Customer Service Software Buyer Report – 2016

Each year we speak with thousands of business professionals about their customer service and support (CSS) software needs. Facing daunting lists of hundreds of possible customer service software solutions, these professionals contact us for advice.

The questions we ask and the individual answers we receive are confidential; however, we pay close attention to the data from these conversations, looking for new trends and checking in on old ones.

In this 2016 Customer Service Software Buyer Report, we check in on some of the trends we uncovered in our 2014 Buyer Report. We also dive a little deeper to uncover some new trends, such as:

Key Findings

  • In 2016, businesses have a higher proportion of total employees using customer service software than in 2014.
  • On-premise CSS is now a distant memory, as 98 percent of buyers are seeking cloud-based (SaaS) CSS software.
  • More buyers are graduating from their current CSS system to a better CSS system—rather than from manual method—than in previous years.

Proportion of Total Employees Using CSS on the Rise

In 2015 we did not complete a Buyer Report for Customer Service software. With a longer baseline (2014 to 2016), some of the findings in this 2016 report stand out with more contrast.

One particularly interesting finding is that in 2016, companies purchased licenses for a larger proportion of their (total) employees than in 2014. This means that, on the whole, more employees are using CSS than previously.

Higher Proportion of Total Employees Using CSS in 2016
increase employees using css 2016
One interpretation of this finding is that customer service departments are growing relative to company size.

What’s more probable, however, is not that the service departments themselves are growing, but rather that roles in other departments are taking on some customer service responsibilities.

This is in line with trends we’ve identified and discussed previously. For example:

  • Companies are increasingly handling service requests on social media. As social media is often the realm of marketing or sales departments, social media service strategies often see marketing and sales employees using CSS.
    • There’s been growing recognition of the importance of the customer experience as a competitive differentiator, and companies are increasingly investing in improved service experiences. This is happening in multiple areas, from the disruptive IT and tech industries to just about any business that sees its customers using mobile devices.
      • On a broader level, many companies in recent years are redesigning their organizational and IT infrastructures. The redesign trend focuses on “de-siloing” internal departments, often by introducing a set of shared IT resources, such as CSS and other software.

      Altogether, this finding reflects a growing emphasis on the end-user experience. It shows companies are prioritizing their customer service experience improvements by getting more of their employees involved.

      We should also note that, thanks to the rise of cloud-based software (SaaS) and particularly the popularity of the subscription-based pricing model, adding new CSS users is easier and cheaper than ever before. And, speaking of cloud software…

      Deployment Preferences for CSS Buyers See Dramatic Shift

      This finding is particularly refreshing; it suggests that the business world at large has turned a corner regarding cloud-deployed software solutions.

      Only two years ago, a solid one-third of buyers requested traditional, on-premise CSS installations.

      2014: Some Buyers Seeking Cloud-Based Software
      some buyers seek cloud-based software 2014
      And two short years later, nearly 98 percent of buyers are shopping specifically for a cloud-based customer service solution.

      2016: All Buyers Seeking Cloud-Based Software
      all buyers seek cloud-based software 2016
      The benefits of subscription software have been discussed thoroughly over the last 10 to 15 years. Lower upfront costs, fewer implementation and maintenance costs and greater licensing flexibility are just a few.

      With all this in mind, there’s perhaps only one question buyers seeking on-premise software need to ask themselves: Why?

      (Note: This shouldn’t imply that there are no good reasons a company might choose on-premise software; there are. Challenging integrations with local databases and regulatory compliance are two examples.)

      More CSS Buyers Replacing Existing CSS

      “How are you currently handling customer service requests?” We ask this question early on in our consultations with buyers, and it sets the stage for the rest of the conversation.

      Generally speaking, it helps us understand a buyer’s software and IT maturity. For example, a company that has only just begun handling customer service over email would probably be overwhelmed by a full-featured omnichannel support platform.

      Or, a larger company with their own in-house CSS system may just want to add a single best-of-breed application, such as live chat.

      In other words, to help software buyers achieve their goals and arrive at Point B on time and under budget, we need to know where their Point A is.

      On a more practical level, the buyer’s current methods also determine any integration and implementation challenges the company might face with the purchase of a new system. New software implementations can be plug-and-play, quick and painless. They also have the potential to be endless and, well, fatal.

      A buyer’s software maturity and their degree of prepurchase research and due diligence determine how well the transition will go.

      Prospective Buyers’ Current Methods 2014 vs. 2016
      buyer current methods 2014 vs 2016
      In 2014, just over half the buyers we spoke with were purchasing their very first CSS software solution. By and large, these were not new businesses. Rather, they were established businesses that had been using their own homebrew approach to handling customer service. These typically include some combination of the following:

      • Email (for communication)
      • Spreadsheets (for tracking and performance measurement)
      • General CRM, contact management or project management software
      • On- or offline self-service resources (to stem the flow of incoming service requests)

      Examples from 2016, in order of increasing software maturity, include:

      • “We have a small staff and have been logging customer support requests using paper and pencil.”
        • “We are currently using one email inbox between four customer service representatives.”
          • “When support needs come in online or over the phone, they are written down on paper and given to support personnel who then close the ticket on a custom-built in house system.”
            • “We have Salesforce, Oracle and Informatica, but we don’t have a formal knowledge base.”

            Overall, these results suggest that the business world continues to prioritize customer service. Compared to two years ago, fewer companies are purchasing CSS for the first time and fewer buyers are replacing manual methods.

            The large jump in the number of buyers replacing existing CSS suggests that companies are more willing to shop around for new features and applications.

            For CSS vendors, these results have several implications. While it’s good news that demand for CSS remains strong, it’s also clear that buyers are increasingly willing to shop around. As the core CSS applications become standardized, it’s possible that buyers will become more price-sensitive and choose cost savings over brand recognition.

            Demographics of CSS Buyers

            This section gives a demographic overview of CSS buyers in 2016.

            The software and IT industries continue to be the segment with highest demand for new CSS.

            Buyer Industry Segments
            buyer industries
            CSS buyers represent a fairly evenly distributed cross-section of company sizes, as measured by annual revenue. Compared to 2014, more businesses in the highest earning brackets ($501M to $1B; over $1B) sought new CSS or new CSS applications.

            Buyer Size by Company Revenue
            buyer size by revenue
            The detailed methodology for this report can be found here.
            If you have comments or would like to obtain access to any of the charts above, please contact craig@softwareadvice.com.

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