With decades of experience in Customer Experience Management software investing (8 partnerships and 6 successful exits), the team at PeakSpan has witnessed CXM blossom into one of the most exciting and strategic segments in the world of software today. While the voice of the customer has always been top of mind for growing businesses, prioritization of CX has become even more pronounced in 2023 as companies understand that existing customer relationships have never been more important than when navigating an uncertain economic environment. Customer expectations continue to evolve at a rapid clip, and organizations are eager to adapt to these new normals to win and expand their relationships with their customers! With this backdrop, PeakSpan is excited to share our top 10 themes in the world of Customer Experience Management — areas in which we feel particularly energized to support entrepreneurs and areas that we believe businesses ought to prioritize as they think about their customer base.
Unlocking the Power of LLMs:
The promise of conversational AI has been bandied about in CX circles for years, but operators knew that building and training models for a specific use case made for expensive deployment and maintenance in production. However, modern large language models (LLMs) have been pre-trained on vast data sets and have demonstrated an out-of-the-box ability to handle common CX tasks, like information retrieval and text generation. This few-shot or zero-shot learning, as it’s called in the AI community, makes it much cheaper (because it requires less data) to tune an existing LLM to fit a very specific domain (e.g. financial services or healthcare). The API pricing for OpenAI’s GPT-based products has also fallen by nearly 90% in the last year, which is emblematic of the emerging scalability of these powerful models. As a result of this confluence of factors (buyer acceptance, prevalence of positive ROI use cases, feasible pricing), we foresee a multitude of CX software players looking to embed LLMs in their products to synthesize textual information or generate responses to queries. Subsequently, the continued improvement of LLMs and their impending spread in CX software may raise questions about companies who ascribe significant value to in-house or proprietary NLP capabilities. Thus, in our view, software players who can build sophisticated workflows around the LLM infrastructural layer have the wind at their backs!
We see a new era of reputation management fully in swing in the CX space — one in which communications geared toward persuading customers are plummeting in efficacy and instead messaging focused on building trust with customers is enjoying the highest ROI. So-called “trust-based marketing” or “trust marketing” is not a new concept, but the prevalence of customer-generated content and customers’ established tendency to research before buying make trust marketing a necessary part of any customer engagement strategy. To deliver this more effective kind of messaging, businesses must leverage tools that amplify the Voice of the Customer through the most resonant media. These “Trust Management” tools help with the creation, curation, delivery, and tracking / analysis of user-generated content and the consumption thereof by prospective customers. We have been tracking this trend for years and saw early success with our partner ReviewTrackers (acquired by InMoment), but believe there is much more room to run in this arena as businesses of all kinds wake up to a simple reality: 80% of customers say trust is a key factor in the purchasing decision, but only 34% trusts the brands they currently use.
In customer service, satisfaction (and thereby a customer’s tendency toward retention vs churn) will often come down to a single interaction that one human being has with another. As CS organizations have evolved, it’s become clear that robust training and information-sharing processes put the CS agent in the best position to deliver a delightful service experience (and that without these processes, companies are rolling the dice on CSAT and retention). Therefore, in the remote-first or hybrid post-COVID contact center, CS and Ops teams need tools to accomplish two sets of goals: (1) ensure that agents behave in a way that maximizes CSAT while optimizing handle-time and throughput; (2) attend to and invest in agents themselves to improve performance, reduce workforce attrition, and increase agent satisfaction. If both sets of goals are delivered on, the alchemy of a ‘delightful customer service experience’ can be more reliably replicated and organizations win on both internal (EX) and external (CX) metrics.
As businesses nurture their customer relationships amid an uncertain macroeconomic environment, we believe that many will start to feel hamstrung by the difficulty in obtaining timely and high-quality customer insights. These insights (spanning product, user experience, user interface, brand affinity and more) are most commonly generated through traditional research projects with consulting firms or agencies. These engagements are expensive, fail to deliver ongoing / real-time insight, forego a prime opportunity to build highly engaged customer / user communities, and ultimately represent an analog piece of what should be a data-rich digitized function in CX. Next-gen research platforms have emerged to modernize these customer / product / market research efforts and, we believe, will see strong uptake by the 25%+ of enterprises that have no defined research strategy in place as well as the remainder who have grown dissatisfied with the status quo. In particular, we see significant value in the ability to cultivate highly engaged communities that can be quickly and verifiably tapped for strategic insights.
Prescriptive Customer Success:
As systems of record have proliferated throughout the enterprise, the amount of customer data available has grown exponentially. This data asset, if leveraged properly, enables prescriptive customer success. In a bygone era, CS organizations merely reacted to customers problems. Then, CRMs and other basic software tools enabled proactive cultivation of customer relationships, but only in a generic and untailored way (“proactive” was the way CS teams thought about contact 10 years ago). The modern CS team can make full use of the rich data about customer behavior to identify the optimal moment for the optimal touchpoint. This prescriptive CS will necessarily marshal departments across the entire enterprise, which creates a real need for CS Operations platforms that coordinate and record these efforts. Of course, data and analytics tools will continue to accrue value, but we see perhaps an even bigger need for software in the new arena of CSOps to ensure prescriptive customer success.
