Customer experience news

2018's key customer experience trends - and how they impacted CX strategies

6th Dec 2018

What trends characterised the world of customer experience management in 2018, and how did they shape CX strategies?

The customer experience is a more important consideration than ever before for today’s businesses.

Research by Engage Hub, for instance, indicates that organisations cite improving the customer experience as among their biggest priorities. In a survey of cross-industry customer experience decision-makers, 65% of c-level executives rank improving customer experience as the most important overall business objective, even above net profit and revenue growth.

Little wonder that software vendors continue to align themselves and their offerings with customer experience management.

Yet despite this growing focus, the standards of experience being delivered are stagnating, with organisations struggling to align digital transformation with their CX strategies. Elsewhere, new data privacy regulations are forcing organisations to re-evaluate how they obtain customer insight.

Let’s take a deeper look at some of the trends and technologies that have characterised the past 12 months in the world of CX, and examine how they have influenced customer experience management strategies and performance.

Customer experience stagnation

The latest analysis by KPMG Nunwood indicates that the UK has witnessed little sign of customer experience improvement in the last year.

The latest Customer Experience Excellence (CEE) report – Ignite growth: Connecting insight to action – revealed only a minute uptick in the UK’s overall CEE score, a figure that KPMG Nunwood derives by examining factors such as personalisation, effort, integrity, expectations and empathy.

David Conway, Director at KPMG Nunwood, notes: “Many British brands have focused intensely on customer experience, but it would appear that the majority of their efforts have yet to be recognised.”

Elsewhere, there is a similar story in the US. Of the 287 brands across 19 industries ranked in Forrester's CX Index, progress of CX improvement is stagnant - for the third year in a row.

Sampson Lee believes that despite the growing profile of customer experience management, the continuing disconnect between CX and business means many CEOs still don’t fully buy into CX.

Since CX practitioners should fully recognise that ‘connecting CX with business results’ is the key to gaining buy-in from CEOs, why has the disconnect prevailed for years even to this day? 

“When CX initiatives don’t deliver, CEOs cease to support them, plain and simple,” he explains. “Since CX practitioners should fully recognise that ‘connecting CX with business results’ is the key to gaining buy-in from CEOs, why has the disconnect prevailed for years even to this day?"  

“CXPA’s co-founder Jeanne Bliss said, “CX is a company’s delivery of its brand promise.” I couldn’t agree more as it makes perfect sense. When a brand delivers its promise, it drives business results – first-time purchase, repeat purchase and referral.

“Obviously, there are strong ties between brand promises and business drivers. For instance, the number one repeat purchase drivers of IKEA and Louis Vuitton are ‘product pricing’ and ‘exclusive feel for wearing/owning LV products’ respectively. Notwithstanding that both brand promises and business drivers include ‘pricing’ and ‘product’, not just ‘service’, numerous CX professionals are overwhelmingly focusing on “Serve Customers Better” irrespective of what the brand promises are and what drive business results.

“Forrester’s research director Harley Manning remarked, “CX transformations are massive, take years, and cost millions.” Even with ‘service’ as the brand promise, most ordinary brands are not equipped for a CX transformation – the full-scale 'Serve Customers Better' approach. 

“When the majority of industry players continue to put forward the full-scale 'Serve Customers Better' approach to all companies with different kinds of CX challenges, it’s no wonder that the disconnect between CX and business results continues and most CEOs still don’t buy into CX in 2018.”

Digital transformation

2018 witnessed a dramatic rise in the number of digital transformation projects being undertaken by businesses. But syncing these projects with the customer experience has been problematic for many organisations, as their appetite for innovation has outreached their ….

CX consultant Ian Golding explains: “The world continues to go mad for the never ending evolution of digital technology and 2018 has seen digital strategy further amplify. The increased rhetoric around digital customer experience is seeing more and more organisations confuse the application of digital technology with ‘improving the customer experience’. Too often, digital technology continues to be implemented in isolation of the customer journey, with the primary intention of replacing human intervention and saving money, thus making the customer experience worse! As a result, the biggest trend - digital - is also the biggest threat to customer experience in 2018 and beyond.”

Organisations themselves have been prepared to admit that the demand for innovation is sometimes coming at a cost to the customer experience.

In a global survey of 800 CIOs by Dynatrace, 73% of respondents said the need for speed in digital innovation is putting customer experience at risk. The study found that on average, organisations release new software updates three times per working hour, as they push to keep up with competitive pressures and soaring consumer expectation. And nearly two-thirds (64%) of CIOs admitted they are forced to compromise between faster innovation and the need to ensure customers have a great experience.

Elsewhere, at the other end of the spectrum, some projects labelled ‘transformational’ are simply not going far enough to improve the customer experience. 

