Customer Service Functions Evade Cost Cuts

Despite economic pressures, 21% of finance leaders said they plan to increase customer service and support funding.
David McCannOctober 4, 2022
Customer Service Functions Evade Cost Cuts
Photo: Getty Images

Companies may be tightening up on costs in response to a host of economic pressures this year, but they’re generally stopping short of risking customer satisfaction.

In fact, in a July poll by Gartner, 21% of the 234 participating finance leaders said they plan to increase funding for their customer service organizations over the next year. That was three times as many as the 7% who said they expect to cut down on such spending. Almost three-quarters (72%) of those polled said they will maintain their current spending levels.

Inflation, supply chain disruptions, and a tight labor market are among the factors forcing CFOs to make trade-offs in their spending, said Sarah Dribble, a partner in Gartner’s customer service and support (CSS) practice. But, she noted, the CSS function “is not a top priority for cost-cutting compared to real estate/facilities management and finance, which are the most likely to face budget cuts in the next year.”

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Such restraint is noteworthy, considering that in a separate July survey of 180 finance executives by CFO, more than three in five (61%) of them identified cost-cutting as one of their most effective tools against inflation.

Digital Investments Displace Traditional Spending

Most CFOs are prioritizing digital investments over such traditional spending categories as sales and research and development, according to Gartner. They’re focusing on technologies that enhance current revenue streams as well as new digital products and services.

There is also a priority on digital investments that reduce costs. For example, digital self-service channels for customers offer a tremendous cost savings opportunity for service organizations, costing $0.09 per contact compared to $14 per contact in assisted service, according to Gartner.

Another area that may not only reduce CSS costs but also better help serve customers is conversational AI, which is expected to reduce contact center labor costs by $80 billion by 2026.

In a March 2022 report, Forrester Research noted companies are leveraging conversation intelligence to anticipate customer service agents’ needs while also provide timely advice and suggestions based on an agent’s preferred communication style.

“Agent workspaces will become increasingly adaptive and personalized,” Forrester wrote. However, the report added a word of caution: “Solving these problems is about more than just selecting the right [AI] vendor. Data-fueled products require close collaboration between design and data science teams to deliver effective and intuitive user experiences.”

CFOs will also look to ramp up investments in hiring and compensation, but increase scrutiny on consultants, contractors, and facilities, Gartner said.

“For instance, there may come a time when a contact center in an expensive geography needs to be closed down, or transitioned to remote work, or the frontline is unable to handle contact volume without contractors,” said Dibble.

With respect to hiring, almost three-quarters (73%) of finance executives in the CFO survey agreed with the statement, “My company faces critical hiring needs in the second half of 2022.”

Perhaps ironically, in that same survey, 17% of respondents pointed to hiring talent as among their most likely targets for cost-cutting.