ServiceNow, Inc. (NOW) Earnings Call Transcript & Summary

All right. Good morning, good afternoon and good evening, everyone. Thanks for joining us today. My name is Natasha Mayekar, and I'm excited to be here today to talk to you about our topic at hand, how you can elevate experiences and lower expenses with ServiceNow. I'm joined – I'm part of the product and solutions marketing team at ServiceNow and I'm joined by my colleague, Abhi Rele, who's the Senior Director of Outbound Product Management. In just a few minutes, I'll let him introduce himself and pull them into the conversation during our fireside chat portion. So, at a quick glance, today, we'll walk you through effective ways to help your organization, elevate experiences and lower costs, and we'll also get to see everything come to life with the demo. And of course, we'll have our fireside chat with Abhi, who will share how our customers have been able to both decrease cost and elevate their customer experiences. Before we get started, I want to just run a quick poll with you to help us understand where we are in our customer journey -- customer experience certain here today. The question that we have for you is, where are you focusing your customer experience investments this year? And some of the options are internal process improvement, front-end engagement channels, customer service tools and technologies, organizational alignment, service agent training or some other options. And just as a reminder, you can multi-select all of these options here, too. So, we'll just take a few minutes here to let some of these responses come in. All right. I think we got some good numbers in here, curious to see some of the results are... All right. So, it looks like the majority of our folks are looking for internal process improvement and the front-end engagement channels, which is great because a lot of the topics that hand here will cover in on some of those areas. So building off our previous question, where I'd like to start with is with this powerful quote for McKinsey & Company and some of the research that they did on the state of customer care. Now and looking forward into 2024, customer care leaders are focused on retaining and developing the best people, driving a simplified CX experience while reducing call volumes and costs at the same time and building out their digital care ecosystem. So, as you can see, it really all comes down to how leaders are thinking about prioritizing investments across the people, operations and the technology aspects of their customer care strategies. We know where you're hearing Pete this all over the place, but accomplishing this still isn't easy because human intervention is required and so needed to serve the customer. Most of the digital transformation investments have been focused on digital engagement, so on this front end on the black tier and giving customers all of these several options to connect. But when we peak behind the curtain, we find a ton of disparate processes and technologies are tied together by human middle bar. So, agents, middle and back office folks have to so manually enter and handle each task and communicate to different departments and separate systems. The agents themselves don't know the status of the case unless they follow up with individual teams or departments leaving the line with customers call in to check on the status of their quests and in turn, leading customers frustrated that they have to call in and ask in the first place. I can speak to a recent personal experience. I had to call my self-service provider for a billing question and ran into this exact issue of not getting a clear answer on my request and being bounced around from team to team. And I know all you all have experienced a similar situation, and we know that it's frustrating. All right. So, before we get into it, we'll actually have another quick poll and we want to hear from you, what are some of the top challenges you face in your customer service organization today? Is it reacting to service requests versus being more proactive, siloed apartments and systems, low employee engagement, low CSAT for NPS, no alignment on your customer experience strategy or some other areas, too. And again, you can definitely multi-select some of these options here -- and I wanted to call out just a quick reminder. We do have some reaction opportunities on the bottom right corner. So, if there are areas that you really like or love, feel free to use those reactions at your discussion. Great. So it looks like we got some great responses here. Let's see what some results are. It looks like some of the top challenges are reacting to service request and being proactive, which is great and also looking at some of the silo departments and systems that will really dive into deeper here as we go into our conversation later. So, with ServiceNow, we want to help address and change some of those challenges that we just talked about earlier and that you've addressed in our pollution. We can intelligently orchestrate and automate work to solve all of those issues faster. And how we do this is we break cases into discrete tasks. These can then be automated or completed in parallel, not just consecutively across different teams and departments and save you tons of manual work and several man hours. And the big plus is that because it's all on one platform, everyone involved has full end-to-end visibility into the case and customers see updates on next steps, any potential delays and most importantly, the ETH resolution. Work is routed efficiently. It's competed faster and seamlessly, and everyone involved has visibility, including the customer. So, what are the best ways to elevate experiences and lower expenses can streamline operations to both improved employee productivity and handle robust more quickly and consistently, can empower customers with the ability to self-serve or seek agent support on any channel; and finally, being able to boost agent performance with modern -- things like a modern, highly configurable UI and a single workspace manage and see all case activity. Let's see how this come to life with this short demo. [Presentation]

