beyond.
Conversational AI has seen exponential growth
There are some very interesting trends coming out of the big annual report we’re putting together right now for the UK market. To start with, I don’t usually like to talk about exponential growth, but it’s undeniable that we’re seeing exponential growth in conversational AI, or AI-enabled webchat. That’s a rare thing in this industry.
Contact centre performance has fallen off a cliff
The second major trend is contact centre performance. It fell off a cliff during the pandemic and hasn’t recovered. In fact, things are getting worse. We’re getting increased call lengths which aren’t in themselves a problem. Calls are getting longer in part because, with self-service and AI soaking up a lot of the easy inquiries, the calls that get through are the more complicated ones that take longer to resolve.
But you’re also getting much longer wait times and much higher call abandonment rates, which are drivers for customer experience. The fact that the industry seems to have been losing control of the key metrics is of some concern because that feeds into spiralling costs and decreased customer experience.
Senior execs are prioritising the wrong CX metrics
From your annual reports and CX buyers’ guides, it seems like your research regularly exposes gaps between what customers and businesses see as the priority for good customer service. Why do you think these gaps exist?
Contact centre executives have prioritised NPS (net promoter score) and CSAT (customer satisfaction), which is all well and good, but those metrics don’t tell you why your CSAT is high or your NPS is poor.
One of the things we’ve been banging on about for years is first contact resolution (FCR). This seems to be – along with short wait times – the key driver to customer experience. It’s not the only thing, but it’s absolutely crucial.
FCR hardly gets a look in from senior executives. The operational guys appreciate it more, but it’s a difficult thing to measure. NPS is a doddle to measure, plus everyone measures it and you can use it to compare against others in your industry, whereas FCR is really difficult to benchmark, even internally.
Why it’s better to try and measure Customer Effort
I was chatting with a client just yesterday about their NPS and asking how many of those customers actually refer them to their friends. That’s one reason we talk about Customer Effort instead. Effort ties in with FCR. When you ask if something was high effort, or how easy it was. And if it was difficult, why was it difficult? You can use the answers you get, and FCR absolutely comes up in that.
So does average wait time. That’s a big driver as well. That’s about effort. One of the things we also track is if they started on a digital channel, have they then had to break and go to voice? That’s also part of Customer Effort, so it’s difficult to get a Customer Effort score. It sounds like a great idea, but it is subjective. But yeah, that’s absolutely the key to whether your customers are going to keep doing business with you.
“Customer loyalty will be key to riding out the recession for many firms”
However you measure it, customer loyalty will be key to riding out the recession for many firms. Yes, you want new customers, but keeping the ones you’ve got is more important than ever. Customer experience plays a large part in this.
Something we noticed in the last annual report was how businesses want to compete on customer experience. But they’ve got a lot of headwinds against them, such as poor contact centre performance.
Agent attrition is becoming a huge challenge
I’ll mention agent attrition now as well. This is rising now after many years remaining steady, which is something we see in times when there is plenty of alternative employment.
If you break it down, we’re seeing call lengths going up, call abandonment going up, and wait times going up. These tell you that you haven’t got enough agents to do the jobs. Companies need to increase headcount.
But agent attrition is growing despite salaries rising massively. Most years, agent salaries go up by maybe 1% or 2%. In 2022 they went up 10%. When you look at contact centre costs being about three quarters of staff costs in most businesses, increasing salaries by that much becomes next to impossible. Also, this 10% increase is just companies trying to hold on to the agents they’ve got, and the attrition rate shows that they’re not even managing to do that.
Contact centres have been slow to act when it comes to technology
Most contact centre leaders have been wanting to go in this direction for a long time now. They just often can’t seem to provide self-serve options that customers accept in enough numbers to make the investment worthwhile.
Most companies are struggling to move customers cleanly between channels because everything’s still siloed. We’ve been asking the same survey questions for years and I like to go back and track what changes. And we’re still seeing the same technology challenges and complaints.
For years when we’ve interviewed people about AI and interaction analytics, they would say they’re not using it yet but they want to implement it in the next 12 months. Then you come along 12 months later, and they’ve still not implemented it. There’s a lot of delayed investment. There is a gap between the people at the top who sign the bills and the people who actually work at the contact centre.
Ten or 15 years ago, your traditional contact centre manager was making decisions about what they did and the technology they bought. That’s very rare now I would say. It’s not uncommon to be dealing with an IT director who is not purely contact centre focused or experienced. So IT decisions are often made without the contact centre in mind.
