Today’s Experience Economy

Melody Brue:
I am Melody Brue, Vice President and Principal Analyst at Moor Insights & Strategy, and I am so happy to introduce you today to Alan Masarek, CEO at Avaya. Welcome, Alan. How are you?

Alan Masarek:
Thank you so much. Glad to be here. I’m doing well. Good to see you again.

Melody Brue:
Great to see you. And I’m really excited to be talking about all of the new things and this experience economy. So we’re going to talk today about the experience economy and how to add value to business, employees and customers to innovate, accelerate, thrive, and win with customer experience. So Alan, recently you discussed your formula for customer experience with the CX+EX=BG. Can you talk about that and help understand that formula?

Alan Masarek:
Well, so the BG is business growth.

Melody Brue:
Yes.

Alan Masarek:
We’re all very familiar with CX, customer experience, EX, employee experience. And we’ve distilled it down to this formula because, well first of all, at the end of the day, all of our customers, often the largest brands in the world, they’re all trying to win based upon their ability to differentiate their customer experience, to provide a better customer experience than their competitors. Every company at the same time is trying to focus on business growth. Those outcome measurements, and you can call growth, revenue growth, profitability, shareholder value, value appreciation, but think of it an aggregate of business performance, business growth. At the end of the day, you can’t in a vacuum deliver a customer experience without at the same time delivering a great employee experience. And that’s why we’ve come up with the formula, CX+EX= business growth. Now, when you think about EX, and that’s the one that’s a bit misunderstood, is think of the challenges of your classic contact center agent.

It’s a tough job, high turnover, but if that’s the person who is the first point of interaction that the customer has with your brand, and that person’s only been on board for a couple months and is not very familiar with the products, how good an experience can the employee, can the agent provide the customer, it’s a challenge. So what you have to do is you have to provide the software solutions, which we do, that help the employee answer the customer’s questions, do it in a way that is quick and satisfying, it’s an elegant experience so that the agent, their job is better, their become more tenured, and they have an opportunity to deliver that customer experience.

I’ve often spoken about that boards and other CEOs like me, what we think about is business growth, is business performance, shareholder appreciation. And so the key thing that we advise IT professionals who are involved in buying our solutions is let’s get the language consistent, talk in terms of the outcome and then work backwards from the outcome. And so the whole idea is how do you focus on the business growth by having the tenured satisfied agent with all the information necessary to answer that query from the customer and provide a better customer experience. So it’s CX+EX= business growth

Melody Brue:
And you’re so right that the employee experience really does impact the customer experience so much and there are so many ways to help improve that that are just getting more and more advanced. So let’s talk about one of those things which is AI.

Alan Masarek:
No conversation will go on without talking about AI, but-

Melody Brue:
We made it three or four minutes, but this is the whole-

Alan Masarek:
But we laugh, but in the customer experience industry, AI will have more impact than any other enterprise software vertical that virtually any of us can think about. Why? Why? And it goes back again to the formula CX+EX= business growth, which is all of our brands are very focused on how do they optimize the customer experience on the one hand and how do they reduce cost On the other side. The highest cost that every one of our brands have is the agent, within the contact center folks. And of course the agent who’s involved just in a voice call in that synchronous one-to-one interaction, you can’t deploy that agent to do one-to-many because they’re tied up in a one-to-one voice call. So the beauty about digital channels on the one hand and AI on the other is that it gives the employee the agent’s ability to answer the questions better, and I’ll come to that in a moment, and it gives you the opportunity to deflect so many of the calls or interactions that are coming in for routinized requests.

I want to do a password reset or I have a billing question or what have you, which is very discouraging and boring to the agent and then undermines the agent experience. Going back to the formula, you want that agent, that employee’s experience to be optimal. And so the ability for AI to come in and deflect whether the interaction comes in digital, it can be deflected through chat, or comes in through voice and through some voice spot, using AI to how you intelligently route that interaction so that at the end of the day, the human, the agent is involved in a more interesting complex interaction where human interaction is required, where the empathy of somebody is really required and it’s a complex interaction. That’s a more satisfying experience for the agent. And then it puts the agent in a position where they can solve the customer’s problem.

One of the beautiful things about new forms of AI, generative AI, is that your generative AI systems can be listening in the background and balancing the query from the customer against the knowledge database. And even when you get obscure questions from a customer, you’re popping into the text stream for the agent what the answers are. So again, go back to the formula. It is a more satisfying experience for the agent because they’re involved in more complex, interesting interactions. The easy things get solved very quickly via AI, and even the more difficult things because gen AI is in the background listening and bouncing off of the knowledge database, you can answer the customer’s queries that much better. You get CX optimized plus EX optimized, that’s what’s going to equal business growth.

Melody Brue:
Yeah. And so I’ve heard you talk a lot about innovation without disruption. And so how can companies bring in AI given the importance of CX and EX, how can companies bring in AI without that big disruption?