Let's imagine what this could look like with ServiceNow. So, we'll start from the water company's perspective. Let's call them Waterworks. And like everyone else, they are under the extreme pressures of the current economic environment. They're looking to decrease the cost to serve for scalable growth, but also deliver exceptional service to their customers. And here, we have Matt, a service adviser for Waterworks. He oversees all the systems the water company supports. And the first thing he likes to do is check in on the active case map. So, this is the map of the California count that water work services. The groups and different colors are regions that have active cases. Currently, some are due to maintenance and others are a result from higher water pressure alerts. And while he's checking the status, he sees an alert come in, in real time that the water monitoring system has detected a low pressure warning and has created a new critical case. And this map doesn't just -- isn't just a geographical one. Behind these regions are real people, hospitals, airports, schools, businesses, making up thousands of people that are now without water. -- and something to point out here is when the alert came in, it automatically created a case. So, in the past, when an alert would go off, it would be up to the service adviser to create a case and manually delegate tasks. But what happened here is after the alert, the case was created automatically and a series of tasks have been set into motion. So, Matt clicks into the case to get more information. So now he can see all the details within the case and has an overview of everything that must be done to restore the water service before he would have had to manually handle each task communicating to different departments, all in different systems. And you wouldn't know the status unless he followed up with them. But here, the initial steps have already even completed through automation. It has saved Matt and his team, many hours of manual work, and he's now able to identify the root cause of the problem and can start taking the necessary tasks to remediate. So, he wants to send an updated alert with more specific information to be impacted customers. The system is even intelligent enough to understand which service level agreements are linked to certain customers and therefore, bumping them up to the top of the list. So places like hospitals and airports can meet the required time regulation at avoheavyfine. So we've just been looking at mass experience, but let's see what this could look like from the customer experience. This is Lilly. She doesn't just represent herself. She represents thousands of customers, and she received the initial proactive mobile notification, a learning her of the potential issue. And she is one of those impacted customers, so she received a second alert with more information and an estimated resolution time. Now this is really powerful because customers are not as of set about the actual outage as they are about being kept in the dark and not knowing when things are going to get fixed. This kind of communication gives Lilly confidence and the ability to plan out her day around this disruption. So now let's go back to Matt to see how we can get the water on faster for Lilly. So we're back in Matt's perspective. And the most important thing he needs to do is dispatch a contractor to go on-site and fix the issue. Here, he has the ability to see a comprehensive list of in-house and third-party contractors and they're sorted by cost, availability, ratings and customer satisfaction scores. Having this list is huge because in the past, that would have to manually call each one of these technicians and maybe cross reference from his own Excel spreadsheets, all while trying to find someone available and on budget. So he sees that the California American Water Contractor group is our top choice because it meets all of the criteria so he can quickly assign and dispatch them to the site. What's pretty cool here is now that the contractor is that the contractor can see what they've been assigned to. This is a 2-way communication. Both parties have full visibility into all the information about what is needed to get the job done. And this has saved hours of work, which means the water can get back on that much quicker. So once the contractor is dispatched, Matt checks in on the overall status of water throughout the county. So here, he can monitor all the water systems and see the dependencies between them. And this is a huge undertaking. For example, a county like Santa Clara has 1.9 million people in it. So each one of these boxes represents a system that's grouped together by categories that's made up of all these connections because it's not just a pipe or a valve, they all work together. And when there is an issue, as you can see, it can have a domino effect on everything else. So once the contractor fixes the leak and everything is back up and running, the dashboard updates to reflect that all systems are functional again. Now let's tell those customers. So an automated alert goes out to the customer, water is back on as well as the customer survey to see how they were feeling. And this communication doesn't just apply to major issues. Hopefully, a water outage happens once in a blue moon, but a lot of common requests can be automated as well, things like password resets, moving and renovations. Now customers have a direct line of Waterworks and can actually self-serve the next time they have a need because if these types of requests can be automated, it can save employees' time, create efficiencies, which leads to overall operational savings and the results speak for themselves. So while Waterworks demand went up, ServiceNow was able to help them reduce the cost of servicing the customer without impacting the quality of service. Fewer physical agents needed to solve the problem, increased operational efficiencies, agents got their time back, higher CSAT scores, increased compliance and lower risk defines, leading up to $4 million in savings, all while driving up customer value. And because really what's the most important at the end of the day is that Lilly got her water back on. So simply put, ServiceNow can help customers do more with less.

