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Nadji Tehrani
Executive Group Publisher, Editor-in-Chief

Taking CRM To The Next Level…


 

This 24th year anniversary issue gives me a great opportunity to briefly look at the past, present and, more important, take an extensive look at the future of our great industry.

Since 1982, when Telemarketing® magazine, which has now evolved into Customer Inter@ction Solutions® magazine, laid the foundation, in a pioneering act, for the multibillion-dollar contact center/CRM industry, we have witnessed many changes. These changes were documented in previous editorials.

In this anniversary issue, I’d like to share with you some of my own views of where the industry is today, from a growth standpoint, and where it will be going in the near future. Also, I would like to share with you the views of several industry leaders on a variety of topics.

24 Years Young And Still Growing!!

In spite of many obstacles, such as those explained in my May 2005 editorial, not to mention do-not-call legislation, unfair press and offshore outsourcing, the domestic call center/CRM and teleservices industries are growing at an enviable pace. Some examples are:

SER Solutions, Inc. — a leading technology solution provider to the contact center/CRM and teleservices industries, reports a whopping 300 percent increase over plan in Q1 of 2005!!

Millennium Teleservices — a leading teleservices company which focuses 100 percent on outbound domestic business (with NO offshore call centers) reports a phenomenal growth of over 100 percent!! Mr. Brian Pasch, the company CEO, informed me that the company plans to double its number of call centers in 2005 versus 2004 by going from about 30 existing call centers to over 60 call centers!!

Concerto Software — a leading technology provider to contact center, CRM and teleservices companies, also grew tremendously in Q1 of 2005. According to Jim Mitchell, Senior Vice President, Technology Office, “Concerto’s revenue in Q1 of 2005 was 66.7 million, an increase of 83.7 percent over Q1 in 2004!!”

Home Agent Adoption Also Indicates Explosive Growth
In a recent analysis of the Top 50 teleservices companies, the Customer Inter@ction Solutions® (CIS) magazine editorial department discovered that the growth and acceptance of home agents in teleservices contact centers have grown 239 percent in 2004 versus 2003. CIS magazine editors expect similar growth in 2005. This phenomenal growth indicates a dramatic change in the industry, whereby using home agents in teleservices as well as in-house contact centers will become much more cost-effective and will out-produce conventional agents by better than 10 percent. One might use the tremendous success of Jet Blue, which uses 100 percent home agents, as powerful proof that home agents will continue to play a VITAL role in the future of our industry. For more information on home agents, please contact West Corporation, the world leader in home agent outsourcing, at www.west.com.

Looking To The Future
Without a doubt, the advent of new technology and new techniques such as the application of home agents, hosted services, etc., will rapidly change the shape of our industry in the very near future.

In fact, it is my personal view, as the publisher and editor-in-chief of the industry’s leading publication since 1982, that as the industry begins to adopt more and more home agents while implementing advanced speech technologies and using IP-enabled contact centers, the industry will achieve the following benefits:

• Drastically improved performance;
• Substantial cost reduction by adopting IP technologies;
• Substantial additional cost savings by adopting advanced speech technologies; and
• Last but not least, the combination of all of the above new technologies will enable call centers to drastically reduce the cost and vastly improve quality and overall performance to the point where there should be no need to look at offshore for cost savings in the very near future!

Speaking Of Offshore
At this point, I would like to bring to the attention of our valued readers a presentation that was made by Steve Brubaker, Senior Vice President of InfoCision Management Corporation. Mr. Brubaker presented a speech, titled “Winning With Team USA, Call Center ‘Outsourcing’ Offshore or Domestic (USA)”. In this presentation, Mr. Brubaker provided a most comprehensive case, with documentation, that clearly indicates that offshore outsourcing, in spite of its cost reduction promises, is not a prudent choice for savvy business executives.

We would like to invite all interested readers to refer to tmcnet.com/136.1 to view Mr. Brubaker’s PowerPoint presentation. In the event that you require additional information, please visit www.infocision.com.

The Extremely Revealing Responses To Our Editorial Surveys By Industry Leaders
As indicated above, several industry leaders responded to our questions and, in so doing, provided us with a comprehensive and extremely visionary presentation of the future of our industry and various other topics. I urge all of our Customer Inter@ction Solutions® magazine’s valued readers to read the following responses to gain a comprehensive picture of the current and future state of our industry:

Carl Mergele, CEO, SER Solutions, Inc.

CIS: What is the growth rate of SER’s business: Q1 (04) vs. Q1 (05)?

SER: We are experiencing tremendous growth in our Contact Center line of business. At the end of Q1 of 2005, our bookings were up 300 percent over plan. Year over year from 2004 to 2005, our business is up over 35 percent.

CIS: What is your vision of our industry’s growth going forward; i.e., the rest of 2005 and all of 2006?

SER: According to industry analysts like Datamonitor, the growth of the contact center industry is about seven percent per year, with outbound out-pacing that by a few percentage points. This is significantly below what we are experiencing.

