2007 contact center CRM industry status and forecast.

Our phenomenal industry, which officially began to grow as of June 1982 with the publication of our flagship magazine, Telemarketing[R], has continued to grow, in spite of many obstacles and roadblocks, at a phenomenal rate. Just this morning, December 20th, for example, I was speaking with a member of the senior management team of a teleservices company. He shared with me that 2006 has been a truly phenomenal year for their company: every one of their divisions has experienced record growth and profits. Needless to say, this phenomenal company has no offshore facilities whatsoever and, in fact, 100 percent of their call centers are in the U.S.

Obviously, they are not the only company that has established such phenomenal growth. A number of other contact centers have reported similar growth records. Indeed, every month we receive notices from the press that several hundred new call centers are being announced here in the U.S.

To the extent that the call center today is playing a vital role in the growth of every company in the world, it seems to me like the growth prospects for our industry will never change. Simply because no company can exist without sales leads, sales efforts, cross-selling, credit collection, fund raising, customer service, CRM, customer retention and assorted similar functions. In plain English, there is no other department in any company that is more important than this powerful, revenue-generating department known as contact center and/or CRM center.

Having said all that, let us look at specifically why the industry continues to grow:

1. The vital service. Call centers provide such a vital, revenue-generating function that it makes them indispensable. As I have stated many times in these editorials, every company is a call center.

2. Continued innovation. Our industry has been blessed with a tremendous amount of innovative, savvy and visionary executives. As the industry changes, they will also reinvent themselves. For example, because of those innovators coming up with IP communications technology, home agent programs, hosting, advanced speech technology, etc., significant advancement in quality, capability and cost reduction has been achieved to keep call centers more and more profitable.

3. Technological advancements. As mentioned in the December 2006 "Publishers Outlook," technological advancements have played a major role in keeping call centers state-of-the-art so they are continually profitable. Indeed, early adopters have been the greatest beneficiary of the new technologies.

Industry Survey Results

For the purpose of this editorial, we have contacted several leading industry executives and conducted a survey in which we have requested them to share their views regarding the current status as well as the future trends for the call center industry. I am pleased to announce that many of these executives have responded tremendously by providing insightful vision and actionable suggestions about current and future contact centers.

We will now share with you some of the comments made by various executives from many of the leading technology and services providers to the contact center, CRM and teleservices industries.

The following individuals contributed answers to our survey questions:

* Dudley Larus, VP Global Marketing, Amcat (www.amcat.com)

* Ralph Breslauer, Executive VP of Sales and Marketing, Aspect Software (www.aspect.com)

* Nathan Stearns, VP Business Solutions, IEX (www.iex.com)

* Steve Brubaker, Senior VP of Corporate Affairs, InfoCision Management Corp. (www.infocision.com)

* Charles Ansley, President & CEO; Keith Roller, VP of Development; Bob Brittan, Director of Product Marketing, Symon (www.symon.com)

* Joseph A. Staples, Senior VP of Worldwide Marketing, Interactive Intelligence, (www.inin.com)

* Nancy Treaster, Senior VP of Global Marketing, Witness Systems (witness.com)

Nadji Tehrani: Can you offer a short opinion on the current status of the call center/CRM and teleservices industries?

Dudley Larus, Amcat: We are in a transitional time. Some companies really get it and are linking success, growth and revenue with providing a better customer experience. Still others are stuck measuring the wrong KPIs (key performance indicators) that are tied only to cost reduction. Until organizations begin to measure the right elements such as first-call resolution, we will continue to have poor service and the contact center industry will keep its lackluster reputation with consumers.

For companies that "get it," new technologies and new ways of thinking are allowing visionary companies to link increased revenues, contact center efficiencies and business growth with a focus on the customer. These companies are directly linking success with their ability to attract and retain customers. And, they are finding they can come to their technology suppliers and paint a picture they require for successful customer interaction, and we are able to meet that vision cost-effectively. Mid-sized organizations can provide their customers all the services that only the Fortune 1000 could provide in the past.

The trends today are extremely positive, with CRM being viewed as a companywide process and CIM, or customer interaction management, finally coming together as part of a unified corporate process to serve customers and grow the business. The leveraging and sharing data between applications is becoming a reality and benefiting the consumer.

It also seems some organizations are stuck still measuring the KPIs of a past era, such as average talk time. While there is talk about customer focus (finally), with so many changes happening in technology, it's difficult for consumers of contact center technology to understand what their options are, what's real and what it all costs. We at Amcat think it is possible to retain the objective of driving revenue and reducing costs while improving the customer experience.

