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SERVICE ON-DEMAND

The future of customer service A report from The Economist Intelligence Unit

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Service on-demand: The future of customer service

Contents About the report

Key points

1. Introduction

Defining the disruption

The access economy whirlwind

Companies are still figuring out what works

Is the ‘Uberisation’ of customer service coming to Asia?

2. A market eager for disruption

The buyers are ready

It’s about a lot more than cost reduction

3. Hesitant suppliers

What, worry, me?

The calm before the storm

Experimenting at Mila

4. The on-demand customer service model

Still very much a work in progress

Managing performance

Conclusion 18

Next steps for on-demand leaders

Service on-demand: The future of customer service

About the report

Service on-demand: The future of customer service is a report from The Economist Intelligence Unit (EIU) sponsored by Genesys. The report was written by Paul Kielstra and edited by Charles Ross. It draws on a survey conducted from February through April 2016 of 200 senior Asia-Pacific executives involved in management of their companies’ customer service (buyers) and 75 executives from companies which supply customer service products and services (providers). Almost half of the respondents (44%) were from retailing, 21% from government organisations and 15% from the telecommunications industry. The survey sample covers a wide range of seniority, with a quarter of respondents C-suite or above, 34% senior executives and 41% managers. Participants were from a variety of companies: 56% had annual

revenues of under US$250m and 20% more than $1 billion. The survey findings were supplemented by interviews with 3 opinion leaders, experts and business leaders. Our thanks are due to the following people for their time and insights (listed alphabetically by surname): l Max Loosen, co-founder and CEO of Sendhelper l April Rinne, leader of the World Economic Forum’s Young Global Leaders Sharing Economy Working Group l Christian Viatte, CEO of Mila The EIU bears sole responsibility for the editorial content of this report. The findings do not necessarily reflect the views of the sponsor.

Service on-demand: The future of customer service

Respondents by Country

Respondents by Industry

(% of respondents)

Taiwan Singapore Philippines New Zealand Malaysia Korea

19% 12%

11%

15% 12%

Japan

Australia

5% 3% 12%

China ex Hong Kong

Hong Kong

15%

India

Retailing

44%

Government/public sector

21%

Telecommunications

6% Indonesia

Others

An explanation of terminology: “Buyers” and “Providers”

This study makes frequent reference to two subgroups from our survey panel who together are the core of the customer service marketplace.

third parties or need to allocate resources within their own organisations so that these capabilities can be provided in house.

Buyers: In this study, “buyers” are the 200 respondents who have involvement—usually a great deal—in decision making around how their organisation manages customer service. They are buyers in the sense that they either purchase customer service capabilities from

Providers: In this study, “providers” are the 75 respondents who say that they “work for a 3rd party supplier of customer service offers, channels or services.” Some examples include outsourced providers of call centres, email responses, or social media monitoring.

Service on-demand: The future of customer service

Key points • The access economy business model has already revolutionised industries such as taxi service and hotels, but how far it can extend—to what functions and industries—remains an open question. • Those whose task is provision of customer service expect that their function shifting to an ondemand model within the next three years will be a fundamental part of their ability to compete. • Current third-party customer service providers are equivocal on the potential and likely importance of an on-demand model, suggesting the industry may be ripe for disruption. • Transitioning to an on-demand model will not be simple: although technology is starting to become available, key skills and process issues remain; most important, leading stakeholders, notably customers and management, need to be brought on board. • Whatever the barriers, the momentum for transformation is strong: more than two-thirds of customer service buyers say their companies would introduce an on-demand model even if it brought significant changes in how they operate.

Service on-demand: The future of customer service

Introduction

Defining the disruption A sure sign of the novelty of something is when it’s difficult to even name it. An economic phenomenon currently transforming numerous industries has just this characteristic. Dubbed, among other things, the “sharing,” “gig,” “ondemand,” and “peer-to-peer economy,” each of these adjectives has received criticism for being either incorrect or incomplete. April Rinne—a consultant in the field and leader of the World Economic Forum’s Young Global Leaders Sharing Economy Working Group—explains, “These terms are indicative of the emerging, complex and often messy nature of the space’s evolution. All of them are valid in some ways, but none is perfect.” “Sharing economy” is still the most common name to describe those firms which rely on a technology platform—typically mobile phonebased—to allow communities of small users and providers to exchange the temporary use of goods, or access to services, for monetary payment or reciprocal access. This study, though,

looks in particular at entirely commercial activity: how such a model might affect the customer service function. Accordingly, it refers either to the “access economy”, a term currently gaining favour1, or uses the more common “on-demand economy” because of the greater speed which this business model can give to customer service.

