In some form or another, a recession is looking increasingly likely in 2023. The Conference Board, a global nonprofit think tank, called for a 96% probability of recession in the U.S. within 12 months from October 2022. That’s a steep increase from the 0% likelihood in early 2020 through early 2022.[1]
We can be confident that regardless of the severity of the looming downturn, it’s likely to affect businesses across all sectors of the economy.
In an environment like this, tightening is inevitable. Yet, contact centers that spend strategically will be best positioned to weather the storm. The best way to get through a recession is to balance cost cuts with a strategic investment in customer experience (CX) to ensure you hold on tight to your customers.
How bad will it be?
While it would certainly be helpful if contact center leaders could see exactly what the downturn will look like, economists aren’t clear about how bad it could be. Even though they can’t agree on the severity, they generally concur that recession is imminent.
The Conference Board expects that factors such as lingering inflation, continuing Fed rate hikes, and geopolitical turmoil will combine to make a recession highly likely in 2023. The group expects that U.S. gross domestic product (GDP) will turn negative in late 2022 or early 2023.[1] Although it doesn’t expect negative economic growth to linger for long, the Board does anticipate a slower pace of GDP growth for the next decade, beginning in 2024.[2]
Other predictions span the spectrum from pessimistic to promising. BlackRock analysts were bullish about 2023, despite some hopeful upticks in markets after the midterm elections.[3] JPMorgan CEO Jamie Dimon, meanwhile, predicted a mild recession that would pale in comparison to 2008, even predicting 1% GDP growth in 2023.[4] Goldman Sachs is a clear outlier, calling for a “soft landing” that may even see the U.S. skirt a recession entirely.[5]
Every recession is unique, but each brings some predictable results. That means contact center leaders can learn from the past and proactively prepare for what’s coming.
Consumer spending is expected to slow, of course. During the last recession, 20% of consumers shifted their spending toward lower-priced goods. Likewise, overall consumer trust in brands dropped by 20%during the 2008 recession as buyers projected their pessimism about the economy onto the companies that drive it.[6]
Every customer dollar is valuable, but it becomes more so if there are fewer dollars to go around. In the face of a recession, contact centers need to position themselves to retain customers and grow revenue in any way possible.
How to weather the storm: invest in CX
These aren’t the only lessons that previous recessions have to teach contact centers, however. Not all companies cut costs indiscriminately in a recession, and those that made strategic investments in CX in 2008 fared far better than those that didn’t.
Data from a recent Watermark Consulting study illustrates just how much of a difference CX made during the Great Recession. Companies that were deemed CX Laggards from 2007–2009 saw their stock drop by an average of 57% during that stretch. In contrast, CX Leaders actually saw their stock increase by 6.1% on average, despite the S&P 500 dropping 15%.[7] Paradoxically, those companies that spent more on customer experience came out of the recession stronger.
This shouldn’t come as a surprise, though. Investing in CX is a critical way to bolster customer loyalty, something that’s especially critical during a downturn. Maintaining an existing customer is much less expensive than securing a new one, after all. What’s unique today is that customer expectations for CX are rapidly evolving. Investing in self-service, IVRs, and chatbots can help handle calls more cost-effectively.
“As customer expectations for outstanding service and experience continue to rise, businesses can no longer rely on improvements in usability, functionality, and dependability of a product or service to ensure customer loyalty,” says Alok Kulkarni, co-founder and CEO of Cyara. “Customers are essential for the business, and if they aren’t getting the experience they want, they’ll have no problem taking their business elsewhere. In 2023, providing exceptional CX will be critical for maintaining and retaining customers, and it will directly impact the company’s ability to weather the economic uncertainty.”
A complete testing solution
What does it look like to invest in CX in a way that will recession-proof your contact center in 2023, then? As we’ve discussed before, technology investments like migrating your contact center to the cloud and adding conversational AI are critical for contact center success, regardless of what happens in the next 12 months. Both set the stage for the digital-first, self-service CX that customers expect today.
A complete investment in CX, however, involves much more. The cloud and conversational AI make so much possible, but they can also magnify defects in your IVR or chatbot solutions and can enhance problems with customer experience. To truly ensure a strong customer experience, contact centers must deploy end-to-end testing solutions that allow them to continuously monitor every stage of the customer journey.
Cyara offers the complete solution for recession-proofing your contact center. With automated testing and monitoring solutions, you can test more, assuring great quality CX, without spending more on labor. Not only that, but you can also ensure your employees spend their time on the most valuable thing — critical and complex customer service tasks — rather than on testing or trying to alleviate customer frustrations.
Just as in the last recession, the businesses that invest in these CX-supporting solutions will be the ones that come out strong on the other side. Read more about the true cost of manual testing or reach out today to learn more about how Cyara can help you get ready for the rough waters ahead.
[1] The Conference Board. “Probability of US Recession Spikes to 96%.”
[2] The Conference Board. “Global Economic Outlook 2023: US Edition.”
[3] Jonathan Ponciano, Forbes, “Dow Rallies 800 Points As Apple Stock Surges—But ‘Looming Recession’ Could Still Tank Markets, BlackRock Warns.” Oct. 28, 2022
[4] Siladitya Ray, Forbes, “JPMorgan Forecasts ‘Mild Recession’ In 2023— Here’s What Major Financial Institutions Predicted This Week.”, Nov. 17, 2022
[5] Goldman Sachs. “Why the US is Expected to Escape Recession in 2023.”
[6] AMC Technology. “How would a recession impact your call center?”
[7] Jon Picoult, Forbes, “The Best Business Strategy For Surviving A Recession? Not What You’d Think.” Jan. 7, 2020
