CX investment to soar 30% in the 2020s
Investment in customer experience technology will rapidly rise in the next decade, as organisations seek to increase customer understanding and reduce churn rate.
Investment in customer experience technology is set to soar in the next decade, as organisations seek to increase customer understanding, improve loyalty, reduce churn rate, and meet consumer demand for more personalised experiences.
Research by market research and consulting firm Reports and Data has predicted that the CX application market will grow nearly 30% over the next seven years, rising from its current valuation of $6.17 billion today, to a huge $38.5 billion by 2026.
Retail and ecommerce firms are expected to be the biggest investors in CX application suites, which includes technology such as sales and marketing automation, customer support helpdesk, product configuration and reporting and customer analytics software.
North America remains the single biggest geography for such technology, accounting for 38.5% of the total sector due to a well-established, banking, retail and ecommerce customer base.
But Asia Pacific is growing at by far the fastest rate due to rapid urbanisation, industrialisation and digitalisation. The region is forecast to experience a compound annual growth rate (CAGR) of 29.6% between 2019 and 2026, owing largely to the huge potential of untapped consumer markets in China, Japan and India.
A fragmented marketplace
The increasing adoption of emerging technologies such as artificial intelligence and the Internet of Things is likewise anticipated to encourage further market growth as the amount of data collected and the number of digital transactions continues to rise, leading to a desire by both private and public sector organisations for appropriate technology to help manage the customer experience more effectively.
The market itself, meanwhile, is currently divided into software, which is by far the biggest chunk at 62% of the total, and services, which is the area growing the most swiftly. The latter is expected to demonstrate a CAGR of 33.8% over the next seven years due to an increasing need by organisations for skills to help them integrate their CX applications with existing systems.
But it is these very integration issues that are expected to dampen growth somewhat in the short-term as a result of the complexities involved in collating data from a wide range of different touch points combined with data security and privacy concerns. Over the longer term, however, vendors are expected to overcome such challenges and convert them into “an opportunity for the market to thrive upon”, the report says.
Key vendors in this space include Adobe Systems, Avaya, CA Technologies, Chime Technologies, Clarabridge, Freshworks, Genesys, IBM, Medallia, Nokia Networks, Opentext, Oracle, Qualtrics, SAP, the SAS Institute, Tech Mahindra, Verint Systems and Zendesk, but the report notes that the market is highly fragmented. As a result, not only is the proportion of research and development expenditure on new product development relatively high here, but there is also a lot of market activity as suppliers invest in acquisitions, partnerships and collaborations in a bid to gain a competitive edge over their rivals.