We’ve seen a great deal of consolidation over the past 18 months, with smaller contact centers being acquired by larger enterprises who are picking up those agent seats. Additionally, the number of agent positions continues to grow, with markets such as Asia Pacific continuing to offer great expansion opportunities for SER. A recent trip to the Pacific Rim confirmed significant opportunities for

SER — specifically, our newest call management solution, CPS E2, and our agent performance optimization solution, SERTAINTY. In fact, many of the organizations we spoke to admitted having issues with their current outbound solution not scaling. As their centers have grown to over 100 agent seats, they’ve hit the ceiling with their existing solutions. Since CPS E2 can scale to well over 1,000 seats on a single system, I believe the opportunity for SER is massive.

CIS: In your opinion, why is speech technology not growing as fast as it should?

SER: I think that contact center managers often think “IVR” when they hear the phrase “speech technology.” And, they are quick to dismiss the need for additional speech technology in their centers. I think vendors, analysts and the media need to spend more time educating the market on the value-add business applications that make use of speech technology. For instance, there are the benefits of applying speech technology to automate quality monitoring activities — making it possible to monitor 100 percent of all calls, not just a fraction, which is the case in most contact centers today. As more early adopters of speech applications experience and publicize actual return on investment, the use of speech applications will become more mainstream.

CIS: There seems to be a growing trend to make top-notch call center technologies available to small to medium-sized businesses (SMBs). Do you think this trend will continue, and ultimately all large technology providers will need to comply or disappear?

SER: For many years, SMBs have been the target market for vendors that offer a “contact center in a box” solution. These solutions typically do not scale well and are not as full-featured as “best-of-breed” solutions. Additionally, many smaller businesses have discovered that they are not in a position to fund the integration of point solutions. The trend we are seeing today is for best-of-breed companies to partner and provide pre-integrated solutions so the smaller businesses can take advantage of full-featured systems without incurring the integration costs. This is bringing top-notch, scalable solutions to more segments of the market. An example of this is the strategic convergence between Aspect and SER, bringing best-of-breed inbound and outbound solutions to the market.

We are also seeing small businesses take a look at hosted on-demand solutions, since they offer a low cost of entry, a quick time to deployment and the flexibility to use as much or as little of the service as is needed. This is something SER is taking a serious look at. However, we believe that if the business and associated call volume grow, it will make sense for centers to invest in an enterprise contact center solution where complete control of all aspects of the center are deemed beneficial and the TCO over time is actually lower than an on-demand solution.
 
CIS: What do you think is in the future of outbound now that the dust has settled from the legislation of a few years ago?

SER: The market for outbound in the U.S. is still growing, especially since many organizations have started to experience the benefits of proactive customer care programs. As mentioned previously, once you get outside of the U.S., the market for outbound is growing at a much faster pace, especially in Asia Pacific, where we see contact centers being established not to deliver outsourcing services to the U.S., but to deliver domestic outbound and inbound services to Asia Pacific countries.
 
CIS: As more companies bring all of their communications onto IP platforms, how is that going to affect, either negatively or positively, their outbound abilities and technology needs?

SER: An all-IP communications platform will have a positive effect on the ability of companies to optimize their use of outbound dialing. In an all-IP environment, the dialer can be centralized, while supporting geographically dispersed agents. Centralizing the hardware provides significant cost savings, since it is no longer necessary to have IT staff trained on the dialer at each location. IP connectivity allows each campaign to be staffed with any combination of onshore, nearshore and offshore agents, providing maximum staffing flexibility. SER’s outbound solutions are designed to help customers take advantage of IP telephony with remote agent support and built-in VoIP capabilities.

Jim Mitchell, Senior Vice President, Technology Office, Concerto Software

CIS: What is the growth rate of Concerto’s business: Q1 (04) vs. Q1 (05)?

Concerto: We are pleased with the expansion Concerto Software has experienced in the past year through both acquisitions and organic growth. Concerto’s revenue for the first quarter of 2005 was $66.7 million, an increase of 83.7 percent compared to $36.3 million from the same period last year. Product revenue for the first quarter was $27.7 million, an increase of 72 percent from the same period last year.

CIS: What is your vision of our industry’s growth going forward; i.e., the rest of 2005 and all of 2006?

Concerto: Despite the initial concern caused by the FTC privacy legislation, as well as other legislation impacting organizations, such as HIPAA and Sarbanes-Oxley, the contact center industry has continued to grow at a steady rate and shows no signs of slowing down. Companies such as Concerto that take the time to understand their customers’ core business processes, including customer service, sales and telemarketing and collections, and deliver solutions that address customers’ needs in those key areas, will be best positioned for growth moving forward. For example, Concerto Software envisions that as VoIP adoption rates increase, SIP-based technologies such as presence will break down the walls of the traditional contact center environment as we know it, which will empower anyone in an organization — from contact center agent to CEO — to leverage company resources and handle customer communications as appropriate.

CIS: In your opinion, why is the adoption rate of speech-enabled IVR equipment not growing as fast as it should?

