Between 1995 and 2000, IT investments (including software, computers and communications) charged ahead at an astonishing growth rate of almost 25% per year. Spending peaked at over $460 billion in 2000, then precipitously dropped off during the 2001 recession.

Since then, IT investments returned to a growth path, finally overtaking pre-dot com levels in 2006.

Was the investment worth it? It was. The IT productivity paradox was long a source of debate, which was famously settled only recently. In the information economy, the rule is simple: innovation drives growth.

These days, businesses get the relationship between IT and growth. But during a slowdown, the case for building up IT may have to be defended. This point is nicely presented in an article in Harvard Business Online. Specifically, the authors argue that companies should maintain investments in customer service and support because demand generation is even more critical when the business environment worsens.

Technologies and applications for the contact center that we have been writing about—home agent, IVVR, Web 2.0—can be ways to not only get your business through the current financial strain but also accelerate growth when the economy gets back on track.

To help consumers get past IVR systems, Paul English started gethuman. English has moved on to other endeavors, but his site remains an invaluable resource for bypassing IVR menus to connect directly with an agent.

Crowdsourcing has made its way to the consumer market in a very exciting way. A start-up founded by voicemail pioneer Scott Jones enables you to send questions on any subject from your cell phone—either by text or voice. An anonymous army of researchers goes to work on the reply, which is returned as a text answer. It’s free.

Brand sage Idris Mootee blogs frequently on Web 2.0, creativity, and customer experience. Mootee is a world traveling business consultant with a unique perspective—check him out.

I had the opportunity to see customer advocacy in action during a recent visit to our local Costco. Wife’s list in hand, I proceeded to knock off every item efficiently and made my way quickly to the cashier. After all the items were scanned, I handed my credit card to the cashier, who proceeded to ask me if I had any coupons. After telling him I didn’t, the cashier reached under the register, produced a flier that entitled me to $25.00 off my purchase and waved the bar code scanner across the coupons. Right before my eyes, my bill dropped from $173.45 to $148.45…a 14% reduction in the bill. I would have never known about the offer otherwise.

In Forrester's words, "When customers feel that a firm acts in their best interests, they are willing to invest more, borrow more, and buy more products from the firm". Amen.

Was it too expensive? Was the quality not good enough? Was it not considered a necessity? Probably all of the above. But in terms of the business world, I think people just thought a talking head didn’t add much value. I also think many of the technologies that are now taking off in business (think IM) were spawned in the consumer world – and video just never caught on there.

But now that it’s 2008, it seems like video is finally starting to gain some traction. While there some slow growth in the early 2000s, there appears to be a peak in interest now - why? My hunch is that the video craze in the handhelds - and finally the beginnings of the ubiquitous infrastructure to support it – is behind the rise in video.

Sure, the economy is helping to fuel the market in which travel budgets are tight, but is it the talking head we seek? I say no. I believe it's the just-in-time world we live in that will drive video and deliver a new level of customer service. The product demo, pictures of the polo in multiple colors, the streaming video on how to set up your TIVO – we seek all of this out on the devices we now use the most – our cell phones and PDAs.

In my opinion, companies that jump on this bandwagon and use video to differentiate their brand will win the hearts and minds of both techies and the up and coming generation that expects this rich experience. Do you agree? How will you use video in your business?

Before entrepreneur and inventor Clarence Saunders came onto the scene in 1916, going to the food market meant queuing up at the one-and-only counter, placing an order, and then waiting while clerks retrieved items from shelves. Realizing that profits would rise when customers served themselves, Saunders launched his revolutionary Piggly-Wiggly store in his hometown of Memphis, Tennessee. It was the first modern supermarket, introducing shopping conveniences that we now take for granted: allowing customers to rove the aisles, prices marked on goods, and check-out stands.

The shopping cart as a symbol of self-service is now literally an icon found on web sites. Besides the bottom-line efficiency to the retailer of doing-it-yourself, there’s also an important 2.0 aspect to the customer—we interact with others and form relationships in the aisle and at the checkout line based on our purchases and product preferences.

To my thinking, this makes Saunders’ self-service supermarket an example of a customer-based social network!

I agree with Forrester Research blogger Bruce Temkin that this new wave of highly automated self-service doesn’t mean that full-service customer support is ending anytime soon. The technology can become a distraction when self-service turns the customer into an unwilling technician who has to grapple with non-intuitive interfaces—graphical or IVR.

I think of Web 2.0 and Contact Center 2.0 as the best of both worlds: providing the customer familiar technology as a helpful aide, while not eliminating the personal interactions that are the key to bonding the customer to the business.

In a recent conversation with a leading service provider, I mentioned one consumer site that repeatedly took the company to task and asked how chronic issues mentioned on this site were addressed. To my amazement, the president of one of the company’s largest divisions actually spent several hours chatting with customers on the site to both understand and explain improvements face-to-face (or pretty close). Though he couldn't address everything, I give him a lot of credit for putting himself out there.

Sound familiar? Is your company also utilizing Web 2.0 technologies to get closer to your customers? We'd like to know!

While the Spore demo was impressive, it’s iPhone’s new ability to synchronize with Microsoft Exchange that has captured the attention of the enterprise community. Emails, calendar appointments, and contacts are pushed out in real-time. For the contact center world, the new push capability is incredibly handy if you’re a field technician trying to coordinate a trouble ticket with an agent.

The iPhone already supports PBX functionality. With the 2.0 upgrade, this “consumer” device is not so quietly morphing into a business-class tool that competes head-to-head with the likes of Blackberry, Treo and Windows Mobile.

So, are you getting ready to toss out your BlackBerry? I’d be interested in learning whether iPhone 2.0 is changing your mobile device plans. Drop me a line and let me know.