The access economy whirlwind In recent years, several companies have shown the potentially huge impact of this kind of business. Uber, a seven-year old, self-described car-ridesharing service which has turned the urban taxi industry on its head, is the most oftencited access economy firm. Its recent fundraising efforts indicate a likely overall valuation of more than $60bn—already greater than that of Ford or GM. AirBnB, a short-term accommodation platform, has existed for a year longer than Uber and reached a valuation of $26bn, putting it in the same league as Hilton Worldwide Holdings in market capitalisation. (Figure 1)

Figure 1 Disrupted industries: On-demand entrants overtake incumbents (estimated valuation, 2015, US$bn)

60% Giana Eckhardt and Fleura Bardhi, “The Sharing Economy Isn’t About Sharing at All,” Harvard Business Review, January 2015.

68%

23% 26% Sources: WSJ, Economist

Service on-demand: The future of customer service

As with any new technology-based business model, hype and froth have not been missing. Uberisation, a phrase less than two years old, has become the buzzword for the rapid transformation of an industry due to entry of an access economy company. Experimentation is widespread as potential funders face crowds of hopefuls touting the latest “Uber of X.” Before Compare and Share, a worldwide directory aggregating sharing economy web sites, shut in February 2016, it had over 8,000 platforms listed. Similarly, in March 2016, AngelList, a leading online marketplace for start-up investors, had over 5,700 private online marketplace companies for those with deep pockets to choose from.

Izabella Kaminska, “Sharing economy disruption, maybe not so disruptive?” July 2015, Financial Times; Georgios Zervas et al., “The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry,” 2016, http:// people.bu.edu/zg/ publications/airbnb.pdf; 2

See Sarah Kessler, “The ‘Sharing Economy’ Is Dead, And We Killed It.” Fast Company, September 2015. 3

2014 Global Outsourcing and Insourcing Survey: 2014 and beyond, December 2014. 4

Global Outsourced Customer Care Services Market Trends, Growth and Forecast Report Up To 2020, November 2015. 5

In addition to high profile successes, so much activity also brings frequent failures. This is more than the inevitable high churn of small entrepreneurial efforts. There have also been some large casualties: Quirky, a site for crowdsourcing inventions, had raised $181m in seed capital, and Homejoy, a cleaning services platform, nearly $40m by the time both shut in 2015.

Companies are still figuring out what works The highly uneven success of access economy firms is a reminder of how this type of activity is still poorly understood. Max Loosen—cofounder and CEO of Singapore-based Sendhelper, an access economy platform for cleaning and other household tasks—notes that “this is still new territory for a lot of people.” Uber and AirBnB have been successful, he adds, but in many sectors how to use this model for basics such as screening and monitoring for quality, or automating key processes, is still being figured out. For successful companies, even something as basic as from whom they are drawing business, is not always clear: a study of AirBnB’s impact in Austin, Texas found that it was having the biggest © The Economist Intelligence Unit Limited 2016

effect on very short stays at low-end hotels, but one in New York City instead indicated that many customers used it for stays of several months long.2 Moreover, it is far from clear where the model will work. Indeed, a number of assumptions have quickly turned out to be flawed. An early argument for the sharing economy, for example, was that most people did not actually use many possessions—power tools were the most common example—more than a handful of times. It therefore made sense to rent rather than own these. However, while a market for peer-to-peer accommodation rental clearly exists, numerous platforms which aimed to gain the apparently obvious market for peer-to-peer tool rental quickly failed.3