Concerto: While imperfections in voice recognition technology may have caused speech-enabled equipment sales to lag, Concerto does not believe that there is a slow adoption rate for voice self-service. Instead, Concerto has many customers making investments in voice self-service technologies and believes that continued improvements to speech applications will cause demand for these types of technologies to increase.

We have seen an increase in the use of this technology as the cost of the implementation has become more predictable. It seems like every day, a new mainstream company introduces speech.

CIS: There seems to be a growing trend to make top-notch call center technologies available to small to medium-sized businesses (SMBs). Do you think this trend will continue, and ultimately all large technology providers will need to comply or disappear?

Concerto: Yes, we believe that this trend will continue and the SMB market is currently underserved. Small to medium-sized contact centers have the same requirements for satisfying customers as their larger counterparts do, but without the support of the IT staff and resources dedicated to managing complex contact center solutions. So they need robust, cost-effective products that are easy to implement, manage and maintain.

The vendors that offer sophisticated solutions without the complexity will be the winners in this space. The small to medium-sized contact center market needs solutions tailored to meet their needs and that harmonize customer contact, data and applications across the business and IT environments. Armed with the right tools, small to medium-sized contact centers can capitalize on the strategic and competitive benefits that high-quality customer interactions can yield. For more on meeting the needs of this segment, please read Concerto’s “Finding the Right Fit: Strategies and Solutions That Suit Small- to Medium-Sized Contact Centers” White Paper (http://webapp2. concerto.com/www/whitepapers.php?dest=WP_Amer_FindingTheRight-Fit_ 06April05.pdf%20).
 
CIS: What do you think is in the future of outbound now that the dust has settled from the legislation of a few years ago?

Concerto: While the initial knee-jerk reaction to the legislation was alarm, now that two years have passed, the heightened demand for privacy protection has presented an opportunity for forward-thinking companies. Organizations that have been sensitive to the trend and responsive to the legislation have been able to increase customer loyalty and agent productivity. The privacy movement has weeded out the consumers who do not want to be called, allowing outbound contact centers to specifically target prospects who are interested in what an organization has to offer. Many of our customers have found that, although agents are making fewer outbound calls per hour, they are actually realizing better results.

Telemarketing will continue to thrive, as it remains a cost-effective way to generate interest and sales of products and services. For the savvy outbound contact center, there will continue to be targeted pools of interested customers, new opportunities to improve and grow customer service and loyalty, and the ability to build a more streamlined and productive workforce.
 
CIS: As more companies bring all of their communications onto IP platforms, how is that going to affect, either negatively or positively, their outbound abilities and technology needs?

Concerto: There is the potential for IP to have a positive impact on outbound contact centers, as it will enable them to easily tap into agents with the necessary skills for campaigns — regardless of their physical location — as well as to seamlessly implement multichannel outbound campaigns.

As the vision of VoIP’s potential in the contact center becomes clearer, organizations are beginning to recognize the flexibility this technology offers; particularly its increased capability without compromising an organization’s customer service standards or agent satisfaction.

The best way to achieve this flexibility is to move to IP telephony at a pace that maps to an organization’s business goals and current infrastructure. A well-planned migration strategy will enable an organization of any size to realize the flexibility that VoIP offers, including:

• Flexibility to react to, or proactively address, competitive threats;
• Flexibility to conform to and meet the latest regulatory and compliance requirements;
• Flexibility to provide a multiskilled workforce; and
• Flexibility to react to and anticipate changing business conditions.

Jon Hamilton, CEO, Authtel Incorporated

Before reading any of my predictions, it is important to remember the immortal words of Yogi Berra, who said, “It’s tough to make predictions, especially about the future.”

Offshore outsourcing. This trend will continue, particularly where it makes business sense, such as using bilingual representatives in a country where there are qualified employees who are available for lower salaries. On the other hand, more and more companies will test it as simply a way to save money, and they will be disappointed with the quality of the service and the results.  Many of these will move the work back to the U.S. and Canada.

Do-not-call registries. The latest count on the federal list is 92 million and growing. The registries will keep growing until they become a more complete list of Americans than the Census.

EBR exemption. Companies that believe they can ignore the contact preferences of their existing customers will find their customers ignoring them. Eventually, if companies don’t begin to ask for consent to call, states and/or the federal government will eliminate this exemption.

Permission marketing. This will become the preferred marketing methodology, not just for telemarketing, but also for e-mail, fax and text messaging. Companies that request their customers’ marketing preferences will find that telemarketing will continue to work and become even more cost-effective.

The medium. Telemarketing is still the most cost-effective of the direct marketing media, despite the government and media onslaught. Because of this one fact, it will survive, but its practitioners will need to adapt to new realities. Consumers want greater control over how and when we contact them. Giving them this control will allow the medium to remain viable.
 
As always, please send your comments to me at ntehrani@tmcnet.com. CIS

Sincerely yours,
Nadji Tehrani
Executive Group Publisher, Editor-in-Chief

For information and subscriptions, visit www.TMCnet.com or call 203-852-6800.

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