Nathan Stearns, IEX: There are still a lot of mergers and acquisitions going on, which poses a lot of questions in the minds of customers. Therefore, it is up to companies like IEX to lead them through the consolidation and assure them that the industry is still providing them with what they need.

There is a lot of focus on performance management. However, if you look at the current state of the industry, everyone is still looking for ways to reduce costs. For example, one of the main reasons companies are looking at adopting work-at-home programs is for the associated cost savings. In fact, oftentimes, contact centers will risk taking a hit on effectiveness in order to reduce operating costs by using at-home agents. The same can be said of outsourcing. If the center goes with an outsourcer, the center will be more efficient but not necessarily more effective because the in-house center is losing a lot of control. The outbound environment is no different. Why are outbound centers adopting workforce management? To be more efficient. They want to blend inbound and outbound calls, which is great from a dollars and cents perspective. However, there is still a great chance that quality will be jeopardized when agents are trying to handle both types of calls.

So everyone is talking about effectiveness, but most of the energy, time and effort are still focused on efficiency. As vendors, we need to help customers find ways to gain maximum efficiency and also increase effectiveness.

Steve Brubaker, InfoCision: The call center industry is experiencing a resurgence after years of new federal regulations. There seems to be an overall positive momentum as companies are expanding and opening new centers. At InfoCision, we have experienced significant growth in all six divisions, which tells us the industry is strong across all market segments

Charles Ansley, Keith Roller and Bob Brittan, Symon: The call center market is stable with low growth rates in North America and EMEA. PAC RIM is maturing with some unexpected feedback from consumers.

Teleservices are encountering new barriers, especially in the outbound segment and do-not-call legislation. Marketers have been saddled with obtrusive legislation that does not allow customer service professionals to call customers directly. Self-service solutions, by their very nature, attract customer-driven interaction, presenting an excellent business case to cross-sell and upsell various offerings. The growth in Web-based self-service solutions and the highly mature IVR solutions make them good channels for campaigns and other marketing initiatives.

Relative to CRM, as telemarketing becomes a less effective means to communicate, the overload in e-mail reduces the effectiveness of e-mail campaigns, the trend towards out-of-home marketing becomes more important and the ability to communicate effectively through new marketing channels becomes important. In particular, mobile marketing and digital signage need to be considered to complement the traditional marketing channels.

Joseph A. Staples, Interactive Intelligence: With the ongoing convergence of communication technologies, call centers, CRM companies and teleservices firms are increasingly differentiating themselves by using adjunct applications in new and creative ways to more proactively interact with customers, such as "pushing" voice-based automated customer satisfaction surveys via outbound dialers with IVR front-ends, or blasting personalized e-mail notifications via the consumer's device of choice, including computers, PDAs and cell phones.

As communications increasingly merge with IT infrastructure, these industries are also focusing more on business process integration, which extends beyond the customer service group and into the entire enterprise, further promoting the idea of the "intelligent contact center" based on software suite architecture.

Nancy Treaster, Witness Systems: Most organizations are largely focused on growth, which means a concentration on acquiring new customers and doing more business with existing customers. Since many organizations struggle with how to differentiate their products from the competition, efficient and effective customer service delivery is the last battleground. This challenge has thrust customer centricity into the forefront of thinking among executives across industries.

Customer centricity drives organizations to focus on the customer experience; however, stakeholders demand the organization do this in a responsible manner, protecting the bottom line. The drive for efficiency and effectiveness is having a positive impact on the contact center industry as well as vendors involved with CRM. The teleservices industry, as practiced in cost management, is enjoying higher growth rates based on their ability to deliver customer satisfaction and results. A key technology driver is voice over IP, which is enabling the realization of more virtual enterprise operational models designed to deliver the best customer experience at the lowest expense.

Nadji Tehrani: What/where are growth prospects for 2007--specifically in what areas?

Dudley Larus, Amcat: We see a bright future for unified applications that provide a 360-degree view of customer data and customer interactions, thus providing a better service experience along with reduced costs and better results. The up trend will continue for technologies that turn information into usable insight such as workforce optimization. Also, the trend for customer interaction software to become more integrated with corporate CRM processes will continue.

