Gartner Predicts No Reduction in Customer Service Spending in Coming Year

Customer service expenditure graph

Nearly a quarter of finance leaders plan to increase CSS funding, despite economic pressures.

Only 7% of CFOs plan to decrease customer service spending over the next 12 months, according to a July 2022 poll of 234 finance leaders by Gartner, Inc. Twenty-one percent plan to increase customer spending and 72% to maintain spending, despite economic pressures.

“In response to inflation, supply chain disruptions, and a tight labour market, CFOs will make trade-offs in spending that affect customer service and support (CSS) leaders,” said Sarah Dibble, Director in the Gartner Customer Service & Support practice. “The bright spot for CSS organisations is that their function is not a top priority for cost cutting compared to real estate/facilities management and finance, which are the most likely to face budgets cuts in the next year.”

Nearly all CFOs prioritise, and will continue to prioritise, digital investments over categories such as sales or research and development, focusing particularly on technologies that enhance current revenue streams or new digital products and services. CSS leaders should therefore prioritise the technologies that meet these criteria to make the strongest case for investment to their CFO.

CSS leaders must also make a strong case for digital investments that reduce costs. For example, digital self-service channels offer a tremendous cost savings opportunity for service organizations, costing $0.09 per contact compared to $14 per contact in assisted service, according to Gartner research. Another area that will not only reduce costs but also better help serve customers is conversational AI, which is expected to reduce contact centre agent labour costs by $80 billion by 2026.

CFOs will also look to ramp up investments in hiring and compensation, but increase scrutiny on consultants, contractors, and facilities. “Service leaders with large budget allocations in the latter of these categories should be prepared for increased scrutiny, as well as have contingency plans in place,” said Dibble. “For instance, there may come a time when a contact centre in an expensive geography needs to be closed down, transitioned to remote work, or the frontline is unable to handle contact volume without contractors.”

Overall, CSS leaders should look to demonstrate ways that their function helps the company achieve its financial objectives by increasing customer loyalty, especially as CSS organisations are faced with frustrated customers who are dealing with their own financial stresses.

Other actions for CSS leaders to mitigate the effects of the economic downturn include:

  • Influencing the C-suite on cost reduction and avoidance
  • Migrating volume to digital and self-service
  • Improving, automating, or eliminating inefficient processes
  • Assessing outsourcing options and partnerships
  • Contributing to the top-line by developing value enhancement strategies

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