NETTING IT OUT

2Q2009 was a bounce back quarter for KM-based customer service. The recession finally had an effect in 1Q2009—slowed customer growth and lower levels of financial performance. Seasonality hurt, too. But the effect was brief. In 2Q2009, customer growth was up. Financial performance was also up. In addition, significant new products were introduced to fuel growth for the future.

Customer growth rebounded in 2Q2009 for all but two suppliers. Customer acquisition was up for many of the rest, and additional business with existing customers was up for most.

Product activity was high in 2Q2009. There were several significant announcements from eight of the ten suppliers that we cover: Attensity Group, Consona CRM, eGain, IntelliResponse, KANA, nGenera, RightNow, and salesforce.com. The hot product trend is integration of social media as both a customer interaction channel and a knowledge source.

The biggest company news for 2Q2009 is news that we reported in our update last quarter. To recap briefly, Attensity Group is a new software supplier formed by the merger of Attensity, Empolis, and Living-e. The merger forms an attractive customer service supplier with useful and differentiated offerings. Also, Consona CRM acquired SupportSoft Intelligent Analyst Suite, software that provides diagnostics and repair functionality for supporting complex, high-technology products and services. The biggest new news is salesforce.com’ announcement that its data center in Singapore has gone live. SaaS computing activity is Asia Pacific is growing rapidly.

Six of our ten suppliers earned our Customers.com Customer Service Stars for 2Q2009: Attensity Group, eGain, InQuira, IntelliResponse, RightNow, salesforce.com. All of them demonstrated strong customer growth and strong financial performance. All of them introduced innovative new products and new product versions. 2Q2009 certainly was a good quarter for KM-based customer service.

KM-based Customer Service Rebound from a Soft Quarter

After a run of seven excellent quarters, growth in KM-based customer service slowed in 1Q2009, but only for a beat. Business rebounded nicely in 2Q2009 for all but two of our suppliers. Customer growth improved, and good financial performance resulted. In addition, there were several significant product announcements. So, KM-based customer service is positioned for continued growth in the next several quarters. Pretty good in the face of a global recession.

Three factors are responsible for the 2Q2009 rebound. First, as always, KM-based customer service offerings can deliver bottom-line benefits—reduced cost to serve and improved customer satisfaction and loyalty. Organizations of all sizes, across all industries, in every geography, have been working to capture these benefits by deploying KM-base customer service systems. Second, KM-based customer service suppliers have been telling us for several quarters that the most significant effect of the recession has been to slow their potential customers’ decision processes. Their sales pipelines have been full of good opportunities, but those opportunities have been very slow to close, and deals that slipped were perhaps the key cause of the soft 1Q2009. However, in 2Q2009, some of the larger opportunities closed. For example, closing big deals in 2Q2009 that had slipped out of 1Q2009 was the reason that InQuira had a “huge” quarter. Third, our SaaS suppliers—IntelliResponse, RightNow, and salesforce.com—have been doing very well throughout the recession. In fact, IntelliResponse and salesforce.com have had record-breaking growth. Fast, low cost deployments of SaaS offerings add to the more general bottom-line benefits of KM-base customer service, making SaaS offerings even more attractive. Throughout the recession, SaaS has provided a strong foundation for the rest of KM-based customer service.

Seven of Ten KM-based Customer Services Suppliers Bounced Back

Customer growth and financial performance were up in 2Q2009 for Astute Solutions, Attensity Group, eGain, InQuira, IntelliResponse, KANA, and RightNow. Customer growth was flat for salesforce.com, but the larger story is that “SFDC” acquired the same 500 or so customers as last quarter and set another record for quarterly financial performance.

Only Consona and nGenera CIM had down quarters in customer growth and financial performance. We feel that Consona is positioned for growth in future quarters through a strengthened product offering resulting from its acquisition of SupportSoft’s Intelligent Analyst Suite and plans for new product versions this fall. Re nGenera CIM, as we reported last time, it’s been through major organizational changes in the past few quarters. A slip in a quarter isn’t really a surprise. We’ll keep a watch on both these firms in the coming quarters.

Six Customers.com Customer Service Stars for 2Q2009

Balancing customer growth, financial performance, and products, Attensity Group, eGain, InQuira, IntelliResponse, RightNow, and Salesforce.com earned Customer Service Stars for 2Q2009. All of them demonstrated strong customer growth and strong financial performance. All of them introduced innovative new products and/or new product versions with significant improvements. Props to all six. 2Q2009 was indeed a good quarter for KM-based customer service. To these companies, we award our Customers.com Customer Service Stars!

Social Media and Customer Service

There’s a trend in KM-based customer service to include social media as both a customer interaction channel and as a source of knowledge. The Market Voice application of Attensity Voice of the Customer version 5 includes automated tracking of customer conversations within Twitter, Facebook, community forums, and blogs. The Cloud Monitor feature of Cloud Monitor RightNow May ‘09 tracks and reports on external conversations about products, services, and brands in social media. Currently, Cloud Monitor tracks Twitter and YouTube. Support for Facebook, MySpace, and LinkedIn is planned for a future release. Both Attensity Group and Right-Now use text analytic technology to detect customers’ emotions in their content. So the offerings can make organizations aware not only of what customers are “saying,” but also of how they feel when they say it. Salesforce.com is into social media, too. Beginning with its introduction in January of this year, Salesforce.com Service Cloud has been using Facebook content as a knowledge source and Facebook, Google, and Twitter as customer interaction channels.

Social media can be a great knowledge source. It can help organizations understand their customers, what customers are saying about their products and services, and how they feel about them. It can also be a useful interaction channel. For example...