Digitisation is changing the economy, products and services
Which trends and technologies are currently having the biggest impact on the service sector? How digital is customer service across different industries? How are service providers using innovative technologies? And what potential is emerging from this? Our new customer service and engagement study answers these and many more.
“Customer service can - and must - evolve: From being a pure problem solver to an integrated business function. Bringing marketing, sales and service much closer together.”
Read the detailed analysis of service trends, market and industry developments as well as inspiring best practices in the study.
The study at a glance
In this study, we focus in particular on trends and new technological opportunities in customer service. In detail, we provide a snapshot of some of the largest industries in Germany, drawing on specific examples of how how digital service initiatives are already being successfully implemented.
Trends
The service market is currently being shaped by four overarching and four technological trends, some of which reinforce each other and lead to high-quality, digital services.
Overarching trends
1. Tech pioneers increase customer expectations of services
In PwC's Global Consumer Insights Pulse Survey published in 2021, 50 % of respondents said they had become more “digital” as a result of the pandemic. For this group of people, the importance of digital customer services is growing, which is why companies must invest in them without delay. Most of these people are used to the best in class digital services of technology companies such as Meta, Amazon, Apple, Netflix or Alphabet. Companies like these set high standards when it comes to service, and customers measure all other companies against them.
2. Self-services require constant optimization
Companies are using more and more self-services. However, these are often difficult for customers to find and navigate – or they are simply out of date. Service managers can solve such problems by continuously optimising their self-services and integrating a forwarding option to human agents for complex tasks. In this way, they can prevent customers from having to submit their requests more than once, avoiding unnecessary activity for all involved.
3. Hyperpersonalization
With data-driven personalization, companies can address customer preferences individually. Artificial intelligence (AI)-based systems can accurately identify appropriate content and play out precise next-best-actions as well as next-best-offers. As a result, digital service is evolving from a pure cost point to an efficient up-seller and cross-seller. For this reason, the topic is also becoming more important for tele-sales and inbound selling strategies. Marketing, sales and customer service are thus moving even closer together – a development that companies must increasingly take into account in their strategic and organizational planning.
4. Better agent experience for a better customer service
Service is often equated with customer experience: optimised processes and offerings are primarily aimed at the customer experience. This is important, but companies should also keep an eye on their service agents. Because modern technologies and the underlying processes change rapidly, agents need to regularly update their skills. Service optimisation therefore also includes the “agent experience”. Last but not least, customers also benefit from this.
Technology trends
In addition to overarching trends, modern technologies in particular are shaping the service sector. The four most important technology trends are:
1. AI as the “Swiss Army Knife” in customer service
Artificial intelligence is a key component in the future success of customer service. AI can be used almost everywhere in customer service. Its potential is particularly great for text interpretation, learning chatbots and automated emailing.
2. Cloud-based omnichannel systems as a holistic solution
Reinforced by the pandemic, companies are increasingly turning to cloud-based omnichannel systems. Leading providers such as Salesforce, SAP and Microsoft offer modular systems; central platforms enable holistic solution approaches. Users benefit from simple implementations, fast optimizations, long-term economies of scale, attractive prices and holistic integration of all channels.
3. Voice and biometrics offer automation potential
Registration via voice recognition and pre-qualification thanks to natural language understanding (NLP & NLU, Natural Language Processing and Understanding) offer better customer experiences and automation potential, especially for telephone inquiries. Speech recognition is now so sophisticated that increasingly complex enquiries can be processed without human assistance. This achieves significant efficiency gains.
4. Smart processes thanks to Robotic Process Automation
Many companies are already using Robotic Process Automation (RPA), increasingly also in the service environment – for simpler routine processes such as password resets. RPA software is becoming increasingly user-friendly; users can deploy the manufacturers' fully integrated automation platforms without much prior technical knowledge.
Market model
The contact center and CRM market as a whole is expected to grow moderately by 4.64 % (CAGR) through 2024
Looking at how the market for CRM and contact center solutions is expected to develop until 2024, the following picture emerges: there will be moderate annual growth (CAGR) of 4.64 percent. In-house services will grow slightly faster than outsourcing (3.9 %) at five percent. In the case of service providers, PwC expects a pandemic-related, short-term increase in demand, which will have a particularly positive impact on their nearshore capacities. In the medium term, demand will return to normal.
Rising prices drive market growth
Higher market prices are the main reason for the growing service market. Service agents are usually paid according to minimum wage. The minimum wage increase planned in Germany for mid-2022 to €10.45 in July and the targeted increase to €12 in October 2022 (according to the current draft legislation) will increase personnel costs in the sector. Investments in technologies such as CRM systems and chat and voicebots will also contribute to the price increase. As a result, PwC expects prices to increase by 4.15 percent, with internal prices expected to increase by 2.9 percent and service provider prices by 4.9 percent. Service provider prices will rise more sharply because they are more likely to be affected by the minimum wage increase.
Contact volume grows moderately, but becomes more complex
By 2024, contact volume is also expected to increase by a moderate 1.4 percent – partly because more services will be automated, and partly because self-service offerings will increase. The price per human contact will also rise because human service agents will increasingly accept complex requests. These will take longer to process on average and require more expertise. The resulting, expected price increase will hardly be compensated by relocations to nearshore/offshore locations.
Commoditization and automation cause market shifts
Looking at individual sectors, the largest market volume increase for public services is expected in 2024 (8.7 % CAGR). Energy and utilities (1.8 %) and telecommunications (1.6 %) are expected to see the smallest increases. These two sectors still accounted for the highest market shares in 2015, the year of PwC's first service market analysis. Because their offerings are becoming increasingly automated and the products require less explanation, their market shares are declining. By contrast, healthcare, financial services and public services are growing in importance.
Maturity model
Digital service maturity levels reveal optimisation potential
In order to determine the status of service activities in individual sectors, a special maturity model must be used. This model maps the internal (inside-out) and external (outside-in) requirements of modern customer services in seven dimensions. The dimensions examined range from service strategy to operational aspects.
The dimensions were defined together with industry experts and companies, validated and divided into a scale of one to five. A maturity level of five corresponds to “best-in-class” implementation. Study result: In the inside-out dimension, the industries achieved an average of 2.9 points; in the outside-in dimension, the result was slightly better at 3.0 points. This means that there is potential for optimisation in all the sectors analysed. This is greatest in proactive service and personal, situational service.
There are clear industry differences in the level of digital service maturity: While the telecommunications industry, for example, has already automated large contact volumes, the healthcare sector is just starting to do so. Basically, the above-mentioned technical possibilities have reached a level of maturity that should motivate companies to use them more. This is also supported by the fact that customers are increasingly accepting innovative solutions.
The methodology
Since 2018, PwC has been surveying the total market volume and growth as well as the price development of contact centre and CRM services every two years. For the present study, partly quantitative and partly qualitative surveys were conducted in the first half of 2021; further expert interviews and author discussions took place in the second half of 2021. PwC asked call/contact centre service providers, their clients and in-house service centres to assess the development of demand and prices. Based on the responses and macroeconomic forecasts, the demand, market volume and price development in outsourcing were modelled until 2024. In addition, the data basis was completely revised due to the coronavirus pandemic in order to be able to reliably determine its influence on digital customer service in different industries. By means of expert interviews and workshops in corresponding companies, PwC identified the so-called digital service maturity level for each industry. The industries were assessed on the basis of seven dimensions that take into account internal (“inside-out”) and external aspects (“outside-in”). The sectors examined were: Energy and Utility Security, Information Technology, Retail/Consumer Goods, Telecommunications, Financial Services, Public Sector, Healthcare, and Travel and Hospitality.
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