Customer Interaction Space Sees Consolidation

By Paula Bernier, Executive Editor, TMC  |  December 01, 2011

This article originally appeared in the Dec. 2011 issue of Customer Interaction Solutions

The last few months of 2011 were an active time for consolidation in the customer interaction solutions space.  

News broke in mid October of Alcatel-Lucent’s (News - Alert) selloff of its Genesys customer service solutions. Shortly after that, Oracle revealed plans to acquire RightNow Technologies.

Marty Beard, CEO and president at LiveOps (News - Alert), told CIS magazine that both deals are further evidence of the move toward the cloud and the central role that contact centers play in business-to-customer relations.

“RightNow is being acquired at a huge multiple because Oracle recognizes the importance of the cloud, and it highlights the growing importance of customer service,” said Beard of LiveOps, a contact center software and call center outsourcing provider. “The contact center is becoming the epicenter center of customer communications between the consumer and the enterprises. This is directly impacting customer service at all levels, including multi-channels.

On Oct. 19 Alcatel-Lucent announced that it had received a binding offer of $1.5 billion from a company owned by the Permira funds for the acquisition of its Genesys business. Permira is a European private equity firm with global reach. Genesys is a long-time leader in customer service software and contact center solutions for enterprises; it reported 2010 sales of $500 million.

“Permira's intended acquisition of Genesys would enable this profitable business to flourish further; with Enterprise, we have reached the conclusion that retaining it and strengthening it further serves Alcatel-Lucent and our customers best,” said Ben Verwaayen (News - Alert), CEO of Alcatel-Lucent, in announcing the deal. “Our chosen direction is to leverage the natural connections that exist between enterprise and carrier customers, and proactively apply Enterprise's strengths and momentum in unified communications and data networking with them."

Alcatel-Lucent also said that Genesys and Enterprise “would continue to enjoy a strong commercial relationship, with a joint development agreement and the two businesses continuing to have access to each other's product portfolios.”

Beard of LiveOps said: “Genesys is known as a traditional call center vendor, and the game is changing. In order for them to compete, they had to make a dramatic change and going private is not a surprise.” Beard added that “private equity typically looks to take as much of the profits from an ongoing entity and restructure."

As for Oracle, it expects to buy cloud-based customer service provider RightNow for around $1.5 billion, or $43 a share. The deal, which represents a premium of roughly 20 percent on its closing price on Oct. 21, is expected to close this year or early next.

Thomas Kurian, executive vice president at Oracle Development, said: “Oracle is moving aggressively to offer customers a full range of cloud solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud. RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud."

About 2,000 organizations worldwide rely on the solutions of RightNow, which was established in 1997 and went public in 2004. Gartner (News - Alert) in September recognized RightNow as a 2011 Magic Quadrant leader for CRM web customer service.

The company’s solutions allow customers to access information via e-mail, Facebook (News - Alert) widgets, the web or other channels. That way, agents don’t have to get involved in inquiries for which customers can find the answers themselves. And the millennial generation tends to like chat or other mediums over phone calls anyway, so this speaks to that customer preference.

For example, RightNow delivers a service called RightNow CX for Twitter, through which Twitter users can instantly access customer support from their favorite brands directly via the social network. RightNow also recently introduced RightNow CX for Mobile Apps, which allows consumers to interact with companies via mobile app.

"RightNow’s products add leading customer experience capabilities that help empower companies to interact with and provide a consistent experience to customers across channels," said Greg Gianforte, CEO of RightNow. "We look forward to combining our complementary capabilities along with maintaining and expanding our presence in Bozeman, Mont., in order to better service our customers."

The importance of businesses making it easy for customers to get answers is highlighted in a new study from Convergys Corp., which indicates that the percent of U.S. consumers who report a bad service experience to the offending company continues to rise, up 5 percent in the past year and up 13 percent since 2009.  The top complaint, according to the study, is customer effort.

“Clearly, ‘effort’ is the flashpoint of the service experience, and those companies who make problem resolution hard for customers can pay a stiff price,” said Igor Sarenac, Convergys vice president.

“Although small in number compared to the mass of U.S. consumers who gave high marks to service in the research, greater vocalization by a handful of dissatisfied consumers can do considerable damage to a company’s reputation, leading to a drop in consumer purchases, reduced advocacy, and new customer avoidance,” he noted.

Edited by Stefania Viscusi