10 January 2023
by Isabelle Ohnemus
Early estimates of online sales for Black Friday – $9.12 billion, and Cyber Monday – $11.3 billion show a marginal increase upon last year of 2.3 percent and 5.3 percent respectively.1 However, there is no denying that macroeconomic headwinds – higher interest rates, inflation, and geopolitical instability, suggest that 2023 may pose challenges to consumer confidence and economic growth into early 2023.2
With the holiday season underway and the threat of a rail strike looming on the horizon,3 retailers may face disruption to the supply chain reminiscent of the experience that plagued eCommerce during 2020 and 2021 where contact centers were overwhelmed by a tsunami of WISMO (where is my order) tickets.
While most customer experience (CX) leaders predict an increase in their 2023 budget, research and consulting firm Forrester contend this is overly optimistic, advising CX leaders to ensure their investment in CX is as effective and efficient as possible if they are to insulate themselves against unexpected budget cuts.4
It is against this backdrop that CX teams enter an uncertain 2023 with companies losing their focus on customers, customer expectations continuing to rise, and an economy becoming more turbulent.5
In a narrow sense, CX is the sum or aggregate of customers’ perceptions and feelings resulting from all their interactions with a business or brand. CX is also used as shorthand for customer experience management (CXM) which refers to strategies, technologies, and practices for improving business results by creating an ideal experience for anyone interacting with a company.6
The concept of the experience economy is not a new concept and can trace its roots to the 1960s when the initial seminal theories on marketing and consumer behavior were developed and communicated. However, it was academics Pine and Gilmore, in a 1997 article for The Wall Street Journal (and subsequent writings),7 that conceptualized the idea of “experiences” as distinct from goods and services.8 Businesses must orchestrate memorable events for their customers. Memory itself becomes the product – the “experience” which would give brands a competitive advantage by winning more customers and being able to keep them.
Beyond experience, lies the frontier of transformation, and is best explained by Pine and Gilmore themselves:9
|For into what does mass customizing an experience turn the offering? If you design an experience so appropriate for a particular person – precisely what he needs to be fundamentally affected by it over time – then it can’t help but become a life-transforming experience that changes the customer in some way.|
But back to the present.
In today’s digital economy, in which many products and services have become commodities available through online channels, customer experience has become the defining differentiator. Not only has the customer journey become more complex and non-linear in nature,10 customers also demand a more streamlined and enjoyable retail experience across all channels, all the time.
If the consensus holds, and the economy goes into recession, shoppers will have less discretionary income to spend. In the absence of growth, customers searching for value will gravitate toward retailers who make the purchase experience enjoyable. Brands will compete on the basis of CX, requiring continued investment in CX just to stand still.11
Professional services firm KPMG identified the Six Pillars of Customer Service Excellence as foundational requirements in building strong customer experiences. All six factors must be executed well and as a whole, if an organization is to deliver superior CX:12
On the flip side of the coin, pitfalls to be avoided when initiating programs designed to transform CX include:13
Many CX initiatives are failing to deliver on the promise of differentiation.14 The potential for a downturn in the economy along with the uncertainty that awaits business in 2023 is reason enough for CX leaders who continue to invest, to shield their programs from potential budget cuts by ensuring programs are both effective and efficient, and deliver on their promise of better business outcomes.15
2023 is about execution and delivery of the post-pandemic programs launched in 2022. The following dominant CX themes are evident from a scan of the research and commentaries of leading consultancies and thought leaders in the CX space.
Complex organizational structures and business silos are obstacles in the path of a firm’s CX transformation. Cross-functional collaboration is required if personalized, contextualized experiences are to be delivered.16
In a recent survey conducted by Harvard Business Review,17 39 percent of respondents identified data silos within business functions or channels as being their largest obstacle to generating business outcomes from their customer data. Similarly, 38 percent say limited alignment and collaboration across departments to meet customer data goals and processes are among their biggest challenges.
Scaling a business while maintaining a consistent customer experience without sacrificing quality is a challenge. The level and quality of service that customers receive from companies is a key feature of the experience it provides. Contact centers play a key role in this domain.
Augmenting existing call-handling systems through automation by deploying customer service chatbots employing natural language processing (NLP) to answer common customer questions will simplify the customer journey, reserving the resolution of high-impact tickets requiring a human touch to live call center agents. With 56 percent of customers aged between 16 – 44 preferring their first point of contact to be with an AI chatbot,18 using chatbots can reduce customer service costs by as much as 30 percent.19
An early study by Zendesk showed that 67 percent of customers preferred self-service over speaking to a company representative.20 A later Harvard Business Review survey supported these findings, reporting 81% of all customers attempt to take care of matters themselves before reaching out to a live representative.21
No doubt driven by the pandemic, more recent research indicates that 81 percent of customers want to self-serve without engaging a call center agent, in stark contrast to the 5 percent of customers that prefer human assistance.22
Self-service is not only about providing the level of convenience customers expect from today’s brands. Self-service solutions drive operational efficiencies and cost-savings – frequently cited Forrester research places the cost of a live agent call between $12 and $6, versus $0.25 for an automated response.23
There are many sources of customer data, all claiming to be the single source of customer truth.