That surprises me. Today a lot of businesses will have a Director of Customer Experience or similar that they didn’t have ten years ago. I would have thought they would have sat between Operations and IT and said: “that’s what we actually need for the business problems we’ve got – what can you give us.” But you’re saying the IT people are still running the show? That’s interesting.
“People need to act before the storm”
I think unfortunately we’re going to see a hell of a lot of cost pressures coming through in the next 20 – 24 months and contact centres will have to commit to adopting new technologies and new ways of working. We’ve seen over the past two years that people can commit very quickly to new ways of working. Everybody went remote in about two weeks, and the really interesting thing is that they’ve still not come back. Most people are still hybrid working.
Maybe the IT team or even the management team will realise that if you make a major step change like that the world doesn’t end and you get something better at the end of it. I think they’re going to be forced in that direction by cost pressures, by attrition, by the fact that they don’t want to be raising salaries by another 10% next year, and by the fact that their customers are going to be suffering a lot from whatever we’ve got ahead of us and will be voting with their feet if they don’t like what they see. I think customers are going to become increasingly intolerant, so companies need to act now before the storm rather than after it.
What do you think that looks like in practical terms?
It will differ from business to business, but if a company is trialling something now, they should probably look at implementing it fully rather than in 6 or 12 months’ time or whenever the next budget cycle is.
How companies adopt technology can become a major competitive advantage
One thing I noticed in the pandemic was that too many companies added deliberate CX loops and blockers to try and limit the number of calls they received from customers, and customers hate that.
We’ve mentioned the cost pressures on companies’ CX, as well as the cost of living pressures on customers.
I’d like to see customer service levels improve, because the average wait time now is two minutes, which is four times longer than it was before the pandemic. The proportion of calls that are complaints is going up as well.
Also, if we look at this through your ContactBabel interaction model, the rising cost of living will increase the number of people whose problems are emotional, urgent, complex – or a blend of all three. That will increase the number of people who need to call, as well as likely increase call times.
If a company wants to try to counteract this by increasing self-service, they’re going to have to do it really well if they want to influence customers who are emotional, urgent, or complex to actually use those systems. They need to really think about their customer journeys.
Yes, that’s right. You also need to take demographics into account. The type of people who are going to be using a lot of key services will, in the main, be the sort of people who currently prefer to phone rather than go digital first.
Companies have got to pay attention to what their customers need
When we look at the gaps in the ContactBabel reports between the customer focus and the business focus, I wonder if companies place enough emphasis on what customers prioritise? If there is a disconnect between the contact centre and who’s making the decisions on tech investment, are those customer needs visible enough? On what basis are they making those decisions?
We’re just reworking the chatbot for a big brand now. The technology was imposed on the contact centre from higher ups who didn’t understand the context in which their customers would use it. The customer base for this brand is older and quite specific. Calls are relatively emotional when they happen. Having analysed customer needs, the reasons people used this chatbot were completely disconnected from the reasons it was able to handle, so over 80% of contacts ended up having to go through to agents.
Our research uncovered four contact types that, if the chatbot had been built to handle them, would have taken care of 80% of the traffic. It’s that kind of disconnect and need to understand what contexts your customers will use a service that causes a lot of companies to fail in their self-service efforts.
This picture could seem quite gloomy, but we should make it clear that there are lots of potential techniques to get through these challenges, from customer experience audits and customer journey mapping to integrating systems, to creating genuine multi-channel CX. People will self-serve if you set things up in the right way, at the right moment, for the right reason. You need that understanding of the customer as well. But there are huge opportunities for companies to improve their CX and optimise their return on investment.
“There’s a real opportunity here”
There’s a real opportunity for technology companies here. Because of staffing issues, inflation issues, performance issues, and the fact that we know that what makes a good customer experience is a short wait time and first contact resolution, we know that really good self service will tick these boxes.
Tech providers with more confidence in their growth who went through this ten to fifteen years ago can see this as an opportunity because they know for a fact that their customers and potential customers have increased their HR costs by 10% last year, and they can’t keep doing that. Watch this space because this is really at the tipping point, is the impression I get.
If the pressure’s on the people then it makes the tech all the more important, but it’s what you do with it that’s vital. For many years it was used as a barrier to contact, which just annoys customers and makes them more likely to call. You have to do it in a way that taps into customers’ willingness to go into self-serve. Choosing the right tech is important, but so is the right approach to using it.
Are you a CX professional or CX leader? What threats and opportunities are you seeing in the market and how are you planning to meet them? Are you confident about your contact centre performance or do you think it could be improved? Join the conversation with us on LinkedIn or get in touch for any support you need with addressing the challenges ahead.
Sign up to our newsletter