The Rise of Proactive Customer Care

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Interactive voice response (IVR) systems have been around since the 1980s and are still going strong. Investments in self-service applications have accelerated during the past two years as more companies of all sizes are building or enhancing self-service solutions. DMG Consulting estimates that the IVR market reached $1.867 billion by the end of 2007, making it the second largest contact center technology segment, trailing only the automatic call distributor sector. 

This market is being driven by strong demand for self-service applications, strong speech recognition, a steady flow of innovation, the growth of hosted solutions, and expansion of the outbound notification/proactive customer care market. Recently, slower IVR growth in the United States has been offset by increases in international sales, especially in Brazil, India, Saudi Arabia, Eastern Europe, and the Pacific Rim.

IVRs are both strategic and tactical solutions that are mission-critical for a growing number of contact centers around the world. Some customers complain about these automated systems, but the vast majority finds them convenient and easy to use, and has come to depend on them. With the emergence of proactive customer care, IVRs are providing additional strategic benefits, making major contributions to revenue generation and an outstanding customer experience.

The hosted outbound IVR market, also known as proactive notification solutions, has started to come on strong. New vendors are entering this market, many with vertical solutions for healthcare, travel, collections, and other industries. Currently, most outbound notification vendors, including  Convergys/Intervoice, Eliza, Nuance Communications, Silverlink, SoundBite Communications, Varolii, Vocantas, VoltDelta, and West Interactive, sell their offerings on a hosted or managed-services basis.

The concept of outbound IVR is not new. It has been used for collections, for example, for many years. Many vendors are now offering packaged solutions that provide tracking and dialing capabilities along with their primary function of leaving an automated message using an IVR. Companies have built outbound programs using their inbound IVR platforms for many years. However, as this is seen as just another use for the solution, the premises-based IVR providers do not track this activity separately. As inbound vendors start to offer prepackaged, vertical applications, they may eventually be able to track and report the revenue from these solutions separately. 

Legislative Change

In 2003, the U.S. Federal Trade Commission amended the Telemarketing Sales Rule (TSR) for the benefit of consumers. This amendment altered the dialing landscape. It did not kill dialing, but instead established strict guidelines limiting companies to calling customers only with whom they have an established business relationship. The legislation changed dialing from a disruptive activity that disturbed many dinners to a relationship-oriented function intended to build and enhance loyalty. It also became the driving force behind the outbound IVR market.

Outbound notification is used for many purposes, including proactive customer care. When implemented properly, it can help an organization build and enhance customer loyalty and generate incremental revenue. Until August 2008, when two other amendments were added to the TSR to reduce the number of automated nuisance calls, few barriers limited market entry,  leading to a rapid influx of new vendors. 

DMG does not expect the new TSR amendments to seriously impede the growth of this market, although it may slow down in the short term while vendors enhance their offerings to address the new requirements. According to these provisions, prerecorded messages can be delivered only to customers who have explicitly given permission, and the systems delivering the message must allow customers to opt out. While these provisions require technology enhancements for some vendors, they are simply good business practices that should strengthen this market in the long term.

Of 23 relationship call types, a few are related to collections and fraud, but the majority are intended to enhance relationships with existing customers and reduce the volume of inbound calls to organizations. All of these categories—even collections and fraud calls—improve a company’s profitability, and most can improve the customer experience, as well. Of course, how the calls are executed will determine if they achieve their goals. 

Companies of all sizes, from solo-practitioner dental offices to Fortune 100 companies, are using IVRs to cost-effectively reach customers. In general, customers welcome these calls, having granted implicit permission to be contacted in this way and informed about activities—such as appointments, sales, and travel—in which they have an interest. 

The future for the outbound notification/proactive customer care market is strong. Vendors from many arenas are continuing to enter this market because the revenue potential is large. Increasingly, the market will see multimodal outbound notification solutions that can reach customers via their channel of choice. As long as vendors stay focused on the goal of proactive customer care—providing information their customers find helpful—this market will grow rapidly during the next three years.

Donna Fluss is founder and president of DMG Consulting, a provider of contact center and analytics research, market analysis, and consulting. She is the author of The Real-Time Contact Center, The 2008 Contact Center Executive and Management Briefing, and many other industry reports on contact center hosting, IVR, speech analytics, performance management, workforce management, surveying and analytics, and quality management/liability recording. She can be reached at donna.fluss@dmgconsult.com.

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