Not only is CX technology a massive industry — it’s growing.
The customer experience and relationship management software market reached more than $96 billion in revenue in 2022, according to Gartner. It also saw a 14% growth in market share over the previous year thanks to investments in customer service and support and growing investments in cross CRM.
That number is likely to grow, with 3 in 5 of CX leaders planning to invest more in tech in 2024, according to Forrester.
But as the technology increases and the costs grow, CX leaders face obstacles implementing tech effectively.
“The challenge is usually the complexity of the overall stack,” Julian Poulter, VP analyst at Gartner, said. “There are so many different and overlapping technologies that most enterprises end up with a very complex tech stack which can end up being unwieldy, unintegrated and not fit for purpose.”
CX tech stacks often become bloated, and many CX leaders end up paying multiple vendors providing overlapping capabilities, according to Forrester.
CX Dive assembled the central considerations for what makes a good tech stack, where to add capabilities and where to pair back for efficiency.
A good CX tech stack for one may not work for another
Different sized companies, different industry verticals, as well as different objectives for the type and length of engagements will mean that the tech that one company uses might not work for another, Kate Leggett, VP and principal analyst at Forrester, told CX Dive.
“CX for utilities and the tech stack for utilities is really different than the tech stack for retail banking or for wealth management,” she said.
In first analyzing a business’ CX needs, Leggett looks at high-level criteria first, determining whether it’s a small, middle-market or enterprise company. From there, she looks at the CX tech offerings in the company’s industry and how the business wants to deliver great experiences.
Poulter says the first thing he does when working with clients to revamp their tech stacks is ask “What are your objectives? And where are you with data?”
What are the components of a CX tech stack?
Leggett points to three big buckets that make up a CX tech stack:
- Contact center technologies to manage customer interactions and route work to the right agent queue.
- CRM or customer service technologies to power agents’ desktops.
- Workforce optimization technologies to staff agents across communications channels.
For some businesses, a digital experience platform will be an additional bucket. And increasingly, businesses are seeing a customer data platform as an essential component to crunch data and personalize interactions with customers.
“It's like an overlapping Venn diagram of these capabilities,” Leggett said. “And especially for CRM and the contact center, there are also industry flavors of this technology in terms of ontologies, in terms of workflows, in terms of experiences that you offer.”
Leggett describes those three, or four, buckets as a business’ “core stack.” Businesses can then add on what she calls “best-in-class solutions.”
“And then you start layering on the capabilities that you need,” she said. “Do you need a customer feedback management solution? Do you need for example, voice AI, speech or text analytics? Do you need a conversational AI solution? Do you need churn analytics? Do you need all these best-in-breed capabilities to be able to manage and understand customer interaction, behavior?”
Leggett, an analyst of enterprise CRM solutions, encourages businesses to be pragmatic about adding more capabilities to their tech stacks. She urges CX leaders to consider the risk of smaller vendors getting acquired or going under, the time spent integrating the tech, and the need to train CX staff to use additional tech.
“It's always easier to go with an all-in-one solution as long as it's able to deliver upon your expectations,” she said.
Marketers, who sometimes have purview over CX, also face this challenge, Poulter said. “Marketers in particular are their own worst enemy as they are renowned for buying best of breed solutions rather than sticking with fewer vendors with more integrated solutions.”
An all-encompassing approach to a business’ CX
It’s also possible to take an all-encompassing approach to CX tech.
Poulter takes a holistic approach, describing CX tech stack as a propeller with a cross-functional CRM taking the center hub. Four blades extend from there: one for customer service and support, another for digital commerce, a third for marketing and a fourth for sales.
Each aspect must work together for a smooth customer journey, he says.
“In the real world, these things can get really, really messy and really complex,” he said.
Businesses looking to do a comprehensive transformation of its CX tech stack need buy-in to break down silos, he said.
“If I'm doing CX in a digital transformation across the organization, I need to have C-level on board level support for these things, otherwise, it's just gonna never happen,” he said.“If I'm just focusing on improving customer service for 100 agents, obviously that can work in much more isolation, but nothing is totally isolated.”