Actionary Research

Beyond the Hype: Realigning Customer Service Strategies for Real CX Impact

November 30, 2024 / 7 min read

Summary

The customer service technology landscape continues to significantly transform as vendors aim to offer more comprehensive customer experience (CX) solutions. However, despite the promise of an enhanced service value proposition, the actual customer experience often falls short due to the scope, complexities, and immaturity of current offerings. This research examines the shifting dynamics in the customer service vendor market, identifies the challenges faced by vendors and organizations, and provides actionable recommendations for adopting a more integrated and future-ready customer service strategy.

Key Take: Without careful internal alignment and strategic planning, organizations risk under-delivering on the promise of enhanced customer experience.

Expanding Customer Service Vendor Ambition Will Elevate the Service Value Proposition, But Overall CX May Be Underwhelming

Gartner defines CX as the customer’s perceptions and related feelings resulting from both one-off and cumulative interactions with a supplier’s employees, systems, channels, or products [1]. Effective CX management requires a strategic approach that involves carefully designed customer journeys and the use of enabling technologies to improve interactions across all touchpoints — not just customer service. The ultimate goal of CX management is to consistently meet or exceed customer expectations, thereby enhancing customer satisfaction, loyalty, and advocacy. Customer service vendors are branding themselves as comprehensive CX providers, but their focus remains on customer service, with capabilities still dependent on partnerships and future market expansion.

Vendors are embellishing their capabilities. Customer service vendors are increasingly positioning themselves as comprehensive CX solution providers. However, their offerings primarily focus on the customer service function, which is only one component of a broader CX strategy. For example, while customer service solutions might include AI-driven personalization to enhance service interactions, they do not extend to areas like customizing product descriptions in real time in a digital commerce environment to align with a shopper’s personality — an aspect that is equally critical to the customer’s perception of the brand. While customer service undoubtedly plays a significant role in CX across many industries, labelling these vendors as comprehensive CX solution providers is an overstatement—at least for now. As vendor ambitions evolve and begin to connect experiences across sales, marketing, service, and beyond, the use of the CX nomenclature may become more justified.
Vendor ambitions are expanding into adjacent markets. Customer service vendors are moving beyond their traditional niches, such as Contact Center as a Service (CCaaS), Customer Engagement Center (CEC), and Workforce Engagement Management (WEM), to integrate multiple capabilities within their platforms. This expansion aims to better manage the overall customer service experience (CSX). For example, Zendesk recently extended its reach from CEC to WEM by acquiring Tymeshift, a workforce management vendor, and Klaus, a quality management vendor [2][3]. Although vendors are striving to provide more comprehensive solutions, these efforts remain primarily focused on customer service.
Reliance on marketplaces and partnerships remains strong. Despite these ambitions, no vendor currently offers a complete set of products necessary to fully realize the customer service ambition. This gap has led to a reliance on partnerships, original equipment manufacturers (OEMs), and marketplaces. For instance, some CCaaS offerings in the Salesforce AppExchange marketplace offer unique functionality not available when bought as a standalone [4]. When vendors successfully combine these capabilities, the value proposition can be significant. They can achieve economies of scale, provide a single point of accountability, and create unique functionality and cross-functional workflows that elevate customer interactions to a new level. This integrated approach moves vendors closer to fulfilling the promise of being true CSX providers.

Acquired Products Are Not Integrated Well Enough and Vendors Change Direction Too Easily

Vendors face significant challenges successfully expanding into complementary markets due to their lack of experience in selling and supporting these new products. Acquired technologies are often only loosely integrated into broader platforms, leading to inefficiencies and inconsistent user experiences. Historical examples, such as Nortel’s unsuccessful acquisition of Clarify and Salesforce’s decision to retire its WEM solution shortly after its introduction [5], illustrate the difficulties vendors encounter when trying to integrate and deliver on expanded ambitions. These challenges are compounded by additional risks and complexities that further complicate the landscape for buyers.

