{"id":1865,"date":"2022-06-26T22:19:20","date_gmt":"2022-06-26T22:19:20","guid":{"rendered":"https:\/\/www.replicant.ai\/how-a-recession-would-impact-contact-centers\/"},"modified":"2023-05-09T21:05:42","modified_gmt":"2023-05-09T21:05:42","slug":"how-a-recession-would-impact-contact-centers","status":"publish","type":"post","link":"https:\/\/www.replicant.com\/blog\/how-a-recession-would-impact-contact-centers\/","title":{"rendered":"How A Recession Would Impact Contact Centers"},"content":{"rendered":"

How Leaders Can Prepare for an Economic Slowdown<\/span><\/h2>\n

Depending on who you ask, the US economy may be on the edge of a prolonged drawback.\u00a0<\/span><\/p>\n

Inflation is currently at 8%, the highest in 40 years. GDP <\/span>contracted<\/span><\/a> by -1.4% in Q1, and is currently expected to be only 2.3% for the year. Meanwhile, a Bloomberg survey estimates a 30% chance of a <\/span>recession<\/span><\/a> in the next 12 months, up from 15% in March.<\/span><\/p>\n

In our corner of the world, many are wondering what a recession would mean for contact centers. On the heels of the pandemic and its ensuing challenges (the Great Resignation, supply chain snags, etc.) the last thing contact centers need is further instability.<\/span><\/p>\n

But fortunately, economic challenges offer something that the pandemic did not: precedent. Using learnings from past markets and consumer behaviors, contact centers can better navigate a potential downturn and come away stronger than before.<\/span><\/p>\n

Here\u2019s what a prolonged economic drawback would mean for contact centers, and how they can still position themselves for growth.<\/span><\/p>\n

Consumer Spending Will Slow
\n<\/b>With rising interest rates and new home buying expected to fall, some economists think consumer spending has peaked following a long streak of growth. On the business side, capital investment is down, as well as spending on R&D.\u00a0<\/span><\/p>\n

In the event that customer dollars become harder to earn throughout the summer and into the fall, contact centers will have an outsized impact on company revenues in 2022. Customers have always been quicker to leave brands that offer subpar support and service. One in three customers will <\/span>leave a brand<\/span><\/a> they are loyal to after one bad experience. On the other hand, increasing customer retention rates by just 5% can <\/span>increase profits<\/span><\/a> by 25% to 95%, part of the reason why customer loyalty will be contact centers\u2019 biggest asset.\u00a0<\/span><\/p>\n

But Customer Loyalty Will Drive Resilience
\n<\/b>During the Great Recession of 2009, companies deemed \u201cCX leaders\u201d saw a 6.1% rise in cumulative returns despite the S&P 500 tumbling over 15%. On the other hand, brands deemed \u201cCX laggards\u201d <\/span>fell<\/span><\/a> close to 60%. This striking difference is a testament to the value of strong customer experiences in driving loyalty.\u00a0<\/span><\/p>\n

When customers have immediate access to resolve issues when it’s most convenient to them, they\u2019re less likely to cancel an order, pause a subscription, or abandon brands as a whole. And when customers receive a consistent, personalized experience across channels and can speak to an agent faster, they\u2019re more likely to stick with a product or service \u2013 even through a recession.<\/span><\/p>\n

Investments Will Be Met With Scrutiny
\n<\/b>In a constrained market, it’s not just consumers who reevaluate their spending habits. Many, if not all, companies also cut budgets, often slashing innovation and technology investments in favor of a \u201cwait and see\u201d approach. Additionally, recent hiring challenges in call center agents may push companies to reduce overall investment in their contact centers.<\/span><\/p>\n

Evidence from past recession cycles shows that companies who identify savings opportunities earlier in a declining market are more resilient. A Harvard Business Review <\/span>study<\/span><\/a> found that in the first quarter of 2008, resilient companies had already cut operating costs 1%, even as their sector\u2019s year-on-year costs were growing.\u00a0<\/span><\/p>\n

A potential recession will mean that contact center leaders must be prepared to justify investments with strong ROI models that show clear paths to savings. Luckily, there\u2019s plenty of proof that supports continued innovation investment in a recession.\u00a0<\/span><\/p>\n

But Leaders Won\u2019t Pause Innovation
\n<\/b>While investments will be under the microscope, savvy companies will continue \u2013 if not increase \u2013 their innovation plans through the duration of a recession. For contact centers, this is motivated by evidence that customer loyalty leads to more recession-proof balance sheets. According to <\/span>HBR<\/span><\/a>, loyalty leaders grow revenues roughly 2.5 times as fast as their industry peers. Conversely, 76% of consumers say a poor customer service experience <\/span>negatively impacts<\/span><\/a> their perception of a brand and one in three says it affects loyalty.\u00a0<\/span><\/p>\n

After decades of stagnant contact center solutions like IVRs, standalone chatbots, and agent assist tools, leaders will use an economic downturn as an opportunity to reevaluate their current tech stacks. By investing earlier in innovation, these companies will not only be more resilient, but more competitive when the market comes back.\u00a0\u00a0<\/span><\/p>\n

Contact Center Automation Will Become Mainstream
\n<\/b>Contact Center Automation \u2013 the most rapidly growing contact center solution \u2013 is a modern technology that addresses every customer service obstacle associated with a recession<\/strong>. Companies who leverage Contact Center Automation regularly return over 50% in cost savings when compared to a highly optimized BPO, and <\/span>over half<\/span><\/a> of companies have already accelerated their AI adoption because of Covid.\u00a0<\/span><\/p>\n

Contact Center Automation\u2019s future-proof benefits include:<\/span><\/p>\n