Nina Jones, a CX leader and former head of CX for Porsche and Jaguar Land Rover, notes: “Without fail, every organisation I have spoken with or worked with during 2018 has been leading a transformation within their businesses. The real transformations are those where the senior leadership team is spending time openly looking at their businesses and sacrificing some sacred cows (mainly in the current product/service offering and development) to future-proof profit and revenue streams.  These are brave, visionary transformations which challenge the entire current organisational structure and employee engagement to ultimately become relevant to their customers. 

“There are some others which are labelled ‘transformation’ but are merely digitising the same processes and making them more efficient. It is these where there arguably needs to be a challenge as to whether the change is transformational, or whether it is merely implementing new technology onto old processes?”

For all these challenges, however, it is reassuring that some organisations have successfully improved their customer experiences through digital innovation.

You can’t go into any emerging tech with rose-coloured glasses.

Sue Duris, director of marketing and customer experience of M4 Communications, highlights: “You can’t go into any emerging tech with rose-coloured glasses. You need to ask: What purpose does the emerging tech have in my company; what need is it trying to fulfill or problem is it trying to solve; and how will it benefit my customer? At the end of the day, it’s about the customer and whether you have helped them achieve their desired business outcomes. If you haven’t, nothing else matters because they will leave you.

“I’ve seen companies who have gone through the research use emerging tech as a CX augmenter well. You have companies like Volvo engaging customers through immersive experiences to help them cocreate new products. Houzz has an AR tool that lets shoppers try before they buy. UnderArmour worked with IBM Watson AI to create an AI and machine learning-powered personal health assistant. The French insurance company AXA uses blockchain in its technology and companies such as are taking Bitcoin for payment. Elsewhere, IoT tech is being successfully used for scooter sharing (goUrban in Vienna) and bike-sharing (MoBike). 

“What works is helping customers meet their desired incomes and emerging tech that can do that wins at the end of the day. While product-market fit has been a factor to better align solutions with the customers who would use them, there is still a long way to go. But we seem to be moving in the right direction.” 

Rise of the humans

Colin Shaw, CEO of Beyond Philosophy, is another that believes the influence of digital transformation on CX has been significant, particularly in light of the growing interest in AI this last year. However, he believes that 2018 has seen a tipping point towards over-automation of customer interactions, as a result of the proliferation of artificial intelligence in the likes of chatbots

“This year we have seen the continuation of the headlong drive into digital transformation - what is new is we are seeing the start of AI implementations. Both of these have the obvious benefit of increased efficiency and cost-savings. However, both share a BIG threat that I see too many companies falling into,” he explains. “In the organisation’s desire to implement these, they are damaging their customers' experience making it worse, not better. In their dash to automate everything to save cost, they are accidently automating the one thing which drives most value for them with the customer. Typically, this can be a human interaction. 

In the organisation’s desire to implement digital initiatives, they are damaging their customers' experience making it worse, not better.

“Now be very clear, I am not saying all human interactions need to remain, but certainly the ones that drive the most value. This then raises other questions: ‘What part of our existing customer experience drives most value’ and ‘how do we ensure we preserve this’. In my view BEFORE implementation of any digital transformation or AI implementation a review of the whole of the CX journey is required, the identification of the area that drivers most value identified and then, and only then, the digital transformation and AI elements implement.”

CX consultant Adrian Swinscoe agrees, and believes that this push against full automation of customer interactions has been a defining trend of 2018. 

He explains: "In recent years a lot of the talk has been dominated by technology, artificial intelligence and the ‘rise of the robots’. 2018 was no different but there has been an additional theme emerging and that is around  the ‘rise of the humans’, which is cognisant of the fact that the human touch plays an essential role in many customer experiences. That is challenging many digital only strategies and causing many organisations to have to rethink the role of the human touch and technology in the experience that they want to deliver to their customers."

Customer data and consumer trust

2018 was a pivotal year for the dynamic between companies and customers regarding the use of the latter’s data. The biggest development was the implementation of the General Data Privacy Regulation (GDPR) in May, which forced organisations to re-evaluate the way they collect, store, manage and utilise their customers’ data. But 2018 also witnessed a hugely explosive story relating to the misuse of customer data, as it was revealed millions of Facebook profiles were harvested by political influencing group Cambridge Analytica. 

As Matt West, CEO at Feefo, notes: “GDPR put an end to the Wild West era of Big Data, but trust emerged as a major issue for consumers. The new regulation has put the power back in the hands of consumers who are now only sharing their data with brands they trust and want to hear from.”

