Avant Looks Beyond CCaaS with CX Effect Acquisition

Tech services distributor Avant added key resources to its customer experience (CX) practice with the acquisition of CX Effect.

Avant and its private equity investor Pamlico Capital announced on Tuesday that have bought CX Effect. CX Effect is a tech services distributor (TSD) that specializes in customer experience software solutions, including but not limited to contact center as a service (CCaaS). CX Effect founder and CEO Andrew Pryfogle and chief revenue officer Bob Maute are joining Avant and will work in market development and vendor business development, respectively.

Avant CEO Ian Kieninger said the acquisition of CX Effect brings more than 40 new CX and AI-related vendors, a popular training and education platform, and a unique demand generation strategy. In addition, Avant is joining forces with a company that some of its partners had been leveraging for different solutions and vendors.

Avant's Ian Kieninger

"We got a lot of calls in the last year and a half from some of our top trusted advisors and vendors saying, 'You should take a look at this. These guys are doing something unique and pretty special,'" Kieninger told Channel Futures.

The deal marks Avant's second acquisition. After landing an investment from Pamlico in 2021, Avant purchased Arizona-based TSD PlanetOne in 2022. While Avant touted PlanetOne's back office and digital platform, the latest acquisition bolsters Avant's high priority CX practice.

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“We’re just scratching the surface of what’s possible, leading to some of the biggest deals in the channel today," Avant president Drew Lydecker said. "Through the acquisition of CX Effect, we are bringing the expertise of industry champions to our team and our TAs, along with an unbelievable portfolio of exclusive vendors.”

CX Effect: A Specialist

CX Effect from its inception in 2020 has taken a boutique approach to working with technology advisors (agents) and suppliers. The TSD recruited a group of vendors that largely did not exist inother TSDs' portfolios. Moreover, Pryfogle wasn't trying to boil the ocean when it came to partner recruitment.

"We've been very blessed to attract some of the top producing partners in the channel. Not being a big company and not not having the resources to support hundreds or thousands of partners, we decided, 'Let's focus on the top 100 and really crush it with them,' Pryfogle told Channel Futures. "That strategy played well for us."

Andrew Pryfogle

CX Effect managed to earn business from heavy hitters in the partner community like D&M Enterprise Group.

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“When Andrew Pryfogle launched CX Effect, they were ahead of the AI curve. We jumped at the opportunity to expand our solution set and our thinking. Together we have developed an unmatched pipeline of robust opportunity for our clients and business,” D&M managing partner Vic Pepe said in a news release. “I’m not surprised the team at Avant saw what we saw, and I am excited for what the future holds for us all because of this acquisition."

Pryfogle formed CX Effect after a stint leading efforts around agent-MSP convergence at Pax8. But many in the channel know him best for leading Intelisys' cloud communications practice from 2012 to 2019. Maute served as senior vice president of channel sales at Evolve IP and also hails from MCI and ShoreTel. Maute and Pryfogle worked together at Covad Communications in the early 2000s.

More Than Contact Center

Avant reports a 55% annual growth rate in its CCaaS practice over the last three years, but CEO Ian Kieninger said more opportunities exist in the broader category of CX. Many partners have lumped CCaaS and CX together, but Pryfogle has pointed to technologies that sit adjacent to or apart from the contact center, including business process outsourcing (BPO), workforce engagement management (WEM) and customer relationship management (CRM).

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"If you ask a typical trusted advisor in this channel what they think about when you say 'CX,' the natural reaction you get from darn-near everybody is, 'Well, that's contact center. That's CCaaS. That's companies like Five9, Nice, Genesys and Talkdesk,'" he said. "And while that is true, what we really purpose-built our portfolio around was the belief that the contact center was one small piece of the overall equation."

Pryfogle said the CX journey does not start when a customer dials the contact center for help, but rather "right when we start to interface with a brand." That moment often occurs when a person visits a company's website or sees a digital advertisement, Pryfogle said.

"As an enterprise CX leader, what's the technology you can start to deploy at the very front end of that experience to improve conversion rates, to be able to attract more buyers and get buyers to actually convert and purchase?" he said.

CX Effect's portfolio and expertise will help Avant and its partners extend beyond "the meat-and-potato contact center business" that most TSDs operate, Kieninger said.

"This stuff is kind of the future of that space. And without this stuff connected to [the contact center conversation], you can't have a thorough, end-to-end conversation with a customer," he said. "You still have to shorten it to, 'Well, I can provide you a seat from Nice inContact,' and the customer says, 'Well, what about this, that and the other?"