Is the ‘Uberisation’ of customer service coming to Asia? One area where the access economy, or ondemand, model has yet to have a noticeable impact is customer service. The potential is large as outsourcing in this area is already frequent. A worldwide survey of companies published by Deloitte in 2014 reported that over half already had third parties handling basic customer enquiries.4 Meanwhile, Radiant Insights, a market research company, estimates that the global value of outsourced customer interaction activity was $52bn in 2014 and expected to grow to $69bn by 2020.5 For Asia-Pacific companies, this is also an area where change is expected. A 2016 Economist Intelligence Unit survey of senior executives from the region in retail and telecoms companies as well as state organisations conducted for this research, found that 82% expected on-demand customer service to be available in their industry in the next three years. It seems a safe bet that any number of firms will at least try to meet this expectation: a handful worldwide have

Service on-demand: The future of customer service

targeted this sector and, given the huge number of on-demand economy companies starting up, some will join them. This EIU study, sponsored by Genesys, will look at the potential for such

ÂŠ The Economist Intelligence Unit Limited 2016

companies to gain acceptance and disturb the existing customer service industry, as well as considering current barriers to on-demand customer service delivery.

Service on-demand: The future of customer service

A market eager for disruption

The buyers are ready

“

Many telecom operators know that they have to transform their customer service and need new ideas where they can be more efficient.

”

Christian Viatte—CEO of Mila

Asian customer service professionals in retailing, telecoms, and government organisations—here referred to as customer service buyers—do not simply expect on-demand offerings: they are urgently looking for change in a field which they regard as having substantial strategic importance to the business overall. A majority (54%) of these respondents say that, when compared with other areas, customer service is currently a very important investment priority for the entire company. If we add in those who call it somewhat important, this brings the total figure to 90%. Looking ahead, this degree of importance is expected to be the same in three years’ time. Views on this question set apart those companies currently doing well from stragglers. In our survey, respondents were asked to benchmark the profitability of their firms against peers. Among those which report the highest levels of

relative profitability (“profit leaders”), 80% also call customer service a very important priority; among those with average or weaker profitability (“profit laggards”), the figure is just 35%. While intent on investing in customer service, many see current offerings as insufficient. Fully 58% of demand-side respondents believe that elements of the customer service function are ripe for disruption and only 8% disagree. This is not merely the opinion of over-demanding buyers. When asked the same question, most providers of third party customer service were unsure (59%) but far more thought the opportunity for disruption exists (35%) than disagreed (7%). (Figure 2) Christian Viatte— CEO of Mila, a platform providing on-demand crowd customer services for telecoms, energy companies and retailers—is not surprised. In his industry, he notes, “Many telecom operators know that they have to transform their customer service and need new ideas where they can be more efficient.”

Figure 2 Elements of the customer service function are ripe for disruption (% of respondents) Supply side

Demand side

35%

Agree

Neither agree or disagree

Disagree

35% 7% 8%

Source: Economist Intelligence Unit

58% 59%

Service on-demand: The future of customer service

Accordingly, he adds, the potential of on-demand customer service is growing with a large number of firms “looking for such a solution.” The survey numbers strongly back him up. Among customer service buyers surveyed, 80% say that their organisation will invest in an on-demand offering if it becomes available in their industry, while a mere 4% would definitely not. This is more than a nice-to-have: it is a matter of urgency. Two-thirds of customer service buyers go so far as to say that “managing the transition to an on-demand customer service offering will separate successful firms from failing ones in the near to mid-term;” a mere 6% disagree.

form of on-demand customer service “It’s not just about cost saving. Everybody wants to differentiate with customer service. What you gain [from an on-demand model] is a better customer experience maybe at the same cost or, in some cases, a lower one.” As figure 4 shows, survey respondents agree. Among buyers, lower customer service spending, and even reduced overall operating costs, are relatively minor attractions. Instead buyers expect the biggest gain from on-demand service to be improved customer satisfaction (43%), improved customer retention (32%), and better competitive positioning (28%).

Again, the data sets apart profit leaders and laggards. Among the former, 93% report that their business would invest in on-demand customer service if it becomes available in the near term and the same high number also believe that a successful transition in this will set apart successful and unsuccessful firms very soon. The equivalent figure for laggards 17% in both cases.

Mr Loosen warns that this apparent difference from users of other access economy services should not be over-emphasised. “At the end of the day,” he says, “no matter how people get to your platform, they expect quality. Quality is the most important thing,” not simply low price.

