How Service and Support Leaders Can Tackle 3 Key Economic Challenges

All business leaders, including those in customer service and support (CSS), are faced with a myriad of macroeconomic challenges that will undoubtedly follow them into next year. While service and support leaders might have encountered one or two macroeconomic headwinds in the past, the present environment is truly unique because of the co-presentation of all three—also known as the triple squeeze:

  1. Scarce and expensive talent market;
  2. Forty-year high inflation, resulting in cost pressure and investment scrutiny; and
  3. Persistent supply chain disruptions.

Customers today already expect more from the companies with which they choose to interact. Tacking on these challenging circumstances means customers will grow more frustrated with the companies on which they rely for products and services, making the jobs of the service and support staff who serve them all the more difficult.

Ahead of key budget planning activities, leaders must take decisive action early on in market turmoil to avoid deep cost cuts later, sustain performance, and continue to grow. The path forward will require service and support leaders to reassess their talent markets and prioritize near- and medium-term digital investments likely to show real returns while ensuring customer experience doesn't suffer through the change.

High Inflation and Low Unemployment Create a Scarce and Expensive Talent Market.

The convergence of high inflation and low unemployment has led to a challenging hiring environment for organizations. Wage growth not only impacts CSS leaders' ability to recruit but also makes it challenging to retain top talent. Dissatisfaction with compensation is the top driver of attrition among CSS frontline associates, and competing for a narrow talent pool means high performers have increased leverage. A loss of top talent results in a loss of institutional knowledge and places a premium on quickly onboarding and upskilling new staff.

How can CSS leaders respond? Here are some tips:

  • Expand your talent pool and offer flexibility by leaning on a mix of resources (e.g., part-time, gig workers, business process outsourcing to fill open positions in the tight labor market. If it's no longer necessary to require current reps and new hires to work from the office for all shifts, expand the radius of the search for talent by targeting remote staff located in markets with lower average wages and relatively higher levels of unemployment or those who are looking for maximum flexibility, such as new parents or university students.
  • Consider outsourcing or using gig services. Outsourcers offer a wide range of capabilities, from primary traditional voice services to advanced digital, automated, and platform-based business process services. By considering offshoring and nearshoring, CSS leaders can access locations less impacted by inflation and economic shock. Improvements in internet infrastructure and the increased prevalence and quality of cloud contact solutions mean that gig work is an option for many organizations.
  • Prioritize employee development to reduce the likelihood of turnover. By creating and communicating compelling career pathways tailored to the needs of employees, leaders can help employees feel valued and understood, thus driving employee engagement and better outcomes.

Increased Cost Pressures Lead to Greater Investment Scrutiny.

In the first half of 2022, companies facing increased input and labor costs largely passed these costs along to customers by raising prices. As inflation persists, CFOs report cost-cutting to be the primary action to combat inflation, according to a recent Gartner poll.

CSS leaders can expect their CFOs to be more likely to scrutinize expenditures. However, they might simultaneously be more open to certain investment types (e.g., digital technology that enables the enterprise to drive scale in the long run or acquiring assets while valuations are inexpensive).

How can CSS leaders respond? Here are a few tips:

  • Take time to understand the specific approaches senior management is taking in response to cost pressures. How a company positions itself will depend on a number of factors unique to the firm and industry.
  • Lower costs through targeted automation and self-service investments. Automating manual processes and shifting volume to self-service is increasingly important in times of cost pressure and economic uncertainty. Leaders should reduce assisted volumes by identifying top customer contact reasons that could be handled in scaled, digital channels. CFOs are likely open to digital self-service projects that offer cost reductions in the near term, so CSS can take advantage of the uncertainty to more easily align cross-functional partners and secure funding for automation and digital service investments. Gartner predicts that conversational AI will reduce contact center agent labor costs by $80 billion by 2026.

Prolonged Supply Chain Disruptions Frustrate Customers.

As limited production capacity continues to plague global organizations, CSS departments (particularly in the manufacturing and service industry sectors) find themselves on the front lines responding to customer questions and complaints, often with limited information and means of assuaging customer concerns.

How can CSS leaders respond? Here are a few tips:

  • Proactively communicate available updates (e.g., order delays) to customers to preempt inbound customer outreach. Proactive outreach should be accompanied with links to self-service articles and tools to help increase customer confidence that they have the most up-to-date information on their orders. Insight into inventory and expected fulfillment times at the time of the interaction enable CSS departments to suggest next-best product options should they be necessary, improving CX outcomes.
  • Pursue alternative ways to provide customer value. Leaders should consider allowing or even encouraging reps to spend extra time with frustrated customers as a way of connecting and building the relationship. In some cases, organizations might be in a position to offer something of value to customers in lieu of the product arriving on time or not at all (e.g., enhanced access to web-based content and services while the customer waits for a hardware device).
  • Equip frontline reps with the tools and support they need to serve frustrated customers and have realistic expectations about how voice of customer (VoC) data might decrease as a result of customer frustration vs. interaction with a rep.

Jeffrey Schott is a vice president, Research & Advisory, within Gartner's Customer Service and Support Practice.