Latest Market Trends Impacting Contact Center Strategy V1


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Contact center state of the market presentation delivered at CRM Evolution 2009 in New York City.

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  • Consumer confidence is low, consumer spending is downOverall decrease in retail salesHeadcount / operational expense reductionsCredit crunchGovernment intervention increasing in certain marketsPrice cuts, reductions in capital expenditure budgetsDurable goods orders lowIncreasing cost of healthcare for employers
  • Generate CashGenerate internal financing through improved working capital efficiency [AP, AR, Inv], and reducing capexCut operating expensesStrengthen the CoreFocus efforts on core competencies and processes – outsource or offshore the rest to low-cost providersFortify supply base : support key suppliers where necessary; develop second sources where neededImprove GM through more effective sourcingDrive management and execution of critical initiativesGrow AdvantageExpand offerings to capture greater share of wallet for most important customersCapture market share at competitor’s expenseStrengthen through partnerships / alliances / M&AIncrease innovation and value-add to customers
  • “Businesses naturally move along the maturity curve and very rarely do companies or divisions not experience challenging periods”“If possible it is important for companies to understand and appreciate the impact of the early warning signs allowing them to take action quickly (warning signs can include external indices, losing customers, competitor changes, etc)”“Once the signs have been acknowledged action can be taken:“The faster action is taken then the quicker the company can correct it trajectory and minimize the value lost”
  • Latest Market Trends Impacting Contact Center Strategy V1

    1. 1. Latest Market Trends Impacting Contact Center Strategy<br />August 24, 2009<br />
    2. 2. Today’s Economy Demands a Focus on Performance Improvement<br />1<br />
    3. 3. How Business Leaders Are Responding Strategically<br />2<br />Survey Response of over 1400 Business Leaders – November 2008<br />Reduce Operating Expenses<br />Increase Productivity<br />Reduce Working Capital & Capex<br />Introduce New Product / Services<br />Restructure / Reorganize<br />Seek Merger Acquisition<br />Hire Key Talent<br />Leave Certain Markets<br />Increase Hedging<br />No Steps<br />Generate Cash<br />Strengthen the Core<br />Grow!<br />0% 20% 40% 60% 80%<br />*McKinsey Quarterly, <br />1,424 respondents in November 2008<br />2<br />
    4. 4. Recognizing the Warning Signs of Organizational Decline<br />Organizational Lifecycle<br />GROWTH<br />START UP<br />MATURITY<br />TRANSFORMATION<br />FUTURE GROWTH<br />RENEWAL<br />THE PERFORMANCE IMPROVEMENT <br />PROCESS<br />RESTRUCTURING<br /><ul><li>Competitors acquiring market share
    5. 5. Margin pressure
    6. 6. Missing forecasts
    7. 7. Increasing sales and gross margins
    8. 8. Increasing market share
    9. 9. Scalable costs
    10. 10. Declining sales
    11. 11. Operating losses
    12. 12. Declining or negative cash flow
    13. 13. Out of cash</li></ul>Warning<br />Signs<br />3<br />3<br />
    14. 14. How Companies are Responding Tactically<br />4<br />Company’s Response to Downturn<br />Impact of Economic Downturn on the Company<br />
    15. 15. Performance Improvement Levers<br /> Revenue and Margin Enhancement<br /><ul><li>Product and customer profitability
    16. 16. Segmentation and focus
    17. 17. Channel management and effectiveness
    18. 18. Pricing strategy and customer terms
    19. 19. Sales and marketing effectiveness
    20. 20. Customer relationship and targeting
    21. 21. Portfolio and product management
    22. 22. Order management and delivery
    23. 23. Competitive intelligence
    24. 24. Forecasting and demand management
    25. 25. Customer service strategy</li></ul> Direct Cost Reduction<br /><ul><li>Operations and process optimization
    26. 26. Logistics planning
    27. 27. Production planning and process
    28. 28. Labor cost management
    29. 29. Sourcing and supplier management
    30. 30. Quality improvement
    31. 31. Service and warranty optimization
    32. 32. Materials cost reduction
    33. 33. Product design optimization
    34. 34. Supply and outbound logistics
    35. 35. Terms and conditions</li></ul>Overhead Optimization<br /><ul><li>Staff and span of control right-sizing
    36. 36. Shared services and outsourcing
    37. 37. Indirect spend management
    38. 38. HR, payroll, benefits, and training
    39. 39. Sales and marketing overhead
    40. 40. IT applications and infrastructure
    41. 41. Finance and administrative efficiency
    42. 42. Insurance & risk management
    43. 43. Management reporting and KPI’s
    44. 44. Real estate footprint and terms optimization</li></ul>Working Capital Management<br /><ul><li>AR / AP management
