The erosion of boundaries taking place due to online commerce is driving the need for new business models and ways of thinking in all sectors – including customer service provision. That’s the focus of a report sponsored by Genesys and issued from The Economist Intelligence Unit (EIU): “Service On-Demand: The Future of Customer Service“.
The Report in Context
This EIU report draws from a February to April 2016 survey of 200 senior Asia-Pacific executives tasked with managing customer service for their own companies, and 75 executives representing enterprises which offer customer service products and services. 44% of the respondents came from the retail sector, 21% from government organizations, and 15% from the telecommunications industry. A broad economic spectrum was polled, with 56% of companies having annual revenues below US$250m, and 20% with over $1 billion.
Analysis and commentary was also provided by 3 thought leaders, including Christian Viatte, the CEO of Mila.
Buyers and Providers
The report draws a distinction between two sub-groups of the survey’s respondents, which represent distinct driving forces within the customer service sector.
On the one hand are the 200 executives with a role in making major decisions regarding their firms’ deployment of customer service – whether as contracted from third parties, or through the management and allocation of resources within the organization itself. These respondents are designated as “buyers” of customer service.
On the other hand are the 75 executives supplying expertise in areas such as email response, the monitoring of social media platforms, and call centre staffing: the “third-party suppliers of customer service offers, channels or services.” The report designates these respondents as “providers” of customer service.
Terms like “gig“, “peer-to-peer”, and “on-demand” are routinely used to describe the kind of “sharing economy” which typically draws on Internet access and mobile phone technology to empower communities of individual users and service providers to trade the temporary use of skills, access, physical goods, or services for financial gains or some form of payment in kind.
The customer service function studied in this report is a wholly commercial activity, and is described in terms of an “access economy”, or (due to the speed of service delivery involved in the business model) an “on-demand economy“.
Car-sharing / urban taxi phenomenon Uber is often cited as an example – one that’s already generated more revenue in valuation than big names like Ford or General Motors in its 7-year existence. The term “Uberisation” has even entered the language, to describe revolutionary changes in an industry due to the arrival of an on-demand enterprise.
The on-demand economy is new territory, and firms are still trying to determine what works best – and coming to terms with the sometimes skewed logic and varying levels of success that are being observed.
Early ventures seeking to capitalize on the idea that simple commodities like power tools (which people use only occasionally) could be rented out on a peer-to-peer basis came to a swift end. And even high-profile players like the short-stay accommodation platform AirBnB have recorded dramatic shifts in customer behavior patterns, when compared across locations in a single country.
Though the customer service industry has yet to fully embrace the trend, outsourcing to third parties is already common, with research from the likes of Radiant Insights suggesting that the global market for outsourced customer interaction will grow to $69 billion by 2020. And in the Asia-Pacific region, 82% of those polled for the EIU report expected the access economy to impact customer service provision in their industries within the next 3 years.
Disruption and Agility
Among those customer service professionals designated in the report as “buyers”, investment in service provision was considered a priority for the overall profitability of an enterprise. But many see current service offerings as lacking, and believe that parts of the industry are crying out for disruption – a view echoed in turn by significant numbers of those on the “provider’s” side of the equation.
80% of the customer service buyers interviewed said that they would invest in an on-demand solution if one became available. And over 60% of them predict that buying into an on-demand customer service option would be the factor separating successful from unsuccessful ventures, in the near to mid-term.
Beyond the Cost Factor
Low costs and convenience are the typical selling points for an on-demand service option. But cost reduction isn’t the main incentive for customer service buyers. Rather, the biggest gains are to be had from better customer satisfaction (a must, for 43% of those surveyed), greater customer retention (32% of the respondents), or gaining a better position in the market (28%).
The Impetus for Change
Zurich-based customer service platform Mila is cited as an example of the innovations and change in mindset that are driving the access economy. Beginning in 2013 as a resource for customers seeking help with small tasks, Mila entered into partnership with Swiss telecoms company Swisscom, to create Swisscom Friends – a platform linking those requiring help with IT issues to neighbors with the required skills.
Enquiries about issues not directly related to Swisscom products highlighted the potential for a fuller, paid customer channel to be provided. The firm began disrupting its own formal customer service set-up, allowing subscribers to Swisscom Friends to source advice on the telecoms providers core services such as Swisscom Internet.
Adaptation and Survival
As the Mila example indicates, an on-demand offering may be best approached as a gradual process, with experiments in service delivery at the fringes of an enterprise, so that methodologies can be adjusted and improvements made before rolling it out more widely.
And firms wishing to adopt an access economy business model will need to consider a range of issues, such as:
- Seeking expertise in the right places, and building up a community of customer service providers.
- Ensuring that customer service providers achieve a certain level of performance, at all times.
- Using appropriate technologies such as Artificial Intelligence and data analytics to round out service offerings.
- Ensuring buy-in and support from senior management and stakeholders.
- Encouraging and maintaining customer demand.
Mila CEO Christian Viatte puts it this way:
“Customers will not necessarily remember the [on-demand customer service] platform when they need it. You can’t just set up a platform. You have to go directly to the places where the customers are when they need the service.”
Download the full report here