Why Avant Bought CX Effect: Lead Gen, Product Expansion Key Reasons

Avant CEO Ian Kieninger said his company will work to "amplify" the special sauce of newly acquired CX Effect, including its event-focused lead generation strategy.

Avant announced the acquisition of the boutique tech services distributor last week. The deal brings on dozens of supplier partners CX Effect signed over its four years, angling Avant into a broader customer experience (CX) portfolio and engineering capability beyond cloud contact center software. In addition, CX Effect brings a customer-facing events strategy that Kieninger said can help advisor partners generate more leads and deals.

Expanding CX

Avant boasted that it was bringing 40 new suppliers into its portfolio as a result of the acquisition. Some overlap existed, especially with some of the core CCaaS platform vendors, but many of CX Effect's vendors entered the advisory channel for the first time through CX Effect.

Kieninger in an interview with Channel Futures noted that recruiting and onboarding vendors costs more money and time than people realize. For Avant, the benefit is in housing the new vendors in its portfolio, but not needing to define the channel to those vendors.

Avant's Ian Kieninger

He said Avant has already looked at CX Effect's supplier agreements and found them largely strong enough.

Related:Avant Looks Beyond CCaaS with CX Effect Acquisition

"We've gone through every single one of them in the diligence process, as you can imagine, to make sure they meet our standards. There are some areas where we're going to ... bolster some situations because we have some more leverage and maybe more sophistication. But we're talking about tweaks. I think those tweaks will be done really shortly," Kieninger told Channel Futures.

CX Effect founder Andrew Pryfogle remarked to Channel Futures that when most people hear the term "CX," they immediately think contact center. CX Effect has expanded that definition, adding products that are ancillary to contact center software as well as products that sit outside the contact center. Customer relationship management, workforce engagement management and business process outsourcing are a few of those additional subcategories of CX.

CCaaS company Five9 in its latest earnings reported that it has registered an 80% attach rate of secondary services in its enterprise deals. That number has encouraged Five9 to continue acquisitions and partnerships around platforms that widen the CX aperture.

Kieninger said there's more margin to be had.

"My gut on that is, you're talking 25-40% larger deals. But I also think you're uncovering net-new deals that you never would have seen before," he told Channel Futures. "Because there are a lot of enterprise businesses who do contact center internally on their own, but can't do all these AI-driven aspects. So you go to 100,000-employee company, [which says], 'I'm good.' You say, 'Well, can you solve for these problems? Do you have a chat feature built in? Can you respond to this?'"

Related:A Down Quarter for Five9? Partners Don’t Think So

Lucas Salvage, partner and chief revenue officer at Kairos Data Communications, said technology advisors are getting access to an "addressable market that’s never existed before."

Kairos' Lucas Salvage

"Let’s say that approximately 80% of the addressable CCaaS market is currently under contract for traditional ACD [automatic call distribution] services. That only leaves 20% looking for a CCaaS platform migration. Now, with the CX Effect/Avant portfolio the 'CCaaS-adjacent' product sets allow TAs to have conversations with companies that don’t necessarily need to change their platform but rather augment the AI-capabilities and functionality with best-of-breed suppliers that can solve for numerous different challenges in this space," Salvage said.

Lead Gen Looms Large in CX Effect Acquisition

Pryfogle and Kieninger both highlighted lead generation that CX Effect has conducted on behalf of tech advisors. Leads are a common ask advisors have made of their TSDs. Partners routinely list lead generation as the top resource they need from suppliers, and TSDs are not exempt from those requests. Some have told Channel Futures that they would operate in more exclusive relationships if the TSD were actively building its pipeline.

Related:New Microsoft CCaaS Offering: Threat to the Channel?

At the same time, many partners have heavily scrutinized TSDs that develop customer-facing arms like call centers.

"We're not going to sell direct. We want to take opportunities and match them to TAs who are loyal to us, and we want to amplify that. Avant wants to create a dynamic where we're creating lead opportunities for TAs," Kieninger said. "That's the panacea for everybody, right? And no one's figured it out. No one's figured out how to do digital leads and share them, because no one wants to cycle through 1,000 leads to win two deals, right?"

Events have proven the best way to help advisors with leads, Kieninger and Pryfogle said. Kieninger said CX Effect managed to attract end user decision-makers to its events with its niche technology focus.

"They're getting buyers in a room, and then they're getting TAs in a room. And now people are working together and matchmaking and helping each other do business. And that doesn't happen in if you say, 'Hey, let's get together and talk about MPLS,'" he said.

For now, Avant is looking at ways to amplify the events-based strategy, Kieninger said.

"Whether we can get to an additional platform that just hands out leads, who knows? That's what everybody would like, and if we can figure that out, we will. But I also don't want to bring a low close-rate strategy that no one really wants to deal with," he said.

Salvage has attended some of those events and found "tremendous success." Avant's marketing and event resources should scale up that opportunity, Salvage said.

"'Cracking the code' for putting TA’s and potential clients together is here," Salvage told Channel Futures. "CX Effect has been running small, laser-focused events that provide a different level of training and infusing these events with potential clients. This approach has been able to yield significant revenue generating opportunities. The simple idea that finding CX leaders and bringing them together to share experience and expertise isn’t new. However, being able to leverage our community to help advance the conversation post-event is where the rubber meets the road."

Professional Services

Channel Futures asked if the acquisition brings any implications for the companies that help advisors and suppliers with the deployment of CCaaS platforms, including InflowCX and BridgepointeCX. Kieninger said those relationships between integrators and advisors have formed more organically in the past.

"Those are always things we're working on — trying to connect best-of-breed companies together in a noncompetitive way. And it's starting to work. I think there's some more scale there, and some more wrinkles to iron out," he said.

AI Outcomes

After two years of hype and fanfare around generative AI, Wall Street investors have taken out their frustrations on AI-focused vendors for not delivering enough related revenue in the short-term.

When Channel Futures asked Kieninger about Avant's AI play in 2023, he kept the focus on CCaaS and CX, where clear, monetizable AI use cases already exist.

"Everybody's talking about AI on stage, but can everybody take the AI and make a dollar? Hit the P&L? No. That's when the rubber meets the road and people really care. And that's what I'm passionate about. I can read the headlines to you anytime we want — so can we all. But if I can bring something tangible you can go sell tomorrow – slap some AI on it and make a buck – we're all going to win," he told Channel Futures.