Roadmaps are harder to trust. While vendors continue to expand their customer service capabilities beyond their core domains, their roadmaps often highlight ambitious goals that may not be fully realized. The immaturity of current offerings creates a complex and confusing environment for buyers, as the promise of future capabilities may not materialize. Critical planned features and updates may be delayed, altered, or even cancelled without recourse.
Buyer strategies are disjointed. Many organizations still operate in silos, with separate teams handling different aspects of the customer service technology procurement process. For instance, the team responsible for purchasing CEC solutions may be unaware of the tools used by the contact center for WFM. This disjointed approach prevents organizations from adopting a holistic strategy that could maximize the benefits of an integrated Customer Service Experience (CSX) solution. A more coordinated strategy is essential to ensure that all aspects of the customer service experience are aligned and optimized.
Messaging from vendors is confusing. Vendors are increasingly adopting aggressive marketing strategies that can confuse potential buyers. For example, Verint’s “bring your own telephony” approach, called Open CCaaS, could undermine the perceived value of the CCaaS market by positioning it as a commoditized capability [6]. For many organizations centralizing around their incumbent CCaaS provider may be the best way forward. The integration of overlapping but potentially unrelated technologies, such as merging UCaaS with CCaaS, further complicates decision-making for buyers. NICE’s recent announcement of offering UCaaS as a $5 monthly add-on to its existing CCaaS solution adds to this market disruption and uncertainty [7].

Embrace the Future Reality of a Viable CSX Solution

Despite these challenges, organizations should begin the process of selecting a long-term strategic partner to anchor their customer service technology ecosystem. Initially, this partner may be seen primarily as a CEC or CCaaS vendor, but over time, they will evolve to offer a more comprehensive Customer Service Experience (CSX) solution. When selecting this partner, consider factors such as the breadth of their vision, roadmap adherence, financial stability, speed of innovation, and technical architecture. It is crucial to choose a vendor whose architecture allows for seamless integration with existing investments, avoiding the need for a “rip and replace” approach to achieve the intended CSX ambition. Organizations should be able to leverage incumbent technologies until they are ready to migrate to the core provider’s solution. The integration of these third-party technologies should be “plug and play” and invisible to users. To effectively address these issues and build a robust customer service technology ecosystem, organizations should focus on several key strategies:

Engage incumbent vendors to understand their CSX roadmaps. Seek confidence in their timely delivery and quality. Identify opportunities to streamline your vendor portfolio, ideally to one core provider, which can simplify integration, reduce costs, and create a more cohesive CSX strategy. However, ensure that any consolidation efforts are aligned with your long-term strategic goals.
Utilize the power of ecosystems to enhance your CSX strategy. Assess the merits of your preferred strategic partner’s ecosystem offerings, which often provide better integration, functionality and support than standalone solutions. Closing the capability gap by focusing on ecosystem technologies that complement your core platform will help achieve a more seamless and effective customer service experience.
Centralize Strategic Alignment. Organizations should establish a central team responsible for developing and managing a unified strategic technology roadmap. This team should focus on the benefits of centralization, such as cost savings, improved workflows, enhanced user experiences, and ultimately, elevated CX. By aligning all customer service-related initiatives under one strategic umbrella, organizations can better position themselves to take advantage of an integrated CSX solution.
Adopt a CX-First Perspective. Organizations should shift away from outdated market definitions like CCaaS, CEC, and WEM, and instead focus on attributes that truly define the customer experience. Reframing procurement approaches and associated RFPs to prioritize CX attributes will help organizations achieve their CX ambitions. The table below provides an example of how to map out this revised process, starting from the customer’s perspective:

This shift in perspective will help organizations build a more cohesive and customer-centric customer service technology strategy. The same logic should be applied to the agent experience, considering the attributes that influence their daily work experiences. Employee engagement and loyalty are increasingly important, and approaching customer service technology procurement through the lens of its impact on the employee experience will be essential.

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