We are living in what’s been called the Age of the Consumer. In today’s world, power has shifted to the consumer. We are all more connected than ever before, and customers are in charge – choosing the platforms, devices and means of communication with brands.
This phenomenon has necessitated a transformation in the way companies engage with their customers. Businesses must be just as smart, always-on, and as connected as consumers are.
Salesforce, the customer relationship management platform, recently released the 4th edition of its State of the Connected Customer report, which examines how customer mindsets are evolving. It does so by analysing the transformation of customer engagement across four generations—Baby Boomers, Gen Xers, Millennials and Gen Zers—in 27 countries worldwide.
The importance of customer experience
Customer experience is an important focus for companies and it’s often at the centre of many digital transformation initiatives. But just how important is it?
Our research tells us 84% of customers say the experience a company provides is as important as its products and services. In fact, two in three customers are willing to pay more for a great experience. Given these findings, can exceptional customer experience be marketed as a product in itself? Can a company differentiate itself enough to make customers switch from one if its competitors? And how much more are customers willing to pay?
Exhibit 1: The customer experience stakes have never been higher
As we go about our daily lives, we are constantly navigating products, services and experiences across many industries, switching between personal and professional, and between digital and physical. All these interactions influence our standards of innovation, product quality, service quality and so on. It is therefore no surprise that 73% of customers say their experiences with one company impact their expectations of others. In fact, six in 10 customers say their experiences with one industry influence their expectations of others.
Think about it. If one is used to a fuss-free, friction-less checkout experience on Amazon or Shopee, it’s only natural to expect that same experience when checking out of a hotel. Netflix is very good at recommending content that I actually want to watch, based on my interests. Why can’t my bank offer the same personalised recommendations?
Companies today need to look beyond exceeding the capabilities of competitors in their industry because what great looks like is no longer defined by industry.
Personal, real-time, omni-channel and connected
At the heart of customer engagement transformation is recognising that each customer is unique with his or her own needs and wants. Sixty-six percent of customers expect a company to understand their unique needs and expectations, but only 34% say companies are living up to these expectations. As such, a brand must put the effort to make each interaction personal in order to increase customer engagement and loyalty.
However, personalisation is not enough. A majority of customers expect real-time communication. They expect to find what they need in three clicks or less, and unsurprisingly, 83% of customers expect to engage with someone immediately when contacting a company (up from 78% last year).
To add another layer of complexity, a majority of customers use multiple channels (both offline and online) to start and complete a transaction. To effectively engage customers, brands need to connect various interactions and touchpoints across a customer’s journeys to provide that connected experience. This requires relevant and timely information be shared and easily accessed across the different touchpoints. It’s hard enough to do this when you have 50 customers. It’s really, really challenging (but not impossible) to do this consistently at scale.
Exhibit 2: Context matters for connected customer engagement
Experience is key, but empathy makes a notable entry
The COVID-19 crisis has brought sharper focus on the quality of service experience that companies provide. Think back to a situation at the start of the pandemic when the stakes were much higher. Perhaps you had to urgently catch a flight back home at the height of the lockdowns. Maybe it was filing a claim with your health insurance provider, or trying to get fast and stable connectivity from your ISP. Did you expect to get better service given the circumstances? If your answer is yes, you’re with the 58% of customers who say that this year’s crises have raised their customer service expectations. The good news is that 91% of customers say they are more likely to make another purchase after a positive experience. That’s reason enough for companies to seriously increase investment in this area.
Exhibit 3: Service experiences are paramount
The data shows that customers still prioritise convenience over brand, particularly Gen Z. Moreover, the definition of convenience is shifting as the purchasing power of digital natives increases. This generation is experimenting with ways to simplify purchases, many powered by artificial intelligence (AI) and automation.
Finally, there’s empathy. We are all going through a period of uncertainty and massive change. COVID-19 cases are rising again and things may get worse before they get better. Employees are still being furloughed or let go. Small businesses are unable to pay rent, and some industries like travel and hospitality continue to reel from the impacts of the pandemic. Companies need to deeply understand how these changes are impacting their customers, then tailor fit their communications and offers accordingly. There is clearly a gap in this regard as 68% of customers expect brands to demonstrate empathy, whereas only 37% say this expectation is being met.
But here’s something notable that I have observed which was not picked up in the research. In parts of the world, there are many examples of customers demonstrating patience and compassion as companies struggled to adjust to the new normal. For example, it took twice as long to pay for groceries but few seemed to mind. Deliveries took longer to arrive but not as many people were complaining. We also saw customers reciprocate with empathy towards companies, particularly small businesses that were struggling to stay afloat. Many of us chose to buy local produce and continue to order take out from neighbourhood restaurants.
The pandemic heightened our awareness of how we are all interconnected, and urged us to be responsible for the survival of our communities.
As digital engagement gains momentum, so do questions around data privacy
Innovation has a critical role to play in transforming customer engagement. Customers expect companies to innovate through new products and services or new ways of engaging them, and they interpret a lack of innovation as indifference. This expectation is accelerating digital transformation initiatives that have now become much more customer-facing. Technology becomes an enabler as a majority of customers expect companies to use new technologies to create better experiences.
One such technology trend is that of connected devices, such as smart speakers or fitness trackers. Almost eight in 10 (77%) customers say connected devices make their lives easier. Take healthcare, for example, where remote patient monitoring has improved the patient experience. In transportation, IoT is transforming the traveller experience through increased reliability, more accurate information and enhanced safety. In retail, Amazon Go pioneered the cashier-less checkout experience. These are but a few examples.
Exhibit 4: Connected devices power customer engagement
Similarly, AI has become more recognised and prevalent. For instance, voice assistants like Siri and Alexa are becoming more integrated into our personal and professional lives. But companies face a hurdle. While a majority of customers are open to the use of AI to improve their experiences, fewer than half trust companies to use AI ethically. Conversely, more than half are concerned about AI’s potential bias. This growing distrust stems from a lack of transparency in the data that feeds it.
Exhibit 5: Ethics comes to the forefront as AI becomes commonplace
Alarmingly, only one in four (27%) consumers understand how companies use their personal information, and 61% feel they’ve lost control over their personal information (up from 46% last year). The overwhelming majority wants more transparency over how their personal information is used.
Exhibit 6: A lack of transparency limits the potential of digital engagement
Truly, companies are faced with a quandary as customers demand more personalisation which is highly dependent on their sharing of personal data.
Times are changing, and so must companies
The pandemic continues to impact every aspect of life, and many changes brought about by COVID-19 will stick well beyond the crisis. For companies, it is critical to adapt to constantly evolving consumer behaviour and differentiate themselves to ensure long-term sustainability of their business.
As the younger generations start becoming the main consumers in economies, there will continue to be a paradigm shift in how these organisation or brands are viewed.
The rules of the game are evolving rapidly and with it are new concerns, and companies will have to respond.
* A second piece will look at the evolving nature of trust between companies and consumers, the greater emphasis on ethics, and the questions that both a company and a consumer should now be asking.