It’s about a lot more than cost reduction The reason for the high stakes assigned to ondemand customer service is the underlying hope of what companies expect to get from such an offering. The headline value proposition of access economy companies is typically some combination of low price and convenience. Mr Viatte explains, though, that for those looking to use some

The stronger emphasis on the potential for better customer satisfaction, though, does point to a specific unmet need, which customer service buyers are hoping on-demand models can finally fulfil. Mr Viatte explains that “the pressure to have good service and a fast reaction time is high.” For a telecom company, where a customer’s connection is a key infrastructure service, this is obviously the case but, he says that today, for example, someone might equally expect speedy action to help assemble a barbeque grill. However, “customer service that can commit to reacting to every problem within 24 hours is nearly impossible for a single

Figure 3 Leaders are closely monitoring on-demand (% of respondents) Profit laggards

On-demand customer service will separate successful and unsuccessful firms

17%

Would invest in on-demand customer service

17%

Profit leaders

Source: Economist Intelligence Unit

93% 93%

Service on-demand: The future of customer service

Figure 4 Expected benefits of on-demand customer service (% of buyers)

43%

Improved customer satisfaction

32%

Improved customer retention

28%

Better competitive positioning

25%

Improved flexibility

23%

Better customer journeys Reduced operating costs

22%

Increased revenue through better channel management

22% 19%

Lower cost of customer service Fewer negative comments or reviews from customers

16%

Improved morale among employees

16%

There are no perceived benefits of on-demand customers service

Source: Economist Intelligence Unit

company. But if you have a crowd, consisting of private individuals, staff and external professional service providers, you can react fast,” he adds. Such a capacity would explain the expected role of on-demand service in winnowing successful from unsuccessful companies noted earlier. Eighty percent of customer service buyers say that customer experience is important for

differentiating their brand and the elements of the customer experience which play the greatest part in such differentiation are ease of access (41%) and speed of resolution (36%). Improvements in these areas, which an access economy model might provide but are impossible with existing processes, are what raises on-demand customer service from an interesting method of cost reduction to—especially for leading companies—a potentially key strategic tool.

Service on-demand: The future of customer service

Hesitant suppliers

What, worry, me? If those responsible for customer service at organisations are eager to embrace the access economy, current third-party providers are much more ambivalent.

monitoring on-demand developments in other industries and are interested in how they can apply them to their own.

On the one hand, survey respondents from this group (“customer service providers”) are surprisingly ready to admit the weaknesses in their current offering. Only 12% call their company’s overall offering and channels “very successful.” Instead, 45% say that they are, at best, “neither successful nor unsuccessful.” (Figure 5)

A closer look at the data, though, indicates that this activity masks a lack of focus on real change. Nearly twice as many customer service buyers (67%) as providers are monitoring ondemand developments elsewhere with an eye to changing their own industry. As Ms Rinne puts it, “Sometimes executives are so focused on the core that they fail to see what is on the periphery— which is where the forces shaping the future often are taking shape.”

This strongly suggests an industry ready for a shake-up. In some ways, the industry seems to agree. Respondents from customer service providers report that 40% of their work time is currently spent on creating new, disruptive customer service products or offerings, a figure they expect to rise to half in three years. Similarly, 35% of this group claim to be closely

Moreover, despite the amount of the workday devoted to new customer service channels and offerings, only 28% of customer service provider respondents say that these are very important to their companies, a figure expected to see very little change over the next three years. Just as important, a majority are simply unsure change is even on the cards—59% neither agree nor disagree

Figure 5 How suppliers characterise their customer service offering and channels (% of respondents)

12%

Very successful

43%

Somewhat successful

29%

Neither successful nor unsuccessful

12%

Somewhat unsuccessful Not successful at all

Source: Economist Intelligence Unit

Service on-demand: The future of customer service

Only 24% believe that call centres—one of the most frequently outsourced parts of customer service—are very open to disruption from innovation or increased competition

that elements of customer service are ripe for disruption—let alone whether an on-demand model would be the agent of such change: 53% are uncertain whether a competitor offering such a service would be disruptive to their own company. Finally, only 24% believe that call centres—one of the most frequently outsourced parts of customer service—are very open to disruption from innovation or increased competition.

it would not be the first industry supporting a specific corporate function. Ms Rinne, who is also a qualified attorney, notes that companies are increasingly turning away from the practice of using large law firms for external counsel in favour of on-demand platforms such as UpCounsel and Priori Legal. “Traditional legal services are very much on the chopping block, for both supply- and demand-side reasons,” she believes.