Nathan Stearns, IEX: In 2007, the biggest growth prospect will be migration to non-traditional environments--work-at-home programs, hosted solutions, outsourcing, etc.--and the deployment of agent empowerment and performance management tools as well as other initiatives that help transform the contact center into a strategic resource. From a workforce management standpoint, that means new tools for forecasting and scheduling remote agents, outbound workforce management, tools that improve communication between in-house and outsourced operations and, of course, delivering self-service and performance management tools.

Steve Brubaker, InfoCision: Growth opportunities are abundant for companies providing excellent customer service. Consumers are tired of poor quality--they don't like speaking to someone who doesn't speak their language clearly, they don't like being put on hold for long periods of time, and they don't like not getting the answer they need on the first call.

Charles Ansley, Keith Roller and Bob Brittan, Symon: There will be renewed interest in reporting products (real-time, historical) that can supply additional insight through analytics. Symon has also seen a movement from LED wallboards to a mixture of wallboards and LCD/plasma displays that offer performance and productivity management as well as inform and educate agents and other employees. We also see growth for distance learning.

Joseph A. Staples, Interactive Intelligence: Collections, rapid response to Internet-generated leads and mobile/remote workforce.

Nancy Treaster, Witness Systems: Corporate strategies are continually seeking information surrounding the successful use of remote agents. It's an approach they hope will provide more part-time scheduling, which allows them to deliver high service levels during peak times without overspending. In addition, the increased use of remote agents provides access to a new talent pool in different cities and locations, and also allows organizations to leverage new knowledge workers and experts in certain fields that are not interested in full-time work.

Nadji Tehrani: What do you see as industry trends beyond 2007?

Dudley Larus, Amcat: In the mid-sized space, we see real interest in leveraging customer data and reducing the silos of data that exist in almost every organization. Most companies have a strong desire to eliminate data silos that inhibit customer service as well as good business practices. It's going to take a while to overhaul all of these antiquated data architectures and configurations and turn them into systems that have a common data structure that many applications can leverage successfully for the benefit of the business as well as the customer.

Ralph Breslauer, Aspect: For 2007 and beyond, successful contact centers will be cognizant of five crucial trends that impact the industry:

* Performance optimization. Contact centers will continue to look for ways to get more out of their existing environments by analyzing the results of their contact center and optimizing their workforce and interactions through quality management, workforce management, performance management and analytic tools.

* Unified solutions. Contact centers are looking for ways to reduce complexity and integrations, ultimately maximizing productivity and improving customer satisfaction. A unified solution will be a significant step toward addressing these needs.

* Internet protocol. Contact centers are searching for ways to leverage existing systems while also taking advantage of IP (often SIP) for cost-savings and flexibility.

* Open-source IP-PBX. With fully-supported open-source IP-PBX packages on the market, we'll see more businesses exploring this cost-effective and flexible solution.

* APAC. The emerging APAC (Asia-Pacific) contact center industry continues to grow as an exciting market. While outsourcing is still important, the emergence of the domestic market in India and China is also driving significant growth.

Nathan Stearns, IEX: Contact centers are becoming a more integral part of a company's culture and success. While a lot of call centers are still looked at as cost centers and the focus is on efficiency, we're starting to see a shift. More and more, contact centers are beginning to be viewed as a strategic asset in the company's quest to gain market share.

Steve Brubaker, InfoCision: Technology continues to drive the call center industry--it is the building block for developing a competitive advantage. However, technology can only enhance the quality product that the "people on the phone" in our business deliver.

Charles Ansley, Keith Roller and Bob Brittan, Symon: The great momentum in IP telephony and significant interest in IP contact centers is creating the platform for IP-based self-service solutions to gain traction.

Joseph A. Staples, Interactive Intelligence: Continued rapid transition to VoIP, continued moving away from point solutions toward suite solutions, and consolidation of mobile endpoints and use of cell phones as office phones.

Nancy Treaster, Witness Systems: The first is the need to implement a strong customer recovery strategy. This means providing customers with an opportunity to share feedback as soon as their interaction with a service representative is completed. When a rating for products, processes or people comes in low, a designated group of contact center staff needs to be alerted immediately. Studies show that if a less-than-satisfactory experience is addressed instantly, the respective customer tends to be more loyal than if they never had a problem in the first place.

It is critical to work at cross-channel consistency across the enterprise. In a banking scenario, for example, it is irrational to measure caller wait times in seconds in the contact center but have no idea what the customer experience is in the branch office. The way to avoid inconsistencies across the channels is to employ the same processes and measures for all customer touch points.