    45. 45. Cash forecasting and management
    46. 46. Billing and credit management
    47. 47. Credit terms and factoring
    48. 48. Inventory management
    49. 49. PP&E utilization
    50. 50. Financial controls and monitoring
    51. 51. Capital expenditure planning
    52. 52. Order to cash cycle
    53. 53. Procure to pay cycle
    54. 54. Financing costs and income</li></ul>Industry Perspective<br />Performance Management<br />Products and Pricing<br />Customer Growth<br />Sales and Marketing<br />Strategic Context<br />People and Locations<br />Revenue<br />Logistics<br />Drivers ofEarnings<br />and Cash<br />Finance and Admin<br />Direct Costs<br />Operations<br />Overhead<br />Sourcing<br />IT and MIS<br />Working Capital<br />AR / AP<br />Inventory<br />Financing and Property<br />5<br />5<br />
    55. 55. How Recessionary Conditions Influence Contact Center Strategy<br />In response to the downturn, the following strategies are being employed by companies that own and operate contact center operations<br />Rationalizing Contact Centers<br />Recession is forcing companies to optimize overhead costs as a way to preserve cash resulting in an increase demand in outsourcing or rationalizing of existing centers<br />1<br />Rethinking Technology Investments<br />The recession has forced some practitioners to rethink there existing technology platforms including SsaS/Hosted Solutions, Unified Communications and Social Media<br />2<br />Improvement in Government Service Levels<br />Government agencies are expected to provide the same level of service (if not better) than the private sector <br />3<br />
    56. 56. Rationalizing Contact Centers<br />1<br />2<br />3<br />Companies are cutting back, rationalizing or consolidating contact centers when G&A spend does not flex with revenue or there are a number of decentralized/redundant support functions. Consolidation & outsourcing allows a company to “variablize” their cost base and focus on the core business.<br />Recent Cut Backs/Consolidations<br />Teleperformance & Teletech were forced to cut back or close operations in Belleville, VA & Akron, OH<br />StarTek closed its Regina, Saskatchewan center March 2009<br />SITEL is closing its Sudbury Ontario center affecting 350 jobs<br />Advance Auto Parts announced plans to shut down its 90 person call center in Roanoke, VA<br />Greyhound announced plans to close its Tucson, AZ operation affecting affecting 450 jobs<br />Recent Growth/Expansions<br />RYLA announced plans to open a new regional headquarter customer contact center hub in Saraland, AL creating 600 customer service &supervisory jobs<br />Cbeyond plans organic growth creating 600 jobs through 2011<br />Geico & Afni announced in 2007 that they would add 200 jobs at their local call centers<br />Sykes opened a new state-of-the-art call center in Bardstown, KY<br />Verizon Wireless rationalizes 2 NYC centers and opens 2 in Atlanta, GA & Wilmington, NC<br />
    57. 57. Rethinking Technology Investments<br />1<br />2<br />3<br />Contact Center Practice Leaders that have been forced to do “more with less” can no longer push on process and change management levers to gain economies of scale and efficiency gains. Practice Leaders are rethinking their existing investments and developing business cases to upgrade which are catching many executives off guard. <br />Market Observations:<br /><ul><li>SMB & Mid-market contact center practice leaders (seats 100-350) feel underserved and at a disadvantage when pursuing new technology
    58. 58. Contact Center Satisfaction Index (CCSI) states 65% of unhappy customers will defect to a competitor if they receive poor treatment or experience a negative moment of truth by a live agent
    59. 59. Software-as-a-Service/Hosted Solutions are gaining traction in the contact center space
    60. 60. Unified Communications& IP-based contact centers as a way to improve customer retention rather than customer acquisition
    61. 61. Web 2.0 Technology is enabling practice leaders to right-channel more interactions to the web and less to live agents which is reducing G&A spend
    62. 62. Social Media is making its way into the corporate fabric of today’s companies being leveraged as a way to complete sales, bolster customer service and capture voice of the customer</li></li></ul><li>Approaches for Rethinking Technology Investments<br />1<br />2<br />3<br />Below are suggested approaches for buyers & vendors a like to consider when rethinking contact center technology investments<br />