The calm before the storm

Such an example, though, may not affect executives at incumbent customer service firms. Mr Loosen notes that, many current leaders in every industry “are hesitant about change. Trying new things might not make sense for an institution that already makes money. It is also difficult to get through the bureaucracy.” Instead, he adds, “New market entrants are definitely where disruptive innovations come from an overwhelming majority of the time. Start-ups are used to taking risks.”

In other words, either the customer service buyers, especially those from leading companies, are anxious for a product that is unlikely to work anyway, or providers do not see what is about to hit them. The history of disruption, and of access economy companies in other sectors, suggests that the latter is more likely. If customer service is disrupted,

Experimenting at Mila The very presence of so many on-demand players will almost certainly lead to some experimenting with the customer service area. A good example is Zurich-based Mila. In 2013, it began as a platform aimed at those wishing for help with small tasks, such as picking up groceries or assembling flat-pack furniture—similar to the American company Task Rabbit. Soon, though, it began co-operating with the Swiss telephone company Swisscom in the creation of Swisscom Friends. This platform allows users to get help from neighbours with technical know-how for IT-related tasks, such as setting up a new personal computer. Mr Viatte, who at the time was head of service experience and innovation for Swisscom, recalls that the telecom company’s thinking originally was only tangentially about traditional customer service resources. At the time, “we were often asked for advice with products which were not from Swisscom. We saw that we had potential for an additional customer service channel, in particular a paid one. Customers were very happy with that.” Although the original driver was to deal with requests that were not core to Swisscom’s business, he continues, “we are now bringing in some core business things to be serviced by the crowd.” In particular, the firm is disrupting its own paid service 12

installation. New Swisscom Internet customers have always had the option of installing the service themselves for free or paying for a professional from the company. Now, Swisscom Friends provides a low cost option, making a new connection more appealing to more price-conscious consumers without the technological skills to do the work on their own. Thus, in less than three years, Mila has travelled from a model similar to Task Rabbit to one which has begun providing elements of customer service for a large telecoms provider. Indeed, its importance to Swisscom is such that the company has bought a majority stake, although Mila’s platform still services other major technology companies in Switzerland. Such a pivot, says Mr Loosen, happens “a lot more often than people think. It is almost the rule, not the exception.” Current third party providers would be extremely lucky if none of these on-demand experimenters found a business model to disrupt an industry which executives admit is currently only somewhat successful at meeting market needs. As Ms Rinne puts it “we haven’t seen much like this [on-demand customer service], but it is in the bull’s eye of where things might head. It’s absolutely feasible and in my opinion a matter more of months rather than years before we see significant inroads being made.”

Service on-demand: The future of customer service

ÂŠ The Economist Intelligence Unit Limited 2016

Service on-demand: The future of customer service

The on-demand customer service model

Still very much a work in progress For customer service buyers, simply wishing for an on-demand solution will not make it so. Survey respondents are under no illusion that large barriers remain. Putting in place appropriate technology, although still an important consideration, seems to be less of a challenge than one might expect. Work in this area is still clearly required: 62% of respondents say that to implement ondemand customer service technology will need to improve. Similarly, respondents are split on whether today’s offerings are sufficient: 45% replied new or better technology is necessary for customer service functions to be able to transition to an access economy model, but 54% said not.

24% expect managing customer engagement to be a leading challenge 14

On the other hand, the survey also shows readiness for rapid adoption of other kinds of cutting edge technology by the customer service function: over half (55%) already use data analytics and 30% artificial intelligence. Moreover, as noted above, 67% of customer service buyers are monitoring on-demand developments in other industries to see which can be applied in their own. Moreover, in the current period of rapid innovation, appropriate hardware and software is beginning to appear. Already, Mr Viatte notes, setting up the necessary software and platform is the most straightforward part of creating this type of customer service—but it is also only the beginning, he warns. © The Economist Intelligence Unit Limited 2016

The remaining problems are fundamental ones. As in other parts of the access economy, the best operating model is still unclear. Fortyone percent of all respondents believe new relevant product offerings or service models are needed before customer service can become an on-demand offering. Among the most senior, decision-making executives—the C-suite—this rises to 60%.