Expectations of personalization are no longer exclusive to the B2C or D2C world. Buyers in both B2C and B2B settings now expect, and frequently demand, tailor-made interactions. And when it comes to the efficacy of these touchpoints, the proof is in the pudding: over 80% of consumers are more likely to make repeat purchases and referrals to companies that personalize versus those that do not. Further, 71% of customers expect companies to deliver personalized interactions and over three-quarters are frustrated when this does not occur. So what’s driving this shift? Put simply, B2B buyers are tired of being “sold to.” Rather than going through the used-car salesperson routine, they expect an enjoyable, personal buying experience across every node of the customer journey — a journey that is becoming increasingly complex by the day with multiple channels, constituents, and stages. Those companies that resort to “[insert name here]” strategies will either fall by the wayside or the spam filter. While the above spells doom and gloom for companies not actively aware of these macro shifts, it’s fortunately easier than ever to make personalization a reality. By virtue of the reams of data available across each junction in the customer journey, companies can intelligently measure, analyze and act on trends they see in their customer bases. Folding this data into day-to-day operations to ensure every customer feels personally heard and attended to should not be seen as a “nice-to-have,” rather a “need-to-have-now” that is readily achievable.
The New Contact Center:
Here at PeakSpan we’ve been privy to a secret for years that the industry has only recently learned — contact centers are strategic, revenue-driving assets and should be optimized as such. An important shift in viewpoint has occurred, accelerated by the events of the pandemic, in how businesses view the contact center and the technology that surrounds it — historically considered a dilutive cost, the contact center is now viewed as a strategic revenue-generating engine, handling high-stakes customer inquiries across multiple channels (vs. the status quo of voice only) while mitigating churn and promoting brand equity. The “sales through service” model is here to stay, and software (namely quality assurance, compliance, and visibility) will be a key tenant of the new-age contact center. Those on the front lines are similarly ebullient — the majority of contact centers (over 75%) have set their sights on actively hiring in the last few years, and 85%+ of contact center leaders are confident their CC will be a revenue driver going forward. All told, sophisticated buyers have evolved their view of contact centers from “cost center” to strategic “revenue center” and are in the market for software to ensure smooth operation of these assets.
UCaaS + CCaaS = XCaaS:
Coined by 8x8, eXperience Communications Platforms (XCaaS, or the marriage of UCaaS and CCaaS) builds a critical bridge between internal and external communication. With over a half of customers abandoning a service based on the experience of repeating information to multiple representatives, the de-siloing of UCaaS and CCaaS wholistically synchronizes communications / interactions and eliminates the retelling of client stories. The powerful combination of these services i) improves analytics via integrating CX and EX, ii) reduces CX friction and dramatically improves CSAT, and iii) enhances the ability to deliver a Total Experience (TX) in hybrid or remote environments. Nearly 80% of organizations have recognized this trend and plan to integrate UC and CC over the coming years — we believe there will be a clear separation between those who have and have not fully embraced this dynamic.
From evaluation to purchase to troubleshooting, customers frequently want to “do it themselves.” The buying process is becoming increasingly self-guided, driven by primary research and often can be completed soup-to-nuts without talking to a sales or support person. The unfortunate reality is that while over 80% of consumers attempt to take care of support issues themselves before reaching out to a live rep, close to 40% of customers contact a call center after trying self-service. The old way of doing things has simply expired as the cost to produce software has dramatically declined, resulting in a proliferation of vendors and a supply/demand imbalance. Accordingly, competitive landscapes have rationalized for vendors who have light cost structures and sell software at prices considered infeasible by peers. Purpose-built, dead-simple features with superior usability will win the day as the CXM landscape bifurcates itself into the new and old guard. Customers want the agility, efficiency and usability that top-notch self-service can offer across both purchase and support experiences.
Customer Journey Optimization:
Alignment between organizations’ CX goals and the reality of their customer journey needs to be a priority. The customer journey (especially at the enterprise level) is becoming inherently more complex, involving more individuals (sometimes up to 10 for a single purchase!), more analysis, and more headache. By virtue of this dynamic, however, the ROI of granularly understanding the customer journey and buying cycle yields massive benefits across the organization (improved conversion rates, decreased cycles, greater CSAT, increased communication, etc). Proper customer journey optimization allows businesses to hone and subsequently better service their ideal customer profile (ICP), thereby capturing more revenue and brand equity in the process. Businesses need to ensure that the process by which customers interact with + learn about their product matches the experience they have during said interactions. Quantifying the ROI of CX investments has always been a difficult challenge (and is arguably becoming more difficult with more channels and branching paths of the journey), but analyzing the combination of in-journey signals with end-of-journey results makes this task much more manageable. Over the coming years, from awareness through loyalty, businesses should aspire to have data-driven conviction in the full continuum of CX initiatives they support.
The world of Customer Experience Management is a dynamic one and requires agility in response to headwinds and tailwinds that can emerge and fade in a short handful of years. PeakSpan was purpose-built to support emerging companies taking advantage of the trends laid out herein and would be thrilled to engage in dialogue on any of the above! We are always looking to expand our network of thought partners, so feel free to shoot us a note and let us know what you think!