    63. 63. Improvement in Government Service Levels<br />1<br />2<br />3<br />Situation Analysis & Market Observations<br />There is a growing pressure to increase operational efficiencies while at the same time ensuring that citizens can access any necessary information at any time. According to the latest scores from the American Customer Satisfaction Index (ACSI), the federal government still lags behind the private sector when it comes to delivering exceptional customer service<br />Complication<br />The Federal Government is a monolith and citizens are completely intimidated by the complexity of it. The challenge that most Federal Governments face is how to make the government smaller for its citizens and provide the same level of service (if not better) than their commercial counterparts<br />Solution<br />Many federal, state & municipal agencies are investing in Web 2.0 and other tools to improve transparency and level of care to its citizens constituents<br />
    64. 64. E-Government 2.0<br />1<br />2<br />3<br /><ul><li>Early breakthroughs in in e-government – the use of technologies and tools to provide and improve public-sector services, transactions and interactions – have enabled government agencies to deliver better service and improve operational efficiencies and effectiveness
    65. 65. Over the past five years, these efforts seemed to have plateaued due to lack of governance models, legal, cultural and operational roadblocks
    66. 66. Web-related efforts are often fragmented from one agency to another
    67. 67. Sharing information across siloed departments runs counter to the 360-degree view of the customer theory of CRM
    68. 68. Most federal agencies don’t refer to their “citizens” as “customers”
    69. 69. Generally the government culture is slow to adopt technology
    70. 70. Insufficient capabilities exists in the arena of marketing, usability, customer insights and Web analytics
    71. 71. Like their commercial counterparts, government call centers are as much strategic than they are a necessary evil. To be successful, government call centers must start with the end in mind – provide exceptional service to its citizens</li></li></ul><li>State of Georgia<br /><ul><li>At the request of Georgia Governor Sonny Perdue, Joe Doyle, has transformed everything from the DMV to voter registration and has made it all customer friendly
    72. 72. Employees at the DMV were scared to take lunch in their uniforms because they were scared at what citizens may say, think or do to them!
    73. 73. Lowered the wait time at the DMV from two hours to six minutes
    74. 74. Joe Doyle has taken the State of Georgia’s call centers from 50th in the nation to 4th with service levels approaching the quality of service as Nordstrom’s</li></ul>His approach to transforming the State of Georgia call centers are anchored in four basic principles – the importance of top-down leadership, principle centered, customer driven and results focused<br />12<br />1<br />2<br />3<br />
    75. 75. Other Government Examples<br />Centers for Disease Control & Prevention<br /><ul><li>Consolidated 40 different toll-free numbers covering topics across the agency to a single toll-free number to disseminate all CDC information.
    76. 76. Consolidated publication distribution services from 5 warehouses to single distribution center</li></ul>Centers for Medicaid & Medicare Services<br /><ul><li>Medicare and Medicaid account for one of the largest expenditures in the Federal budget, and is the world’s largest healthcare insurer that oversees healthcare services for roughly 43 million Medicare beneficiaries. Customer inquiry call volumes are significant, averaging 30 million calls a year.
    77. 77. Since the launch of Medicare in 1966, beneficiaries had to navigate through several hundred 800 numbers because CMS’ call centers operated as a patchwork of 71 standalone centers.
    78. 78. The Virtual Contact Center Strategy and enabling technologies provide CMS with the tools to standardize operations and has resulted in: sustained cost savings in call center operations due to decreased call resolution time; consistent, accurate, and clear responses to Medicare beneficiaries and the public, thus improving customer service; increased efficiency and one-stop shopping</li></ul>13<br />1<br />2<br />3<br />
    79. 79. Conclusion<br /><ul><li>In recessionary conditions, the mantra “Cash Is King” is more prevalent than ever before forcing executives to reconsider their contact center investments and strategies in hopes of reducing their direct costs and optimize their overhead
    80. 80. While these efforts are happening, we should never lose sight of the importance of the customer and the social responsibility of organizations to deliver on its customer value proposition
    81. 81. Judicious use of call center technology integrated with a customer-driven approach to training, live agent empowerment and change management should result in effective and efficient operations balanced with high customer satisfaction</li></ul>14<br />
    82. 82. 15<br />Art Hall<br />Manager<br />Alvarez & Marsal, LLC<br /> 260-4152 (O)<br />(404) 759-9158 (M)<br /><br />NORTH AMERICA • EUROPE • LATIN AMERICA • ASIA<br />15<br />