Customer Relationship Management & Business Process Outsourcing: (CRM/CXM/BPO)
Pivot toward quality of service in the challenging service environment of today.
Deal count in the CRM/CXM/BPO vertical is up in the second quarter of 2023, driven predominantly by upstart technologies capitalizing on the AI/LLM revolution to provide customized solutions related to customer care and raising capital. There were some larger CXM/BPO mergers as well highlighted in the bottom section – with Bill Gosling Outsourcing acquiring India-based MattsenKumar – as companies look to expand their geographic delivery footprints and access to additional labor markets.
A recent Gartner’s survey revealed that only 8 percent of participants used a chatbot in their recent customer service experience, and just 25 percent of that 8 percent would use the chatbot again. The survey shows varying success rates for different types of questions, with return/cancellation at 48 percent, order/purchase at 52 percent, and account information at 43 percent. The primary driver of chatbot adoption is the ability to address customer issues efficiently. For all of the talk of chatbots/AI/AGI, these numbers feel staggering low. The reality is that chatbots do not consistently help customers achieve their goals. Improvements are needed, and service leaders should guide customers to appropriate channels. This is the greenfield of opportunity for those with useful technology aiming to blend it together with helpful service.
According to a survey conducted by Interactions published in Retail Brew, a conversational AI software company focused on customer service, consumers are increasingly dissatisfied with customer service experiences. The survey, conducted by Cint and polling 1,000 consumers in the U.S. in March, found that 38 percent of respondents would prefer getting a cavity filled over contacting customer service, 35 percent would rather assemble an IKEA dresser, and 28 percent would choose to burn their mouths on hot coffee. Peter Mullen, Chief Marketing Officer of Interactions, expressed concerns about the decline in customer service satisfaction, stating that companies face high stakes in improving the customer experience. He believes that over the next decade, customer experience will be a critical predictor of annual recurring revenue for businesses worldwide. The survey also revealed that customers have become increasingly frustrated in their interactions with customer service. Within the last year, 48 percent of respondents reported feeling anger during customer service interactions, 38 percent hung up on customer service calls, and 33 percent raised their voice or swore; this includes instances involving AI-powered systems. The top frustration for customers was long wait times on hold – with 77 percent of respondents mentioning it – followed by being transferred multiple times (60 percent) and having to repeat themselves to automated systems (47 percent). To address these challenges, Mullen suggests that hold times can be mitigated by offering the option for an agent to call back when they become available. Furthermore, designing automated systems that are intuitive and intelligent enough to solve issues or connect customers with the appropriate agents can minimize frustration. While AI and voice recognition technology have made advancements, understanding various ways of affirmative responses remains complex. In conclusion, the survey highlights the growing dissatisfaction among customers regarding customer service experiences and emphasizes the need for companies to make significant improvements to meet customer expectations.
We at CAS have seen a recent emphasis on newer BPO delivery in places such as South Africa. South Africa is rapidly emerging as an attractive destination for companies in the business process outsourcing (BPO) vertical due to a combination of compelling factors. First and foremost is the country’s highly skilled and educated workforce, fluent in English and often multilingual, offering a competitive advantage for servicing global clients. The country’s robust telecommunications infrastructure and reliable connectivity further support seamless communication and data transfer. South Africa offers cost-effectiveness, with competitive labor rates and government incentives for BPO investments. The nation’s political stability and improving business environment provide companies with a sense of security and confidence in their long-term operations. As a result, South Africa is becoming an increasingly attractive hub for BPO services, providing companies with access to top talent, operational efficiency, and the potential for significant cost savings. As such – we have seen from a few different parties the foray into setting up an operation (either through acquisition or joint venture).
Deals to Highlight:
SharpenCX acquired WebText
Bill Gosling Outsourcing acquired MattsenKumar
Emerging Tech in the OBS Ecosystem:
The market for fraud prevention and detection is witnessing substantial growth in demand, as the ARM, RCM, and CRM/CXM/BPO operators complete their pivot from legacy operations to a fully digitalized and data-driven model. Specifically, these industries are becoming popular targets for cybercriminals due to the handling and storing of large amounts of sensitive and proprietary data and transactions. Bad actors in the space are testing different data-breaching strategies to exploit current digital vulnerabilities in payment systems, customer information databases, or communication across the entire omnichannel. Data breaches, often considered by industry experts as the starting and critical point in the economy of fraud, increased by 83 percent in the U.S. from 2020 to 2022.
Likewise, the growing complexity and sophistication of fraud schemes have necessitated advanced analytics and technology-driven approaches to effectively combat fraudulent activities. Organizations within ARM, RCM, and CRM/CXM/BPO verticals need to recognize the importance of investing in cutting-edge fraud prevention and detection solutions to safeguard their financial well-being, maintain their reputation, and enhance customer support across service offerings. Notably, the accelerating growth in synthetic identity fraud, credit washing, and wire fraud is sparking interest from investors who want to capitalize on opportunities to create new fraud prevention and detection market leaders. One of the latest examples is TransUnion’s strategic partnership and $24 million equity funding with Truework, an income and employment verification platform for financial services companies.
In the near future, we can expect the market demand for fraud prevention and detection solutions to only pick up, as fraudsters try to stay ahead of the curve and implement original and creative strategies. With recent breakthroughs in generative artificial intelligence (AI), cybercriminals are able to utilize state-of-the-art deepfake technologies to easily breach weak protection systems, such as legacy biometric authentication devices. The race between the use of AI for fraud prevention and detection and fraud conduct will define how ARM, RCM, and CRM/CXM/BPO verticals implement anti-fraud solutions in their operations to differentiate themselves from their competitors, as well as gain a competitive edge.
And what would an “Emerging Tech in the OBS Ecosystem” write-up be without opining on generative AI. The world of large language models and their practical applications are still in the early innings. Much like everyone else given the fundraising volume and activity around the AI ecosystem, we are bullish on the application. Despite the aforementioned, we at CAS think there are likely still more questions than answers for the utility in something as sensitive as credit and collections, revenue cycle management, and/or handling PII. We would love to hear from any of you regarding how you envision applying (or are already utilizing) AI, AGI, LLM, or any other acronym that applies to your current tech stack.