Managing performance A particular complication is that the most successful current access economy models facilitate transactions between supplier and consumer. Although commercial relationships with other suppliers—such as hotels or taxi firms—may be disrupted, the companies losing money are not involved in the AirBnB or Uber transaction. With customer service, things are more complex. How well service suppliers perform reflects both on themselves and on the reputation of a third party—the company that provided the original product or service. Mr Viatte explains that Mila, when acting on behalf of Swisscom or other firms, is providing a B to B to C service which may also end up, to some degree, disrupting the contracting business’ own existing customer service. Mr Loosen adds that “adding extra steps [to an access economy model] like this is a big challenge, which generally requires more manual intervention and more room for human error. It is nice to have an entity that can direct customers to the right person but that person has to get paid , be managed, and deliver a certain standard of quality.”

Service on-demand: The future of customer service

Ms Rinne points out that, consistent with Mila’s experience, any emerging model for on-demand customer service is likely to start with a specific element of the function. She notes that one of the frequent reasons for the failure of access economy start-ups is an attempt to be too comprehensive. “Trying to be ‘everything for everyone’ significantly increases the effort required to build a critical mass of supply and demand to be matched, and increases the risk that you’ll fall short of expectations. Rather, once you have proven your worth in narrow verticals, then you build out.” Accordingly, she recommends that entrants start with one or a few of the most important elements of customer service and, once these are in place, seek to become more comprehensive. The relative novelty and lack of established access economy models for customer service mean that respondents also face some key practical requirements for success. The majority (57%) will need improved customer service processes and nearly a quarter (24%) expect managing customer engagement to be a leading challenge. (Figures 6 & 7) An even bigger issue, though, is skills. This is one of the most frequently mentioned key elements for a successful transition to an on-demand model (53%) and a

lack of skills is the largest single major barrier to such a switch (27%). (Figure 7) Not surprisingly, 62% of customer service buyers say that implementation of on-demand customer service at their firm will necessitate more training. Skills for new processes will be a consideration for internal employees, but the bigger question will be finding and managing those abilities among the external individuals being brought in to provide customer service on demand. This needs to go beyond simply having a list of individuals with the requisite skills. Mr Viatte says that it is essential to “look in the right places for qualified people and to manage and bring them together in order to build up a community.” Once that community is in place, however, the second biggest barrier seen by respondents—quality management of external service providers (24%)—turns out to be less of an issue than might be expected. (Figure 7) As Mr Viatte puts it, because of customer rating systems and the non-employee relationship with external providers “If somebody gives bad service you can exclude them from the platform. You have control of the quality and can manage it very well. Meanwhile the providers, because of the rating and compensation system, are really motivated to give a good service.”

Figure 6 Key steps needed to implement on-demand customer service (% of respondents)

Improving technologies

62%

Training people

62% 57%

Improving processes Hiring vendors/consultants

33%

Hiring new people

33%

Partnerships with other companies Source: Economist Intelligence Unit

31%

Service on-demand: The future of customer service

Figure 7 Main challenges in implementing on-demand customer service (% of respondents)

27%

Lack of skills among staff Quality management of on-demand service providers

24%

Managing engagement with the customer

24% 21%

Limited funding for implementation Lack of on-demand products or services

14%

Lack of technology skills

14%

Training of on-demand service providers

13%

Lack of as yet proven model to attract purchasers of service Managing an ecosystem of on-demand suppliers

13% 12%

Regulations limiting implementation

12%

On-demand customer service is unlikely to ever be a viable option

Source: Economist Intelligence Unit

Figure 8 Ingredients needed to transition to an on-demand offering (% of respondents)

Customer/client demand

53%

People, eg skill levels

53% 50%

Management support

46%

Improved/new technologies

41%

New product offerings/models of service provision Improved regulation of relationship between buyer and seller of third party customer service