Avant in March hired Andy Bird, formerly vice president of product at Concentrix, as its vice president of CX.

New Suppliers

Key in the acquisition is the addition of 40-plus net-new suppliers to the Avant portfolio, Kieninger said. As TSD like Avant branch out into more technologies like cybersecurity, cloud infrastructure and AI, they face pressure to onboard more and more vendors that their advisors can sell.

CX Effect has been building a bevy of niche CX and AI providers over the last three years.

"These are vendors that CX effect and Pryfogle will have spent years curating channel relationships with and helping them build channel programs. I've done that. It's a lot of work. It takes a long time. And they have that done and on a silver platter," Kieninger said.

Kieninger said partners often overlook the cost of vendor acquisition and management. The process of establishing an agreement with a supplier cost anywhere between $15,000 to six figures, he said.

"There's an intrinsic value I can quantify by being engaged in 40 new vendors overnight," he said.

Moreover, CX Effect has trained those vendors on how to sell in an agent model and how to follow proper rules of engagement. Many of the vendors had never engaged in the route to market before and had much to learn, Pryfogle said.

"It's a common thing in my conversations with new technology providers where they've never heard of what a TSD is or what the trusted advisor channel is all about. For the past three and a half years, it has been a lot of education of those suppliers around what an amazing go-to-market strategy this is," he said.

Avant points to Capacity.com, Omni Interactions, Quik, and boost.ai as some of the vendors in CX Effect's portfolio. Channel Futures in 2021 highlighted agreements with workforce management provider Shiftsmart and CRM provider Kustomer.

“CX Effect was honing their understanding of CX and AI years before it was a central topic of concern for our buyers. It’s resulted in a unique pool of vendors that allow us to engage and sell directly to line of business leaders outside of IT,” said Joe Rice, CEO and founder of the tech advisor CXponent, which partners with Avant.

Lead Gen?

Kieninger and Pryfogle said end user customers have attended CX Effect's events and mingled with the core audience of tech advisors. Pryfogle said the presence of CX purchasing leaders at events is intentional.

"It generates a very different type of dialogue when you have really successful trusted advisors in the room sitting at the same table as enterprise companies that are tackling the same exact issue around CX and AI and trying to figure out their strategies. We have a number of ways of how we've done that, but it's been very intentional, and it has resulted in some significant wins for our partner community," he said.

Rarely do end customers attend the events of TSDs, who tend to stay in the background in the eyes of the buyer. But CX Effect's brand as a "outfitter" in a next-generation technology field drew IT leaders.

Kieninger said stories of partners developing leads at CX Effect's events has piqued Avant's interest. Lead generation is a hot topic in the channel. On one hand, some tech advisors say they want their TSD partner to help them identify more potential clients. Others want a wider wall of separation between the TSD and the end customer. Moreover, Kieninger said demand generation efforts by TSDs have yielded minimal success over the years.

"No one has cracked lead gen in the TSD space. It's expensive to do, and it's usually pretty random. Buying leads, call center stuff – none of that sticks very well," he said. "A lot of the strategy is, how do you get customers, vendors and TAs in a room together, and CX Effect is perfecting it. It's a new paradigm strategy we think we're going to amplify."

'Monetization of Labor'

The acquisition occurs in the shadow of a much larger trend, Pryfogle told Channel Futures. This, he said, is the transition of "labor to technology." Avant cited a ContactBabel study in which 44% of contact center leaders said their primary budget allocation had moved from labor to technology in the last five years.

"The largest largest line item in companies' budget has always been people, and we understand that. Now what we're seeing is that companies are being forced to consider, 'How do I help my people be more efficient? How do I help them focus on the more complex, and how do I take away the mundane?" he said.

Pryfogle said a rich revenue opportunity is facing channel partners who embrace into the trend.

"I'm convinced now more than ever that whole monetization of labor will represent the largest transfer of wealth in this channel in our lifetime. I think it will outpace what we did with cloud in 2012 and 2014," he told Channel Futures. "It is a massive opportunity that we've never seen before at this scale."

Pryfogle cited this opportunity as his decision to sell to Avant instead of other suitors.

"There's no way that CX Effect could have met that kind of demand just on our own. We needed a partner like Avant who was purpose-built to meet this kind of demand, and that's exactly why we're doing this," he said.