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Five9's Jim Dvorkin on the Importance of the SMB Market to Contact Center Solutions Providers

November 13, 2007

The small to medium sized business (SMB) market holds huge growth potential for IP contact center software vendors. The vast majority of businesses fit into this category, and in recent years the SMB market has seen faster year-over-year growth than either the enterprise or home business (SOHO) markets. In fact, most IP contact center software makers now view the SMB market as the primary driver of their future growth.


Contact center software makers are successfully targeting this market through the development of less expensive, scaled-down versions of their enterprise solutions. They’re also having great success penetrating the market by offering their software using the hosted or Software as a Service delivery model. Now that SMBs are able to access the same technology the enterprise has access to, they can gain an edge over the competition and in some cases even take their own slice of the enterprise market.

And the need for contact center software in the SMB market has never been stronger. Today, an SMB can see rapid growth practically over night: A small company which had only 300 customers two years ago can have more than 2 million customers this year, yet its staff may have only grown from 25 to 50 employees. In order to keep up with the increasing number of customer inquiries and orders (coming mainly via phone calls), SMBs are increasingly investing in customer service centers to better handle their growing customer base and improve communications across the organization. Gone are the days when a small business had a lone receptionist answering the phone all day, trying to keep up with all the customer inquiries and ordering. Today, even a small business can afford to set up a small contact center operation consisting of five seats, with technology that enables it to serve its customers just like a multi-national corporation. With today’s hosted or SaaS solutions, all a business really needs is a server, some PCs, some headsets and hot agents. Indeed, with their flexibility, ease of customization and infinite scalability (not to mention the simple and affordable pay-as-you-go pricing model), today’s hosted solutions are seeing rapid adoption in the SMB market.

Indeed, market research shows that the SMB market is ripe for penetration. Not only are many SMBs behind the curve in terms of investing in advanced contact center technology, it is also a market which hasn’t been tapped into that much, therefore it holds vast potential for finding new inroads to long term business relationships.

To get a better idea of why the SMB market is so hot right now, ContactCenterSolutions recently asked Jim Dvorkin, chief technology officer for Five9, Inc., some questions about what is driving the growth in this area. What follows are selected responses to our questions:
 
Why is the call center market paying so much attention to small to medium-sized businesses nowadays?
 
According to market sizing research from one of the world leading companies specializing on call center business intelligence – Datamonitor, the majority of the growth in call centers over the next 3 years will happen in the market segment with less than 100 seats. That makes every call center vendor to think through about their strategy on how to address this market segment.
 
Many companies of all sizes respond to competitive pressures by differentiating themselves based on customer experience. Usually, smaller companies must set their customer service goals even higher, since word of mouth and referrals can play a more significant role in their fortunes. As voice over IP and hosted software solutions lower the up-front investment costs for sophisticated call center technology, small and medium-sized companies can finally provide a world-class customer experience.
 
What special needs do these companies have?
 
The call center solution needs to be extremely easy, simple and cost efficient. Smaller companies can not necessarily afford to put together the same kind of capital equipment budget and hire a team of consultants to integrate several “best-of-breed” systems together. More than often with a hosted call center solution – they will have nobody on the IT stuff managing and supporting the hosted call center infrastructure – since it is that easy and simple. When you are a small company – you have to have a laser focus on your core business and next generation on-demand solutions from companies like Salesforce.com, RightNow, NetSuite and Five9 provide that by letting the company to pay only for what they use without making a costly investment into IT stuff to manage all this software and hardware.
 
How are the features scaled down when products are built for the SMB market? Is it only in terms of number of seats, or is it in terms of breadth of features?
 
The right solution for SMB customer needs to be incredibly well packaged. Usually, this means that the software is designed with specific user tasks in mind, helping to ensure SMB call centers can operate effectively with a minimum of IT support. As a result, the user interface is clearly laid out to improve productivity, complex menus and options are avoided, the need for custom development is reduced, and all essential contact center info is easily accessible in real time and in reports.
 
Do you think there are "fake" SMB call center solutions out there … i.e. large solutions artificially and perhaps not optimally "shrunk" for smaller businesses?
 
Smaller companies should be wary of “Express” software editions that are repackaging of products designed for larger call centers. Understanding the business needs and user requirements of the SMB market requires a focus that vendors who also cater to large enterprises may not be able to achieve.
Should SMB solutions be built from the top down or the bottom up?
 
Since the SMB market has unique requirements, call center software for SMBs must be designed to address those requirements in the most elegant way possible. There are many examples in the history of the technology starting from leading enterprise CRM companies that failed miserably by trying to down-scale their existing complex enterprise-class solutions. On the other end company like Salesforce.com made originally made its success by providing on-demand, easy to use, easy to implement out-of-the box solution for SMB space that now is making major traction among enterprise customers as well.
 
Does an SMB solution automatically translate to "software as a service?"
 
In most cases, Software as a Service (SaaS) is ideal for SMBs since it reduces the up-front investment costs and long-term Total Cost of Ownership (TCO), it can be deployed in a matter of hours, and it runs in a familiar web browser environment that makes users more productive.
 
Do smaller companies typically want the broad array of features that larger companies have/need?
 
Although smaller companies need many of the same features that larger companies require, the software must be designed so that those features can be utilized with a minimum amount of configuration and ongoing maintenance effort. Leading call center software for SMBs is designed with the needs of their users in mind, and will usually accomplish their goals by running with the default settings. Additionally, seamless integration to other popular software such as CRM products will typically be available, further reducing the administrative costs of the solution while providing application functionality that was previously only available to large call centers.
 
Do large enterprises ever have a use for solutions that are ostensibly designed for the SMB market? Are they learning any lessons from this marketplace?
 
Since SMBs and large enterprises share many of the same customer service goals, and since lower TCO benefits companies of any size, software that is designed primarily for SMBs may also be a good fit for large enterprises. Understandably, large enterprises may have unique requirements for custom integration, advanced analytics, data warehousing, and voice application design that are more extensively covered by products traditionally marketed to large enterprises.
 
What can smaller companies do now with the newer SMB-targeted solutions that they couldn't do a few years ago?
 
With the continued adoption of VoIP and service-oriented architecture, and greater usage of standards such as VXML and SIP, call center solutions for SMBs can retain attractive price points and also provide a broader set of features such as call recording, text-to-speech, and integration to enterprise applications even when utilizing hosted software.
 
For more information about Five9’s hosted contact center solutions, visit www.five9.com.

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Patrick Barnard is Associate Editor for Customer Interaction Solutions magazine and Assignment Editor for ContactCenterSolutions. To see more of his articles, please visit Patrick Barnard’s columnist page.

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