Well, that was an incredible demo. You can see how companies can switch to lower-cost channels, reduce manual work, decrease resolution time and optimize and retire legacy systems, all while elevating customer experiences through easier self-service, quicker resolution and having transparency to the customer throughout. So, in the end, organizations can build customer loyalty while reducing their cost to serve. We'll now transition into the fireside chat portion with myself and Abhi. Thank you for being here today. All we're really delighted to have you here. Can you tell us a little bit about yourself?

Sure, Natasha. Thank you so much for having me here. So hello, everyone. My name is Abhi Rele, and I lead our outbound product management team for customer service management, Am and a few other areas. I've been here for about 4.5 years. So, I've had a front row seat in seeing our product line growth, having seen our customer base grow and have been very fortunate to have spoken to many customers. So really happy to be here and have this conversation Natasha.

Great. Thank you for sharing story with us, Abhi. Just a quick reminder to the audience, feel free to submit any questions that come up in the Q&A section in the call, we'll be able to answer your questions throughout our conversation. All right. So, let's get started. So, my first question is, with customer expectations constantly evolving and customers expecting quick resolution, coupled with quality service, what sets can organizations take today to help deliver those seamless service experiences while still managing those costs.

Yes. That's a question you asked, Natasha. It's very pertinent, just like we saw in the poll results and we saw in the video as well. And when I talk to customers, I hear something very similar. I hear them struggling with 2 questions that on the surface seem to appear at odds with each other. So on the one hand, I hear them asking how do I improve the customer experience, which is how do we make it easier for our customers, how do we resolve cases faster? How do we provide more visibility and transparency. But at the same time, I share them asking, how do I lower my cost? How do I lower my expenses, which is how do I do more with less? How do I do things more efficiently. But when you hear them speak, what they're really asking is, how do I do both? And if I -- can I do it? And if I want to do it, how do I actually go about doing it? And 9 cases out of 10, what I have seen when I've talked to customers, and this applies to every company in every industry is that organizations operate this patchwork of systems -- they were never designed to work with each other. So you end up with a lot of silos. So when customers want to resolve cases faster, they need to put in place manual processes. They need to put humans like you mentioned at the beginning. And those people are maintaining spreadsheets like we saw in the video or they are actually calling somebody else and saying, "Hey, I see that this piece of work is now in your area. Can you look into your system and tell me where do things really stand? And the more manual process you put into any process flow, you actually -- you think you're resolving cases faster, but you actually end up reducing visibility, you end up slowing down execution and you end up increasing costs. So, they know that putting more people in and putting more manual process in to stitch all these systems together to make workflow is not really working. But then they also know that the status quo today is not working either. And that is why I think most companies struggle with this problem, and that's what makes this really hard.

Yes, exactly. And the point that we made earlier about the human middleware component that not only adds those costs, it just really makes it more difficult to deliver that positive customer experience.