40%

Integration of existing technologies

32%

Funding, eg required investment

32%

Volatility or uncertainty of demand for customer service

25%

Source: Economist Intelligence Unit

Simultaneous introduction of a novel customer service model with uncertain process and skills requirements will make an immediate, complete 16

ÂŠ The Economist Intelligence Unit Limited 2016

switch over to on-demand too daunting. Instead, as the Mila case again shows, it is an ideal candidate for field experimentation at the edge of

Service on-demand: The future of customer service

the company, allowing ongoing adjustment and improvement before it is rolled out more broadly. Beyond these practical issues, though, loom two bigger considerations which are essential for any large business model change getting customers and senior leadership on board. Fifty-three percent of respondents cite client demand as a necessary ingredient of the transition to an ondemand customer service function and 50% say the same of management support, making these the top and third most common answers to this question. (Figure 8) Mr Viatte explains that neither is straightforward. He notes that, unlike for hailing a taxi, “customers will not necessarily remember the [on-demand customer service] platform when they need it. You can’t just set up a platform.

You have to go directly to the places where the customers are when they need the service.” Using analytics and multiple channels to communicate and reach customers at point-of-need is therefore essential. Ms Rinne adds that trust is just as important as awareness: “Trust is the essential lubricant of the entire system. Without trust, not only will it be harder to scale, but your entire business model will be at risk.” As for the other key stakeholder, management, Mr Viatte says that the most important lesson from his experience of creating an on-demand service channel is, “you need a really good sponsor in the company because people are scared about this. Some are not even sure about what it is.” Without leadership, this change will simply not happen.

Service on-demand: The future of customer service

Conclusion

68% of companies would introduce an on-demand model even if it brought significant changes in how they operate

The customer is still king. Last year, in The value of experience: How the C-suite values customer experience in the digital age, the EIU found that 89% of Asia-Pacific companies considered customer experience to be a very, or somewhat important, investment priority. Now, 90% say the same of customer service. This explains one last key finding from the survey. The very real hurdles to overcome in the race toward on-demand customer service will not dampen enthusiasm for it: 68% of customer service buyers say their companies would introduce an on-demand model even if it brought significant changes in how they operate. The customer service function and industry, then, faces almost inevitable disruption as current third party providers admit to a lack of service excellence and buyers are keen for new models. This has implications for both. Third-party providers cannot continue to whistle past the graveyard which could potentially be the resting place of their own companies very soon. Perhaps the most important thing for the sector is to shrug off current uncertainty and either, make a strategic choice to reject the ondemand model as inherently flawed, or to accept its likely coming and prepare for it. At the very least this should involve more attention to how the access economy is affecting other sectors—at

the moment only half as many customer service providers keep a close eye on this as customer service buyers. Providers should also beware of on-demand customer service start-ups, as possible models to emulate or even companies to acquire. Customer service buyers, meanwhile, must begin wrestling with the realities of the on-demand provision they so clearly want. There is as yet no clear road map to this destination. The best advice is to start small, in narrow areas, and build from there. This cannot, however, be halfhearted tinkering. Swisscom Friends’ experience indicates that leadership commitment to engaging is essential. Even with commitment, though, a clear road map to on-demand customer service is lacking. Companies will have to develop processes and— through training or outsourcing—gain access to the skills the nature of which will only become apparent as implementation proceeds. This makes the field a natural one for experimentation before scaling up. Some will find this nerve-wracking, but that is part of successfully negotiating a transition that two thirds of executives currently believe will mean the difference between commercial success and failure in the coming years.

Service on-demand: The future of customer service

Next steps for on-demand leaders

1. Embrace disruption: On-demand customer service can bring a better customer experience with cost savings—the products aren’t available yet, but be ready when they are

3. Train people: An on-demand customer service model will require a change in processes and technologies—staff will need to be trained to manage these changes

2. Get management on-board: Transitioning to a new on-demand business model will require full support of management, because failure to manage the change might separate winners and losers

4. Improve technology: Investment in new cutting edge technologies such as big data and AI will be needed to transition to an on-demand model

While every effort has been taken to verify the accuracy of this information, The Economist Intelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in this report.

Cover image - David Simonds

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