Performance management provides a series of metrics to ensure that the contact center improves productivity and meets its departmental objectives. It also helps measure how the contact center goals are affecting the overall company objectives. This is becoming more critical to organizations, as it offers automated data collection and reporting technology that frees up contact center managers to work toward achieving goals.

Streamlining processes is another trend that will extend beyond 2007. Many processes currently used by companies are derived from an inside-out view. As a result, they have become stumbling blocks for the agents delivering service and for the customer trying to do business with the organization. These things need to be identified and changed.

Many organizations seek a reduced total cost of ownership from their technology purchases. We are noticing that companies are starting to consolidate their vendor relationships and leverage unified platforms to get more value and to reduce the costs associated with buying from and managing a variety of providers.

IP telephony has been on the "growing trend" list for many years, but just recently it has truly started to take off and companies are already experiencing the benefits associated with having a more flexible network. In fact, a recent study from Yankee Group claims that 38 percent of those surveyed have already deployed or plan to deploy IP telephony within the next 12 months.

The industry is driving customer data security to safeguard transactions and information from identity theft and other security-related concerns. This will continue to be a growing concern and something that many companies will begin to visit in the upcoming years.

Nadji Tehrani: The industry's greatest needs ... current and in the future?

Dudley Larus, Amcat: We still need company leadership within all size companies to realize their bottom line is closely connected with the manner in which they treat customers--that the choice is not between customer service and revenue or cost savings. Both can be achieved with the right vision and technologies.

Nathan Stearns, IEX: Tools that can address agent attrition are one of the industry's greatest needs. In some contact centers, it's still over 100 percent per year. Just the cost of recruiting and training and managing those employees is astronomical. To that end, agent empowerment tools are key to success. IEX has spent a lot of time looking to see what the company can do to help the agents do their jobs a lot better, from their desktop and without intervention by supervisors.

To promote agent empowerment, IEX offers a variety of task automation tools that free agents to be more effective and time-efficient while giving them a sense of power over their lives. They can go in and ask for time off at their desktops and immediately get an answer without a supervisor manually intervening.

Agent empowerment is just a small piece of the bigger performance management picture. This includes giving contact center managers the information they need to analyze what's going on and effectively change agent behavior to provide valuable customer service.

Charles Ansley, Keith Roller and Bob Brittan, Symon: Agent retention and motivation. Even though Web-based self-service solutions are configured to address customer queries electronically, there will always be a segment of customers who prefer human interface or agent interaction in resolving their queries. Trained agents and personnel that can find a career path in call centers are essential.

Additionally, systems are required that can motivate agents through visual display of their activity and performance of the entire agent team.

Joseph A. Staples, Interactive Intelligence: The industry's greatest need is the continued adoption of standards that help promote more flexible communications options.

Nancy Treaster, Witness Systems: The industry's greatest need is to better manage a customer service network. In addition to leveraging resources to reduce costs, this involves taking advantage of the knowledge accessible through direct customer feedback and other departments across the enterprise. Focusing on customer centricity means companies must build synergies inside the customer service network to break down silos between functions in the contact center and across the service delivery channel. At that point, an organization can find balance between effectiveness and efficiency to ensure service levels remain strong, consistent and focused on corporate objectives and goals.

Nadji Tehrani: What about legislative prospects in the near future? Are there any that will affect the call center industry?

Dudley Larus, Amcat: To fend off legislation in the inbound and IVR areas, organizations will need to join efforts to self-regulate and implement best practices, providing easier access to live agents in the right circumstances.

Steve Brubaker, InfoCision: New legislation and regulations are always just around the corner. The call center industry is an easy target for politicians who want to get their names and faces in the news. We must be vigilant by offering quality calls and service so complaints are minimized.

Joseph A. Staples, Interactive Intelligence: In terms of legislation, we'll see the FTC looking to limit and/or ban the use of pre-recorded messages in telemarketing.

Nancy Treaster, Witness Systems: The trend to protect customer information will continue. One example of this is the PCI initiative implemented by the credit card industry. Call centers will need to pay close attention to these types of initiatives and ensure that they have the processes and tools in place to comply.

NT: Thank you all very much for your time.

As always, I welcome your comments. Please e-mail them to me at [e-mail].

By: Nadji Tehrani, Founder, Chairman & CEO, Editor-in-Chief, Technololgy Marketing Corporation

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