5 Actions Customer Service Leaders should take to mitigate the effects of the Economic Downturn

Co-Authored with Andrew Schumacher (Senior Principal, Advisory).

If you’re like the Customer Service and Support leaders we’ve been speaking to recently, you’ve no doubt been feeling the “triple squeeze” – persistent high inflation, scarce and expensive talent, and global supply challenges. Three compounding pressures, the combination of which most of us have never experienced before. Which of these are ringing true for you and your team?

• Struggling to meet increasing customer demand due to rising labor costs and increased attrition; 
• Being challenged when requesting to invest, as spending is under greater scrutiny; 
• Wondering whether you’d be better off offshoring or outsourcing;
• Increasingly being pressured to transform from a cost to a growth center; and 
• The relentless challenge of meeting CX expectations as they continually evolve.  

This combination of factors will make navigating the next recession far more challenging than past downturns. But Gartner analysis of past economic downturns suggests that if you act now, you’ll be positioning yourself for longer term gains and returns that laggards won’t see. So, here are five actions Customer Service & Support (CSS) leaders can take now to get ahead.

Contribute to the top-line by creating customer value

Good service interactions don’t automatically support customer loyalty. Rather, we need to focus on how we go beyond issue resolution and help our customers to better use and feel confident in their decision to purchase their existing product or service – the real driver of loyalty through service. So, to deliver the top-line contributions increasingly expected of Customer Service, CSS leaders should develop Value Enhancement (VE) strategies. 

VE is an increasing focus for CSS leaders, but to get ahead in the face of cost pressures, consider taking a more targeted approach to its delivery. For example, focusing on segments who present the greatest renewal or repurchase risk, and looking at how VE can be delivered more cost-effectively in self-service channels.

Influence the C-Suite on cost reduction and avoidance

Customer Service and Support functions have traditionally been considered cost centers, and might be the focal point of immediate cost-saving measures. But one of the things that we learned from the early days of the COVID-19 pandemic and the financial crisis of 2008-2009, is that many companies swung too far in their cost cutting measures, with some coming out of the economic downturn in 2020-2021 feeling like their cost cutting actually hurt their recovery. 

As a result, CSS leaders must seek to maintain their limited budget in a way that agrees with C-Suite priorities by creating a list of trade-offs and crafting a story making the case for each in order to manage spend. In particular, CSS leaders should:

• Make the case for continued investment in digitization (as this can put organizations in a better position for the future, and 69% of CFOs intend to increase spending in this area, so access to funds should be easier); 
• Aggressively source digital talent to support this investment; while 
• Reducing overall attrition costs by shifting to a human-centric workforce design, including embracing radical flexibility.

“I’m telling my teams to fund digital acceleration
by finding savings and inefficiencies.”
– CFO Response to Gartner’s Recession Planning Poll

Migrate volume to digital and self-service

If you’re like most Customer Service & Support leaders we speak with, your natural reaction to the “triple squeeze” is probably to contain costs by reducing customer use of expensive agent-assisted channels. While this makes a ton of sense, CSS leaders should be mindful that simply adding self-service functionality will not guarantee self-service migration. Gartner research shows that simply adding or integrating channels will lead customers to utilize more channels during their resolution journeys. Instead, CSS leaders can improve self-service adoption by improving functionality, and by optimizing the search engine experience for digital customers.

Improve, automate, or eliminate inefficient processes

In addition to migrating volume to digital and self-service, CSS leaders must look at how processes can be delivered more efficiently, or eliminated where inefficient to reduce cost and resource pressure. This might include moving workforce planning from Excel to a WEM solution, or augmenting reps through tooling that surface insights enabling the personalization of interactions instead of them hunting around in the back-end. 

But to be clear – the answer here isn’t to simply take a process and automate it. Rather, CSS leaders and their teams should think longer-term, and assess the true business value of a process, and challenge themselves to redesign, convert, or even eliminate the most ingrained of processes. And just because a process cannot be automated in its entirety – for example, moving that customer interaction from the phone to a chatbot – doesn’t mean it should be passed over. Automating components of a customer journey or back-office process can also contribute to the lower-effort experience customers and reps expect. 

Assess outsourcing options and partnerships

Outsourcing can provide cost savings and a way to augment the workforce in a talent shortage. The good news is that these cost savings do not have to be made at the expense of the customer experience. Leading service and support organizations are evaluating current BPO vendors and assessing new partnerships for their ability to deliver on the right processes and operations.

Customer Service and Support functions should:

• Outsource things like surveys, data analytics, and basic/tier one support which can deliver cost reduction with limited CX impact. 
• Make sure current outsourcing partners are aligned with the organization’s CX and efficiency goals. The best BPO partnerships are measured with a limited number of KPIs, allowing BPOs to focus on positive customer outcomes. 

To discuss how you can take action to mitigate the effects of the economic downturn for your Customer Service organization, schedule an inquiry with a Gartner expert today.