Yes, absolutely. -- which brings us to the question that I hear people asking all the time, and which is why we see so many people who joined this webinar is how should an organization tackle this problem? And it doesn't matter if you're a large private enterprise, you're a government agency or an educational institution, I see all kinds of organizations grappling with this issue. For us, at ServiceNow, I've -- we've been very fortunate to work with many leading brands, and some of them have figured out a way to address these challenges. And it's a journey. You keep working at it, you keep getting better at it. And what I thought we could do is maybe just use some of those examples because these are real companies achieving real results, and this is all available on our site as well. So these results are public. They've spoken about it at our events. They've spoken about it at other forums. So maybe we could just use some of those examples to talk about how these companies continue to optimize and improve that customer experience, how they continue to streamline and automate and improve their internal processes to lower their expenses. And maybe that can give us some -- that can give the audience some ideas on how to do it because, as they say, the proof lies in the pudding. So if somebody has actually achieved something, let's look at how they've done it.

Yes. Absolutely. I think that's a great idea. Okay.

All right. So let's maybe start with something here in the U.S. So let's take the Department of Human Services at the State of Tennessee. So they serve 2 million Tennesseans across about 95 counties that they operate in. And they offer human services. So think of snap benefits, food assistance, disability services, child care services, many other essential human services. So for the Department of Human Services at Tennessee went forward hit, they had to send their people home just like everybody else had to. So now citizens didn't have an office that they could come in and get the same level of experience that they did in the past. And then if that wasn't bad enough, a huge tornado hit Nashville, which is the biggest city in Tennessee, and that ripped out the main office that people were used to coming in. So now there wasn't a physical office either. So that meant that customer experience really got affected. And these are people relying on for disability services or for food assistance. So they really needed those services. So, what Tennessee did is they've been working with us for many years. So. they had ServiceNow. They had implemented ServiceNow as a layer of abstraction across their patchwork of systems, and they've got everything from legacy systems to mainframes and so on. So, with ServiceNow, they've built an emergency benefits portal, and they were able to do this really quickly in under 72 hours. So now people had a wait to apply for these benefits without having to come into an office. So that was step number one. but they were still getting a lot of inbound requests because people who are now interacting digitally and they knew they couldn't scale by just putting more people in. So they deployed our chatbot. And that helped them because now 2 years later, they've had about 2 million conversations through the chart bot. And what they found is that 40% of their inquiries are coming -- are getting handled outside of business hours. So they could not have scaled that well by just putting more people in. But then it gets even more interesting, and this is where they've innovated a lot. They've created an app on Facebook Messenger. So everybody on the webinar here can go to Facebook Messenger search for Tennessee Department of Human Services, and this is powered by the ServiceNow chatbot. So now they're reaching their citizens where those citizens are on a channel of their choice. So they don't even have to come to our Tennessee property to be able to get how they can do it from Facebook Messenger itself. And all this is done on one platform. So it's one consistent experience. You don't see that siloed experience. So the cymose experience has improved. But then they have deployed ServiceNow as their staff portal for their workers, all their agents who are helping customers in their contact center. So now they have that same modern interface, they can create tasks for other people within the organization, just like you mentioned on the slide. So now they are orchestrating all this work through ServiceNow. So for me, this is a great example of how they have improved that citizen experience but kept expenses in check and all this using digital tools in the right way.

That's such a powerful example. So if I were to just recap it, giving customers the ability to self-serve or apply for emergency benefits on their own in this case and reach the DHS through additional digital channels, chat bot, where all means to really elevate experiences, but also keep costs at bay.

Yes, absolutely. It is really that total experience that really needs to be looked at. So let's look at one more example. Something completely different. Again, a customer that we work with very closely, which is Black Hawk networks. So if you are at least in the U.S., if you walk into any large retail store or a grocery store, you've seen that wall full of gift cards, and you can buy gift cards from many different vendors. So that is Blackhawk's business. They are the leading gift card processing company in the world. They operate in 28 countries. They serve over 1,000 brands like Amazon, Google Play, Apples, all the large brands. So for them, the challenge was they had grown very rapidly in the past decade. So while that business has grown very fast, their customer service has become this -- as they call it a complex leverance of B2B and B2C support. So they knew they could not scale customer service to meet the growth that they were having in their business. And that was making it difficult for them to achieve compliance because all these manual processes make it hard for you to track what's really going on. That's really important for a financial services company. So for them, they deployed our customer service management solution. And what they found is that they're taking advantage of all the advanced communication, the proactive service, the case forms, our computer telephony integration, performance analytics to keep track of how they're serving customers. So they are able to elevate the omnichannel experience that their agents can provide because they serve both B2B and B2C. But that's not all. Again, they've been able to automate the processes on ServiceNow, and that has saved them $2 million so far and counting. And they continue to optimize and improve their processes. So they just have that compounding benefit of both the cost reduction heading better as well as the experience getting back. So very different example from Tennessee, but they've been able to do both.

