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Will Customer Experience Survive in a ‘Soft’ Economy?
On The Scene: RightNow Summit '08 -- Cutting costs may lead to cuts in service.
For the rest of the December 2008 issue of CRM magazine please click here
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The economic crisis made for a lively topic at customer experience management provider RightNow Technologies’ annual user summit in Colorado Springs, Colo., in October. Not stocks, per se, but customer service—and how to maintain it as technology budgets dwindle.

“The economy is on everyone’s mind right now,” explains Chief Marketing Officer Jason Mittelstaedt. “[You should] invest in the customers you have, and only do positive-return-on-investment [ROI] projects.” One of the biggest mistakes in this environment, he says, is to focus on new-customer acquisition.

Rob Bois, research director at AMR Research, agrees. “Companies are facing budget constraints across [technology] and line-of-business as economic conditions decline,” he says. “Investments that don’t promise quick ROI and can’t directly lead to cost reduction are simply not funded.”

Greg Gianforte, RightNow’s chief executive officer and founder, says that’s good news. “One of the common themes I’m seeing is an increase in the focus on cost savings,” he says. “It’s great to improve customer experience, but we also have to tie those solutions back to [saving money]. In a soft economy, we see an accelerated shift to software-as-a-service, so when the dust clears and the market rebounds it looks like a very good market for us.”

The downturn has led RightNow to develop a pilot program: For about $33,000 to cover consulting, new users are implementing single modules instead of full suites. And starting small has paid off: Those small-scale, 90-day pilots have been converting to longer-term subscriptions at a rate of higher than 80 percent, according to Gianforte, with an average second-transaction price of $150,000.

Most users are starting with Web self-service, which Gianforte says “doesn’t require a change in CRM strategy.” Feedback and agent-desktop solutions came in second and third, respectively. “The desktop is more of a follow-up purchase.”

Small successes and high-level executive buy-in are essential, says Boyd Beasley, senior director of customer support for Electronic Arts, a Redwood City, Calif.–based provider of gaming software, and a RightNow user. “We had to prove ourselves over time,” he recalls. “[Gaming] is largely seen as creative and requires a big paradigm shift to service.”

The stakes are high: According to a 2008 Harris Interactive report, 87 percent of consumers have stopped dealing with an organization because of a negative experience. And 58 percent would pay more for a better experience even in a down economy.

“Companies will continue to look for investment opportunities to cut costs, but smart [ones] will invest to help retain customers as well,” says Rebecca Wettemann, vice president of research at technology advisory firm Nucleus Research.

Bois says summit attendees were willing to take the plunge. “This conference represented a collection of some of the most forward-thinking consumer companies relative to the customer experience,” he recalls. “The economy may be getting us down, but leading [businesses] are seizing the opportunity [instead of] holing up and waiting for the storm to pass.”

Wettemann says RightNow has cleaned up its messaging and is focusing on the customer experience, but still has to convince prospects to move from aging on-premises systems to its desktop offering.

“That’s a significant growth opportunity,” she says. “On-demand means lower risk, lower cost, and less disruption over time…. There’s a lot of hype about what [on-demand] companies provide, and RightNow [has] a very steady, focused approach to continue to grow by making customers successful…. [That’s] a solid path for growth in a positive [or] soft economy.”

Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationcrm.com/subscribe/.

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To contact the editors, please email editor@destinationCRM.com
Every month, CRM magazine covers the customer relationship management industry and beyond. To subscribe, please visit http://www.destinationCRM.com/subscribe/.
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