The Virtuous Intersection (Part 1)

The following post by guest contributor Brendan Read, Frost & Sullivan Industry Analyst, is the first in a series examining the “virtuous intersection” of customer experience and profitability. 

When we talk about the customer experience, we must place it in the context of expanding profitability. Profitability lies at the intersection of the customer experience, which leads to sales from both existing customers, but also new business drawn by customers’ social media, and of cost management. This confluence can be termed as “the virtuous intersection.” The ability of companies to generate a strong customer experience, while shrinking their costs, are the keys to profits and growth.

That’s the concept. The reality is that undertaking both tasks, improving the customer experience and cutting costs, is not easy.  Companies are facing rising demand with the slowly rebounding economy, which puts pressure on them to ensure that there are enough contact center agents to handle customers. But at the same time they face stiffening competition that keeps prices down, yet also forces service quality, and costs, up. Helping to drive this market environment is that the customers themselves are empowered and knowledgeable, they research firms on the Internet, particularly on social media, and they know their worth. Consequently they have high expectations from companies as to price, quality, and above all, service.

Yet finding the right mix of solutions to manage the experience, while reducing costs, can be challenging. Staff is expensive. So is the software, which can take a long time to install, integrate with other applications, test, and debug before, and occasionally after going live. Firms have to therefore carefully plan and decide how many agents they need to support and with this how much software to buy. Too few and they can face dissatisfied customers caused by long hold times. Too many and companies find that they are wasting scarce resources on unused staff and “shelfware.”

Moreover, in this market there are shortened beneficial windows of opportunity to capitalize on innovation and on new cost savings methods. Competitors have the capability to follow suit almost instantaneously. The only real edge that companies can therefore offer, differentiating themselves in the marketplace, is a superior customer experience that is delivered through both right-priced quality products, and in customer service.

The Cloud Benefits

So what are the benefits of going to the cloud? Simply put, the cloud can help firms enhance the customer experience and at the same time control costs.  Here are several means by which cloud-deployed solutions can achieve those objectives, and with this expand that virtuous intersection of profitability. The cloud provides greater flexibility, and allows firms to go to an operating cost or opex model, where firms buy only the applications they need, when they need it, on demand.  Cloud solutions typically have a lower total cost of ownership or TCO than premise-delivered applications. While yes, there is a point by which on-premise licensed solutions become less expensive than cloud-delivered solutions, that is usually at the 5 year mark. That 5 year mark is now the typical age limit for software at which point it must be upgraded or replaced.

With the cloud, companies can use their IT talent more productively. Instead of wasting tech team’s time fixing phone switches, they can create new applications for their Web sites. These applications can draw customers, or make their products easier and faster to use, thereby enhancing the customer experience.

There is one other critical benefit of the cloud that is shown here that doesn’t appear at first glance to fall in either the customer experience or cost management circles: Business Continuity/Disaster Recovery or BC/DR. BC/DR is at last gaining more importance as companies begin to realize that large disasters such as Moore, Oklahoma tornadoes, the flooding that hit the Calgary Alberta, Canada area, and Hurricane/Superstorm Sandy are becoming “the new norm”. This is on top of smaller, but more frequently occurring, events like building fires and traffic-snarling accidents all disrupt businesses. The cloud’s ability to have applications and data hosted off-site in specialized secure and geo-redundant data centers(not to mention server failover and backup voice/data and power), enables firms to serve customers if their on-premise servers, and networks, are down or destroyed. And if contact centers have to close their centers, open temporary sites, and/or rely on home agents or outsourcers, these agents can login to the applications from any location.