That's awesome, so great to hear. Can you tell us a little bit more about what case forms does and how it could potentially help other customers in the audience here that are facing this particular scenario?

Yes, absolutely. And maybe we'll do one more a customer example that highlights how our platform and our data model really helps customers achieve both an improvement in experience and reduction in cost. So let's take -- let's go across the Atlantic. I'm sure we have some folks from EMEA. So let's take arose. -- which is a global iconic brand. And I'm sure people in this -- on this webinar have either owned a Swarovski crystal, in their living room or you've gifted it to someone at some point in your life, right? So this is a company that was formed in 1895 in Austria. It's still owned by the families that's still a family business. They've got nearly 3,000 stores in 170 countries, so a very large global company. And when Pobeda, they had to close their stores, which meant people could not buy the worst of ski crystals from the store like they were used to. So they started buying them online. So now for us, we face this huge surge in inquiries because people started calling their contact center about where is my order, when is it going to be delivered? Like we've all done as consumers. And the challenge they were facing, and this comes back to those case forms is that you might call them and say, "Hey, where's my order? Or you might then e-mail them or you might start a chat session. And if they were using a traditional customer service solution, each of these interactions might count as a different case. So now you're getting this huge proliferation of cases and duplication, but is actually the same person asking about the same issue. So they were finding it really hard to bring all these customer inbound contacts into a single umbrella. And for them and being an iconic brand helps, the issue wasn't so much about how do you maintain revenue. It was more about how do you deliver that same level of customer service without breaking the bank. And for them, they look at the tools they had, and they saw that they had service now. So they deployed our customer service management platform. And what they were able to do is consolidate all these communications into a single case because ServiceNow has is one platform. It's one data model. All our growth is organic. We pride ourselves in having that unified view. So when people e-mailed or when they called or when they filed the case, they knew it was all for that same customer. So their sales advisers is what they call them. They could go in and see that person X had all these different interactions. So they were not duplicating cases. They were not providing different information. They were able to have that single view of the customer, provide them the right information. And they were able to leverage other people within the organization. So they could also create tasks or sign them to other folks -- and they saw a 55% decrease in case workflows, which is pure efficiency gains.

That's awesome. What strikes me the most across all of these examples that you've shared is that they just can focus on how they engage customers but looked at the total experience overall. So how they enable self-service and empowered customers to act, how they streamline processes and really gave agents the insights that they needed to perform their own jobs better.

Yes. You're absolutely right. It is really that total experience that we need to look at. Just put on your own hat as a consumer or a customer. Once you get used to tapping your app once and a car shows up or your packages get delivered in 2 days, then you want that same experience across every company and every organization that you work with. And if you want to deliver that seamless experience, you can't just focus on having a nice portal or having a nice engagement layer, you really have to think about that total experience, right, from intake to how you leverage the power of your whole organization to resolve those cases faster to make workflow faster so that the customer gets their issue resolved quickly. It's resolved the right way. They don't have to keep calling back. That's really what people are looking for.

Absolutely. Well, that was so wonderful. Thank you so much, Abhi, for sharing your insights and all of these wonderful examples. I'm sure the audience here has some great takeaways to learn and put into practice on their own ends as well. So now I'm sure everyone has a few questions here, so feel free to enter them into the Q&A box. We may not be able to get to all of them today, but we'll make sure that members of our team follow up with you to keep them coming in. We'll take a look and see what questions we have so far. So there's one question here that's come in is, why is Proactive service an essential part of the total customer experience? And how does it impact ROI and CSAT?

