Why The Digital Customer Experience is Crucial - Part Three
Still Early Days for Personalization
The current use of digital customer experience personalization tools is significantly lower than we might have anticipated, with only 15 percent of respondents reporting they’re already deriving benefits after implementing personalization tools. A further 27 percent of respondents are conducting limited experiments with personalization tools, while 13 percent are actively evaluating the tools and have a budget in place. However, another 24 percent have yet to invest in tools, adding that personalization is not currently a priority for their organization. In further discussions with some respondents, what those polled have in mind is sophisticated personalization at the individual customer level, to enable one-to-one marketing, which is still emerging, versus personalization of customer experience to different personas or defined groups of customers. The aim is to deliver the right content and recommendations to an individual customer based on factors including their age, location and other demographics, as well as relevant external factors such as seasonality.
Many of the organizations polled struggle to gain more complete visibility into their customers, which is compounded by the use of legacy technology. One of the top-two challenges to DCX is siloed systems and customer data (44 percent) and then the fourth highest-rated challenge is outdated or limited technology, operations or processes (33 percent). Few respondents are confident about their current level of understanding of customers’ digital behavior. In fact, only 16 percent believe they understand that behavior “well,” having the necessary tools in place to first gain insight and then take action on that knowledge. However, 46 percent said they have a “moderate” understanding of customers’ digital behavior, followed by a further 28 percent who describe their understanding as “poor,” and an additional 11 percent who’ve yet to get started or are just beginning work in this area. We then asked about the most important thing respondents would like to discover about their digital customers, which they don’t currently know. A frequent point raised here was frustration with the lack of appropriate metrics and monitoring to help organizations gain a better understanding of their customers. Respondents are keen to determine at what stage in their digital experience customers encounter pain points and bottlenecks as well wanting to identify the specific roadblocks to conversion. They’re looking for insights to help validate customer journey and design point mapping. Additionally, they want to learn where to best focus efforts to improve customer satisfaction, what motivates customers’ decision making, customers’ preferred channels for communication and for purchase and their expectations for long-term value and satisfaction.
How well do you think your organization currently understands its customers’ digital behavior? Well. Tools are in place to gain understanding and take action based on that insight 15.9% 45.8% Moderately. Tools are in place to gain understanding, but limited actions have yet to be taken 27.7% Poorly. Some tools are in place but not yielding a good understanding of behavior 10.6% Not yet started.
We then asked about the most important thing respondents would like to discover about their digital customers, which they don’t currently know. A frequent point raised here was frustration with the lack of appropriate metrics and monitoring to help organizations gain a better understanding of their customers. Respondents are keen to determine at what stage in their digital experience customers encounter pain points and bottlenecks as well wanting to identify the specific roadblocks to conversion. They’re looking for insights to help validate customer journey and design point mapping. Additionally, they want to learn where to best focus efforts to improve customer satisfaction, what motivates customers’ decision making, customers’ preferred channels for communication and for purchase and their expectations for long-term value and satisfaction.
In follow-up interviews with some respondents, these points were reiterated as well as the desire to find out what are a customer’s short-term and long-term expectations for the successful use of a product or engagement with a brand. No Consensus on How to Measure CX Success Businesses have a wide range of metrics available by which to gauge the success of their customer efforts. Customer satisfaction (CSAT) was seen as the most popular DCX measurement tool cited by 39 percent of respondents, followed by net promoter score (NPS) with 33 percent and engagement metrics (29 percent). However, when respondents marked the most useful metric, the percentages were somewhat different. CSAT was seen as the most useful metric, but only by 18 percent of those polled, and the same was true for NPS with only 14 percent. In third position was customer lifetime value on 13 percent, with CLV in use by 18 percent of respondents. So, from the perspective of use versus usefulness, CLV emerged as the winning metric in its ability demonstrate the successful outcome of an investment in digital customer experience. There were also shifts in the popularity of the metrics used by respondents in 2017 versus 2018. In 2017, 40 percent used CSAT and the same number used customer retention rate, while the latter only sat at 28 percent of respondents in 2018. Engagement metrics were used by 37 percent of respondents in 2017 (compared to only 29 percent in 2018). NPS was more popular in 2018 being used by 33 percent of respondents versus only 27 percent of those polled in the 2017 survey. One issue revealed in follow-up interviews with some respondents is the wide variety of data sources that brands may have to draw on in order to conduct different DCX measurements. Variable quality and accuracy across those data sources can negatively impact the value of the metrics.
What Successful Organizations Do Differently
Let’s return to that group of 13 percent of respondents who rated the general effectiveness of their current digital customer experience platforms and tools as “working well.” In comparing their responses to those of the entire survey population, a much larger percentage of them (69 percent versus the general population’s 41 percent) see DCX as “extremely important” to their organization.
While this group shares the same DCX challenges as their peers, their investment priorities are somewhat different. Instead of analytics and dashboarding in top position as chosen by the entire survey population, the group’s number-one investment is in customer data management and data integration (40 percent), with analytics and dashboarding in second position (33 percent), then digital transformation projects (31 percent).
In organizational terms, for the group, the ranking of the primary decision-maker for digital customer experience technology is substantially different:
As a reminder, in the results of the overall survey population, executive leadership dominated as primary DCX technology investment decision-maker (41 percent), marketing (28 percent), IT (14 percent), a distinct digital department (12 percent) and customer service (five percent). This group is ahead of its peers when it comes to having already purchased a customer data platform or a customer data management solution – 38 percent compared to 21 percent of the total survey population. A larger portion of the group is already deriving benefits after implementing personalization tools – 57 percent to the total survey population’s 15 percent. The group’s most popular (40 percent) and most useful (24 percent) DCX metric is Customer Lifetime Value (CLV).
1.Leading DCX organizations adopt new technology faster and are organized differently. The most successful organizations have prioritized investment in customer data management and data integration. They are aggressively adopting newer technologies such as sophisticated personalization. Marketers also wield more power as primary DCX technology decision-makers.
2.Digital customer experience is a growing priority for all firms, regardless of their size or industry sector. With everyone facing the same issues, there is clearly much to be gained from businesses looking across a variety of verticals to learn what’s working, what’s not and why.
3.Digital customer experience is now an integral part of a broader digital transformation strategy. However, many organizations are struggling with how to make the necessary organizational changes internally to align around a single strategy and to work together more effectively.
4.There’s a lack leadership. Organizational issues are having a negative impact on the ability to provide high quality digital customer experiences including insufficient cross-department alignment and collaboration. This speaks to an urgent need for stronger and more unified leadership to drive and to champion both the DCX initiative and the broader digital transformation.
5.Many organizations are dissatisfied with the implementation and functionality of their DX platforms. But be careful who you ask as the IT and engineering groups are especially critical of the platforms and tools.
6.Digital experience personalization success rates are still low. More customer success stories and best practices are needed to give organizations the necessary confidence to move beyond early experimentation into embracing sophisticated, one-to-one personalization. Organizations seek a better understanding of the potential return on investment attached to this type of personalization and to see more maturity around its application.
7.Companies are split on the value and benefits of customer data platforms. While some organizations have already adopted or are actively evaluating a CDP or a customer data management solution, their peers are still on the fence about investing in these types of technologies. Organizations are debating whether or not a CDP and CDM would be the right answer to resolve their current issues with siloed data.
8.Organizations expect that AI and machine learning will primarily advance access to actionable customer insights and enable self-service. These emerging technologies might be viewed as the latest silver bullet for all that ails digital customer experience, so our advice to organizations would be to proceed cautiously and closely examine product claims when all vendors are claiming AI as a cure-all.