Alan Masarek:
So the concept of innovation without disruption, which is the core value prop of Avaya, is that for many years, and I’ve been in this industry for a long time, we used to think that, well, in order to innovate you have to disrupt, but it’s not true. And so if you think about our very large base of customers, again, Avaya has the largest customer base in the world in these categories around enterprise communications. You’ve had our core voice infrastructure for many, many years. And not only is it the most battle tested, mature, fully featured solution, but it’s also been bespoked throughout the customer’s environment, tied into all your other workflow systems. The notion is you don’t want to disrupt that, but at the same time you want to pull in innovation often or most often over the top from the cloud. So it really is a hybrid at its simplest where I can bring in all those digital channels, all that AI utility, whether it’s provided by Avaya or through our third party partners, and it pairs with what’s coming from the existing on-prem voice.

So from the agents and the company’s perspective, you’re getting all the innovation that you want and need without going through the rip and replace of taking that core infrastructure out. We’re all going through change fatigue as things in the enterprise software space are evolving so quickly, and we’ve all been involved in situations where a vendor comes in and says, my stuff is the new cool whizbang thing, rip out all the things that have come before it to go to my new cool whizbang things. And they may be very cool and whizbang, but the amount of disruption that you go through and the larger the company, the more complex the deployment, often the more regulated your industry or the more secure it is, or in certain geographies of the world. The ripping that core out is not just change management, it’s fundamental business risk.

So we’re saying at its simplest, innovate bring in digital channels, bring in all the elements of AI as we described before, but don’t disrupt the core. Then what happens is as let’s say voice gives way to digital and all sorts of AI utilities, and prem gives way to cloud, because I think those are two undeniable trends. You can stay intra Avaya as your customer interactions are moving voice to digital, or your infrastructure prem to cloud, you’re able to move that seamlessly without ever going through the rip and replace and that fundamental disruption and related business risk. That’s the idea of it.

And AI is a very significant element of that. Often we hear from customers, last word on this, and remember we are disproportionately skewed to this very large customers. They have 10,000 contact center agents. A lot of people in their mind are saying, a lot of customers are saying, well, why would I rip it out to go somewhere else and take all that risk if I believe that over some number of years, AI is going to help me lower that staffing, because I can take routinized queries and answer them through AI and all the other things that we just described.

Our council to client says, Hey, the best thing to do, because you have to innovate, we all have to modernize, but to do it without incurring that fundamental business disruption, that fundamental risk-

Melody Brue:
Risk.

Alan Masarek:
… and it’s actually a less costly solution as well. So when you combine all those benefits, it’s resonating really, really well with the customer base.

Melody Brue:
Yeah. And I think in addition to reducing staffing, or not only just reducing staffing, it’s giving such a better experience. Like you said, those jobs are really hard at times. You don’t usually call the contact center when you’re in a good mood. You call them when you have a problem. Giving those agents the opportunity to do more meaningful work is I think that’s such an added benefit of this too. So, okay, last thoughts. So how AI fits into the contact centers and basically we’re just saying the future belongs to those companies who can bring these things together, customer experience, employee experience. What’s your advice to companies trying to embrace this, who haven’t embraced it yet? What’s their next move and where do they go from here?

Alan Masarek:
I think that AI is critically important, but it’s also been an enormous hype cycle. So what I counsel customers all the time is be very careful about the return on investment you’re getting in that AI investment, because AI is really cool and it can do some really cool things. Be careful though that you’re not chasing the shiny penny to do the cool next thing. You want to build your capabilities more pragmatically, get a return on investment on those big dollars that are increasingly being spent on AI. Focus on the outcome, go back to the formula, how do I get to business growth? Always stay guided by that formula. The other thing that I think is very, very important is I think we need to think about, the customer needs to think about the KPIs differently in terms of how they manage their contacts.

So for years you have this high cost agent base. So we thought about everything from an efficiency metric point of view. Average handle time was one that everybody checked the efficiency of the agent based upon average handle time, get off that customer call as quickly as you can. The reality is, is you need to think about quality metrics, trust metrics beyond just efficiency because you actually may want longer average handle times, not shorter. That’s the irony of it, because if the simple routinized queries are being handled by AI, then the human is involved in something that is much more complex, requires human empathy and human interaction, it’s going to take longer, but that’s what’s going to make that customer happy. It’s going to be rewarding experience for the employee. It’s going to help differentiate your brand, and it goes back to the formula, CX+EX= business growth.

Melody Brue:
That’s great. And I actually talked to, when I was at Avaya ENGAGE, I talked to a couple of customers about that and I feel like there is a little bit of a tide shift now of people starting to realize that time to resolution is not the most valuable KPI, and I was really happy to hear that. Well, thank you so much Alan for joining us and thank you to everybody else for joining us for this great spotlight keynote, The Experience Economy. I love that. That’s a good phrase. Again, this is Alan Masarek, CEO of Avaya. I’m Melody Brue from Moor Insights & Strategy. Thank you for joining us at The Six Five Summit: AI Unleashed, and we will see you next time.

Alan Masarek:
Well, thank you so much. I appreciate it. Great to be with you.

Melody Brue:
Thank you, Alan.