1) Empowerment: Why put agents through the frustrations of commuting when they can serve customers from home instead? It’s The Death of Distance in action. Today’s communications technology gives agents the freedom to work productively and seamlessly regardless of their location. Arizona, Oregon, California, Georgia and Virginia are just a sampling of the 26 states and 14 countries where the Telework Collaborative offers incentives for empowering agents to work from home.

2) Technology: We've come a long way from hard-wired devices, painfully slow connections and other hallmarks of early attempts at technology in the home. High speed internet is moving past 50% penetration in North American households and rapidly increasing across the European Union and Asia, overcoming technological hurdles. Avaya itself delivers IP agent, a robust contact center solution that is deployed in a number of "Avaya by Example" remote worker sites and other at-home agent scenarios.

3) Results: Some of the earliest concerns regarding home-based agents were around manageability, security and resource isolation. Contrary to these alleged drawbacks, several companies utilizing at-home agents report increased worker satisfaction, reduced fraud and improved cross-selling. For these companies, out of sight is definitely not out of mind.

With at-home agent deployment on the rise, your next customer interaction may be handled by someone working from home. Our next two posts will explore best practices from real at-home agents.

“Humans matter” was my battle cry when I started blogging. But it takes reading an actual transcript of a bad customer-agent interaction to remind you of the flip-side of talking to an agent. I reviewed a teeth-clenching tech-support exchange that was blogged by New York Times technology reporter David Pogue. One would have thought that the customer’s change of address request to her ISP would have been an easy play for the agent. To his credit, Pogue balanced his blog with amusing and frustrating contact center transcripts in which the customer was clearly miscommunicating vital information to the agent.

We’ve all been guided through a complex call by well-informed, expert agents. But like shoe sizes (and many other physical characteristics), agent skills distribute themselves into the often referenced bell-shaped curve—a rising and falling mound that’s fat in the middle and skinny at the extremes. Contact center managers understand this fact of life--that few agents are exceptionally good or bad. They try to manage inherent skills variability by rewarding good agent behaviors and improving those that fall outside the acceptability band.

Is there a price to pay for trying to move agents into the narrow part of the curve? CRM blogger Dick Lee thinks so. When regimenting agents through a metrics-based efficiency plan, managers gain good performance metrics (average handling time, average speed of answer) but often at the cost of losing “employee empowerment to make context-sensitive decisions.” Case in point: receiving a free PlayStation 3 from Amazon customer support.

Following Zack’s lead of using baseball as a metaphor for call centers, let’s consider a related question, the extinction of the .400 batter. The last player to achieve a season batting average of 2 for 5 was the amazing Ted Williams, reaching a .406 back in 1941.

The late Stephen Jay Gould, baseball fanatic and Harvard biologist, came up with definitive answer as to why no one has since achieved or bettered that record. His argument: the game has improved and standardized the quality of players through better scouting, coaching and training. Inevitable result: it’s just harder for great players to take advantage of worse players, and therefore there’s less chance of hitting above .400. While the league batting average has remained practically the same since the 40’s, more players are squeezed into the bulging middle part of the curve.

There are now more average hitting players than anytime in the past!

In the contact center, training, coaching, technology and metrics monitoring have improved the performance of agents. But be warned, efficiency programs and regimentation can also have the counter-intuitive effect of eliminating exceptional service from potentially great hitting agents, the outliers who will have a significant positive impact on customer loyalty.

One of my favorite pastimes during this season is to watch the averages of the players – especially those who are on the edge of making a major league roster. Because they’re generated in such a short period of time, amazing statistics can be deceiving. This makes it difficult for managers to assess the validity of these performances over the long term and determine which players make the final cut.

Contact centers also evaluate performance using tools like Average Speed of Answer to measure the efficacy of customer service delivered. Much like spring training, any metric based on an average can be misleading in the short term. Since contact centers run operational analyses on short intervals – typically 15-30 minutes – averages can downplay customer experience outliers. What’s more, Average Speed of Answer only accounts for the front end of the overall customer experience when in reality, it’s the middle and back ends of the customer interaction that typically generate customer dissatisfaction.

Over the past ten years, much progress has been made in attempting to define more precise ways of determining how effective interactions are. First Call Resolution has become mainstream and is a more accurate tool because it includes a customer experience element. In other words, it poses a good question: Does the organization bring to bear all the information and processes necessary to satisfy the customer on the first try?

With any customer interaction, it’s critical to look beyond the averages to get a better sense of how the experience can be improved. The growing investment in analytics and business intelligence is a positive sign that companies are serious about customer satisfaction. More importantly, it’s a sign that they’re exploring the emotional, experiential side of customer interaction and interested in creating powerful, long-lasting connections.

The studies both concluded that overall customer satisfaction is on the decline. “Falling customer satisfaction has a dampening effect on consumer demand, and household debt-to-income ratios affect consumers’ ability to spend. Both are moving in the wrong direction, brewing up a double-whammy that may hit the economy hard,” said Claes Fornell, head of the ACSI and author of The Satisfied Customer: Winners and Losers in the Battle for Buyer Preference. “In such an environment, customer satisfaction becomes even more important because satisfied buyers tend to reduce sellers’ cash flow volatility.”

The bright spot? Online customer satisfaction is at an all-time high. This points to the massive investment in the creation of exceptional online customer experiences. Big investors include several pure play e-tailers like Netflix, Customer Service Champ Amazon.com, and financial service providers Fidelity and Vanguard. Companies like National City Bank that have invested wisely in customer loyalty programs are benefitting from an improved customer experience that leads to greater loyalty, which is key in financial services.

Since most companies will always have a mix of online service, face-to-face interaction, and contact centers in their customer channels, the key will be to "maintain the gain" in the online channel and "remove the pain" from the others that may have received less attention in recent years.