• March 27, 2017
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Cost Considerations Become a Top Concern

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Even though almost every economist on the planet has been talking about economic recovery for some time now, companies this year seem more cost-conscious than ever. As we were working on the vendor ratings for the 2017 CRM Service Awards, it was hard not to notice the number of companies whose overall scores were significantly brought up or down based primarily on their value proposition. In many cases, where companies finished in the rankings, and even whether they made the leaderboard at all, were greatly influenced by how analysts graded them on cost.

As products largely become commoditized and differentiation is harder to come by, cost clearly is setting some vendors apart in 2017. A case in point is Zendesk, named a leader in customer case management by virtue of its cost score alone. Despite a low rating in functionality, analysts liked the fact that Zendesk’s product is available at five pricing tiers, beginning at $5 and going up to $199 per user per month. Zendesk customers also benefit from self-service deployments that don’t require very expensive consulting services, one of our analysts notes.

And in the enterprise feedback management category, both Confirmit and SurveyMonkey were named among the industry’s best solely based on their scores in cost, an area where analysts stated firmly that many vendors in this space have struggled mightily.

Assistant editor Sam Del Rowe, in summing up the category, noted that for many EFM vendors, “the expensive nature of their solutions might be catching up with them.” He further noted that “vendors looking to break into the space can do well for themselves by providing streamlined, cost-effective solutions.”

Cost is not just a factor in the EFM space; in virtually every category this year, analysts were harder than ever on vendors whose costs seemed just a little too high and smiled beneficently on vendors that kept prices under control. In the contact center search category, for example, eGain rode the success of its “try-before-you-buy” program all the way to the leaderboard after it spent last year in the category’s One to Watch spot.

Conversely, the number of companies that were held back this year because of high perceived costs can’t be ignored. Companies like Oracle, IBM, NICE, and Convergys, while still considered industry leaders, were among the growing list of vendors that analysts singled out for needing to improve in the cost area.

The cost issue is also one of the key reasons that so many contact center solutions are now moving to the cloud. This is particularly true in the contact center infrastructure space, where DMG Consulting reported that the number of cloud-based seats grew by 20.9 percent in the past year alone.

“We’ll continue to see cloud migration in this space,” notes Rebecca Wettemann, a vice president at Nucleus Research, particularly as service managers recognize “the real [total cost of ownership] advantages of a cloud approach.”

A story in this month’s Insight section, “Customer Service Software Sees Rising Interest,” might seem, on the surface, to contradict the idea that cost is more of a consideration today. In its “2016 Customer Service Software (CSS) Buyer Report,” Gartner subsidiary Software Advice noted that businesses are spending more on customer service software now than ever before and increasing the number of employees they sign up to use these solutions. Chief among the reasons for this, according to the report, is the fact that prices “are staying more stable and, in some cases, going down, as [vendors] are becoming more competitive with one another,” notes Craig Borowski, a market research analyst at Software Advice, in the article.

Clearly some vendors are already taking steps to reduce their prices. Because of this, “it’s a great time to be looking for customer service software,” Borowski adds.

We couldn’t agree more. Clearly, there’s a lot of change happening in the industry, as evidenced by the efforts of many of this year’s CRM Service Award recipients. Congratulations to all of them.

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