Competitive pressures driving up CX tech investment
CX technology investment will rise sharply in the coming years as customer focus on providing a differentiated customer experience.
Businesses are throwing money at customer experience technology in a desperate bid to seize a competitive advantage, leading to a boom in CX tech investment for the foreseeable future.
New research from IDC has found that worldwide spending on customer experience (CX) technologies will total $508 billion in 2019, an increase of 7.9% over 2018, with retailers and financial services leading the charge.
The report – the Worldwide Semiannual Customer Experience Spending Guide – predicts that CX spending to achieve a compound annual growth rate (CAGR) of 8.2% over the 2018-2022 forecast period, reaching $641 billion in 2022, as companies focus on meeting the expectations of customers and providing a differentiated customer experience.
Of the four technology groups examined by the research (hardware, software, services, and telecom services), services will be the largest area of CX spending at $220 billion in 2019. Most of this total will be divided between business services and IT services.
Software will be the second largest area of CX technology spending led by CRM applications and content applications. Hardware, including infrastructure and devices, will account for nearly 20% of overall CX spending while telecommunications services will be less than 10% of total spending.
The research house examined investment trends across 16 use cases of CX technology, including AI-driven engagement, customer care and support, customer journey analysis, customer satisfaction measurement, digital asset management, digital marketing, digital-based training and education, external customer analysis, integrated customer information, interaction management, omnichannel content, order fulfillment, partner and channel integration.
And while CX investment is distributed fairly evenly across these use cases, those that will see the most spending through to 2022 are customer care and support followed by order fulfillment and interaction management. However, the use cases that will see the fastest spending growth over the five-year forecast period are AI-driven engagement, interaction management, and ubiquitous commerce.
"Customer experience has become a key differentiator for businesses worldwide. New innovation accelerator technologies like artificial intelligence and data analytics are at the forefront in driving the differentiation for businesses to succeed in their customer experience strategic initiatives," said Craig Simpson, research manager, customer insights & analysis at IDC.
The retail sector is leading the investment into CX in 2019 2019 ($56.7 billion) and is expected to be at the vanguard of CX expenditure through the duration of the forecast. Digital marketing, AI-driven engagement, and order fulfillment will be the use cases that receive the most funding from retail organisations.
Discrete manufacturing and banking will be the second and third largest industries in 2019. Customer care and support will be the primary use case for both industries. Retail and healthcare will be the two industries with the fastest spending growth over the forecast period with CAGRs of 13.1% and 11.5% respectively.
In terms of the global breakdown, the United States is the largest geographic market for CX spending in 2019 led by the discrete manufacturing and retail industries. Western Europe will be the second largest region with banking and retail as the top industries. The third largest market will be China, led by healthcare and retail CX spending. But China will see the fastest growth in CX spending with a five-year CAGR of 13.6%.
“The figures from IDC are further evidence of the growing importance that organisations are placing on customer experience,” notes Sudarshan Dharmapuri, SVP products at IMImobile. “In fact, recent research we conducted found that almost all (98%) of CIOs feel under pressure to deliver the CX expected by both customers and the wider business.
“CX today is what CRM was for businesses 20 years ago, in essence, a must-invest.”
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.