Sure. Just when I look at proactive service, it means you are taking the action first before a customer has to contact you. So at the end of the day, you want to reduce effort for your customers. So if you have a better handle on where things stand and you can take that step proactively without waiting for the customer to reach you. It's a better experience for the customer because they know that you are in control. They know that you are there to serve them. And at the same time, they don't have to keep calling back. They don't have to feel frustrated that my issue wasn't resolved. I still don't know where things stand. So that helps you reduce the number of inbound contacts. It helps improve the customer experience so that there's a direct impact on both ROI and CSAT. And to be able to do that, you really want to get off the general purpose tools like e-mail or spreadsheet because when somebody sends an e-mail to figure out, hey, where do I stand on this particular issue? Or can you tell me the status. That doesn't get reflected in the customer experience. So from a customer standpoint, they just see that the case is still open or the issue is still open, even though you might be working on it, you might be waiting on someone. But if you can connect all that through a digital platform where data can flow, you can now start to provide more visibility so that when somebody is working on a task, you can provide that update saying we are working on reviewing your case. So we have somebody in legal working on this at this point or we have somebody in finance reviewing the details. At least the person knows that things are moving. And to me, those -- that lets you then be more proactive because you can be more confident and say, it's going to take us so many days to get this done because you know exactly where things stand. And that directly affects your CSAT that directly improves your CSAT, but it improves your efficiency as well.

Yes, absolutely. That's -- those are really, really great points. It looks like we had just one last question come in to get time for is with digital transformation efforts in full swing and in some cases, under higher scrutiny at most organizations, in what ways is it really possible to make work easier for all teams across the organization and even connect to those teams in a better way.

Yes. It's -- I'm going to sound like a broken record, but it's -- what we find is when we talk about visibility, when we talk about transparency, we always talk in the language of the customer. The customer needs more visibility. But the reality is that the agents, the people working in your contact center, the people working in your middle office also need that visibility. -- because as self-service tools get better, the simple questions are handled through knowledge articles or through chatbots. And so when you call in, you really are asking for a more difficult issue. You need somebody to think about how to solve that problem for you. And that almost always requires help from other team members, other middle office team members. So the ability to orchestrate that work to let that Tier 1 customer service agents know exactly where things stand to give them the ability to assign tasks to other members to then be able to collaborate with them, be able to provide that feedback back to the customer becomes all the more critical. Without that, you can have digital tools but it's not going to lead to full transformation. It's only when you start to improve those internal processes, you start to connect them to the customer experience. You start looking at that total experience from end-to-end. That is really when your transformation starts to yield benefits. And if you look at the examples we saw, it's for Oskar with Dennis or with Blackhawk, they started improving these processes. Now once they have that foundation in place, it's like compound interest, things just get better at a much faster clip because you're taking out all those inefficiencies. You know where there are opportunities for automation and you're putting that in, you're removing your bottlenecks because you can see that through the system. That is really where you start to see the benefits kick in at a very high rate.

Yes, absolutely. And I love that comparison to compound interest, I think that's a really great way to really put things in perspective for the audience here. So, thank you so much again. This is all the time that we have to answer questions live here, but we'll make sure to follow up with any other questions that have come in and have been submitted. So, before we close out, we'd like to share a few exciting upcoming programs that we have in place. One of my personal favorites here is our CX maturity workshop. If you're interested in doing a self-assessment for your organization to better understand your customer service maturity, this is a really great way to deep dive into a few different areas that are listed here and measure the tangible value of an improvement program. Sow feel free to scan that QR code, and these will be kicking off next week on a monthly basis. And that's for more content like this, feel free to check out our on-demand webinars on the ServiceNow website here. We have the link posted here, and I believe on the resources. And last but not least, mark your calendars knowledge is returning to the fabulous Las Vegas this year to stay up to date on the latest by signing up here to receive additional updates. Thank you so much again. Really appreciate your time here and until next time.