Nina Jones adds: “Clearly from a purely process/rational perspective, GDPR made organisations really aware of the quality of the customer data residing in their various systems (and in some cases, awareness of previously unknown customer data systems!) and that it was all a bit of a mess!  Companies were not clear around how their customer data was originally collected, when and by whom and therefore, which data could be used for what!  Hence the reason why we, as consumers, experienced an email onslaught from late Spring all through Summer as they tried to sort it all out! 

GDPR put an end to the Wild West era of Big Data, but trust emerged as a major issue for consumers.

“However, it was noticeable that some organisations turned the GDPR deadline into a galvanising event to launch or reinvigorate cultural programmes, to make it clear that the guardianship of their customer data was an organisational responsibility as well as a cornerstone of their business success or, conversely, reputational risk. The 4% fine and the May deadline galavanised senior leadership teams to provide focus, funding and a programmatic approach to the importance of customer data in their organisation.  And if they hadn’t quite registered the importance, the ongoing Facebook experience made it very clear how a brand can be rapidly tarnished by being shown not to have been good guardians of their customer data and the enormous PR cost to the business of saying sorry – one that we should all take learnings from.”

Beena Nair, retail customer engagement consultant with the customer engagement and loyalty team of Capgemini Invent’s CXA practice, believes that the developments in 2018 have forced organisations to re-evaluate their approach to data – and even if they can legally collect customer data within the new regulatory environment, they may now think twice about whether they really need to.

She explains: “Customer data is extremely precious source of insight – and both businesses and governments recognise this and therefore there are stringent regulations (at least in some parts of the world) to protect gullible customers against misuse of this data - e.g. the recent harvesting of Facebook profiles by Cambridge Analytica. Therefore, businesses need to be wary of the need to collect the data and also use it to make improvements or changes deemed necessary by their customers, such that they do not get so focused on collecting data that they never actually use. Using the data they collect to not only understand what it tells them but also use it in a way to decide the next best action they take with their customer based on those insights should be the sole focus for businesses.

“The data journey is a two-way street and requires complete “trust”, firstly for the customer to know how their data is being used, and secondly because businesses need to only focus on acquiring so much data that is actually needed to better the customer journey from the stage they are on the journey.”

CX and the software market

Following the news that SAP had paid $8 billion to acquire customer survey provider Qualtrics, renowned industry analyst Josh Bersin remarked: “Experience has taken over the software market”.

It is easy to see why he came to that conclusion. Adobe, SAP, Salesforce and Oracle have all either rebranded existing products under the Experience banner or have pooled various marketing, analytics and content tools together under one umbrella to create Experience clouds. These companies are proceeding to make experience their primary focus.

During the Qualtrics announcement, SAP CEO Bill McDermott himself expressed his view that experience management is “the groundbreaking new frontier for the technology industry.”

CX is the only true leading indicator of business performance whereas revenue/transactions are a lagging indicator and representative of good work done in the past.

“The acquisition of Qualtrics by SAP further validates the customer experience industry and the value human insights bring to an organisation,” notes Andy MacMillan, CEO of UserTesting.

Some commentators expressed shock at the amount that SAP had paid – it represented the second-largest purchase of a SaaS software company after Oracle’s acquisition of Netsuite, while  Bersin highlighted that with Qualtrics’ Q3 revenues at $372 Million, and the company is growing at 42% YTY, SAP paid more than 20X revenue for Qualtrics.

However, others were less surprised, given the trajectory of customer experience management, including Vinod Muthukrishnan, CEO of Cloud Cherry.

“CX is the only true leading indicator of business performance whereas revenue/transactions are a lagging indicator and representative of good work done in the past,” he explains. “If I spent 2000 dollars with you in 2018, there is zero guarantee this might happen again in 2019. The only indication that it might happen is my NPS or sentiment regarding the brand

“CX has long been about surveys and getting experiential data in. Blending that with operational data allows us to understand how experience impacts and influences purchase/referral/loyalty.”

He continues: “SAP sees the value of integrating systems data to experiential data and sees how every single enterprise leader globally is today trying to find the formula for success in a rapidly evolving world and continually changing customer preferences. Hence the value is more than Qualtrics' revenue; instead it is about what they can do together.

“Every tech company with a strong CRM/support/marketing suite needs a comprehensive CX strategy. CX platforms ingest data from CRM/POS/ERP's and push alerts to Support platforms and intelligent marketing cohorts to marketing automation systems (allowing for highly focused marketing based on a customer's most likely response to stimulus instead of just profile history). In essence, a CEM platform sits at the heart of all of these systems

“My guess is that anyone with an experience or marketing cloud offering will look inward and find that they have a CEM sized gaping hole in their suite of offering; making them less competitive against SAP. And that is the future multiple SAP has paid for.”

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.