NETTING IT OUT

4Q2008 was the seventh consecutive quarter of growth for KM-based customer service. Customer growth improved as customer acquisition rebounded after being flat or down last quarter. Sales cycles remain long, but sales pipelines are full and deals are closing.

Good customer growth means good financial performance. eGain, InQuira, and Salesforce.com all had record quarters and record years. Only Astute Solutions, Consona, and KANA had off quarters, and Astute Solutions and Consona already see business improving in 2009.

Product activity was pretty high in 4Q2008. Like clockwork, RightNow introduced its regular, quarterly release, RightNow November ’08. (We published our evaluation of it on January 29.) IntelliResponse, our other SaaS supplier, delivered IntelliResponse 5.9, one of the three versions it introduces every year. Consona rebranded its KNOVA and Onyx product lines to Consona CRM and announced five products under the new brand, including Consona Knowledge Management, the KM-based customer service offering. Salesforce.com, which acquired InStranet in August, has already integrated the former InStranet’s knowledge management technologies within its Service & Support offering as Service & Support Knowledge Base. In addition, the firm announced Service Cloud, a cloud computing approach to customer service. Service Cloud has the Service & Support Knowledge Base at its core and uses cloud computing facilities to access additional sources of and channels to knowledge. It’s an interesting and innovative approach to customer service

The biggest company news in the quarter came from Consona and nGenera. As we mentioned above, Consona Corporation rebranded and consolidated its KNOVA and Onyx product lines to Consona CRM. nGenera sold its Talisma brand and the Talisma CRM products to Campus Management Corporation, keeping the knowledge management, email management, chat, and click-to-call software (as nGenera Customer Interaction Management) and software business.

GROWTH RESUMES IN 4Q2008
Customer Acquisition Improves and Growth Continues in 4Q2008

Last quarter, while overall growth continued in KM-based customer service, we expressed concern about lower levels of customer acquisition. Astute Solutions, Consona (KNOVA), empolis, IntelliResponse, and SalesForce.com (InStranet) all acquired fewer customers during 3Q2008. Customer acquisition was flat for InQuira, RightNow and Talisma. eGain and KANA were both up, but that was a rebound from slow second quarters.

We felt that slowing customer acquisition was a sign that the slowing economy was beginning to affect KM-based customer service. The companies that suffered all spoke about lengthening sales cycles and deals that slipped out of the quarter. We know that the uncertain economic future has made buyers deliberate in their spending and has made management more demanding of rigorous justification.

As a result, we “raised a warning flag” about the end of continuing growth for fourth quarter and beyond. Now, the books have been closed on 4Q2008. Growth continues, now for seven consecutive quarters! Three of our suppliers had record quarters and record years—eGain, InQuira, and Salesforce.com. Business was up for empolis, IntelliResponse, nGenera (Talisma), and RightNow. Only Astute Solutions, Consona, KANA had off quarters, but both Astute Solutions and Consona see improvements already for 2009.

Customer Service Really Is a Recession Fighter

The seven quarters of customer service growth are the same seven quarters of economic difficulty. The growth trend in customer service is running in parallel and counter to the recession in the global economy. While customer spending is down, organizations of every size in a widening range of industry segments are buying or expanding their implementations of KM-based customer service products and services to:
•    Retain existing customers by delivering the high level of customer service that maintains or improves their satisfaction and ensures their loyalty
•    Reduce cost to serve by making customer service agents more effective and more efficient and their self-service systems, therefore their customers, more effective

Coverage Changes

There were significant changes in the suppliers we cover during 4Q2008. Let’s take them alphabetically. On October 15, Consona Corporation rebranded and consolidated its KNOVA and Onyx product lines to Consona CRM. KNOVA has become Consona Knowledge Management. On November 14, nGenera and Campus Management Corporation announced an agreement that gives Campus Management the old Talisma’s CRM software business and the Talisma brand and gives nGenera the old Talisma’s knowledge management, email management, chat, and click-to-call software and business. Salesforce.com acquired InStranet in August and has since integrated the former InStranet’s knowledge management technologies within its Service & Support offering as Service & Support Knowledge Base. Given these changes, our supplier and product coverage has become:
•    Astute Solutions RealDialog
•    Consona Corporation Consona CRM Knowledge Management
•    eGain Service
•    empolis:Service Lifecycle Suite
•    InQuira 8
•    IntelliResponse
•    KANA Service Solutions
•    nGenera Customer Interaction Management Suite
•    RightNow Service
•    Salesforce.com Salesforce CRM Service & Support

This Report

With this report, we complete our fourth year of quarterly updates on the products and companies in customer service. These updates focus on factors that are important in the evaluation, comparison, and selection of customer service products. More specifically, we examine these factors in our quarterly updates...