Data-driven organizations will leverage the power of data, analytics, and AI to drive competitive advantage by delivering experiences that are not only personalized but proactive and predictive.24
McKinsey is of the view that predictive customer insights will dominate the CX landscape going forward.25 Customer-level data lakes supporting a wide variety of analytic capabilities will fuel an insight engine that can be acted upon in near real-time.
Businesses collect and store massive amounts of customer data. It is therefore not surprising that customers are concerned about the security, privacy, and use to which their data is put.
While governments across the world are working to implement regulations to protect customer data, it will be those businesses that demonstrate transparency, compliance, and strong measures to safeguard their data that will earn their customers’ trust.26
It may sound clichéd, but happy employees mean happy customers. A 2019 survey established a strong statistical link between employee well-being reported on Glassdoor and customer satisfaction among large sample of some of the largest companies today.27
A more recent study echoed these findings. By focusing on improving employee experience (EX), companies can potentially increase revenue by up to 50% or more, and profits by nearly as much.28 Five key elements – trust, c-suite accountability, alignment, recognition, and seamless technology were identified as supporting a superior EX.
In light of the Great Resignation and the war for talent, unifying both the EX and CX is a strategic imperative.
Borrowing from a different time and domain “… it’s the data …”.
The experience economy and superior customer experience are data-driven.
The focus on predictive systems that provide actionable insight will enable you to better understand what your customers want and need, and perhaps more importantly respond in real time, unlike your competitors.
1 Holiday Shopping Report. (2022, November). Adobe Experience Cloud. https://business.adobe.com/resources/holiday-shopping-report
2 US Consumer Confidence Declined Again in November. (2022, November 29). Cision PR Newswire. https://www.prnewswire.com/news-releases/us-consumer-confidence-declined-again-in-november-301688989.html
3 Gurley, L. K., Pager, T., & Romm, T. (2022, November 29). As rail strike deadline nears, Biden calls on Congress to intervene. Washington Post. https://www.washingtonpost.com/business/2022/11/28/rail-strike-biden-congress/
4 Forrester. (2022, November 21). Customer Experience Planning Guide — Simplify CX Budgeting. https://www.forrester.com/bold/customer-experience-planning-guide-2023/
5 Parrish, R. (2022, November 21). CX Leaders Are Overly Optimistic About Their 2023 Budgets. Forrester. https://www.forrester.com/blogs/cx-budget-in-2023/
6 What is Customer Experience? | IBM. (n.d.). https://www.ibm.com/topics/customer-experience
7 Pine, J. B., II, & Gilmore, J. H. (1997, August 4). How to Profit From Experience. WSJ. https://www.wsj.com/articles/SB870467837649599500
8 Lemon, K. N., & Verhoef, P. C. (2016). Understanding Customer Experience Throughout the Customer Journey. Journal of Marketing, 80(6), 69–96. https://doi.org/10.1509/jm.15.0420
9 Pine II, B. J., & Gilmore, J. (2013). Chapter 2: The experience economy: past, present and future. In Handbook on the Experience Economy (pp. 21–44). Edward Elgar Publishing. https://www.researchgate.net/publication/260917972_The_experience_economy_past_present_and_future
10 From personalization to customerization: Reimagining retail for the new digital age. (2022). Atos SE. https://atos.net/en/lp/lookout-industry-trends/retail
11 Davey, N. (2022, November 25). What should CX leaders prioritise in their 2023 budgets? MyCustomer. https://www.mycustomer.com/customer-experience/engagement/what-should-cx-leaders-prioritise-in-their-2023-budgets
12 The Six Pillars in 2022. (2022, October 20). KPMG. https://home.kpmg/xx/en/home/insights/2022/10/global-cee-2022/the-six-pillars.html
13 Miller, I., Neher, K., Broek, R. V. D., & Wintering, T. (2022, March 21). Six customer experience pitfalls to avoid. McKinsey & Co. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/six-customer-experience-pitfalls-to-avoid
14 Customer Experience Success: 3 Key Tactics to Employ. (2022, May 25). Gartner. https://www.gartner.com/en/articles/these-3-factors-are-key-to-customer-experience-success
15 Forrester. (2022, November 21). Customer Experience Planning Guide — Simplify CX Budgeting. https://www.forrester.com/bold/customer-experience-planning-guide-2023/
16 Taking a design-led, data-driven approach to experience transformation. (2022). In IBM. IBM Corporation. https://www.ibm.com/downloads/cas/8PN5D6GL
17 Generating Stronger Business Outcomes Through Customer Data. (2022, September 23). Harvard Business Review. https://hbr.org/sponsored/2022/08/generating-stronger-business-outcomes-through-customer-data
18 BusinessWire. (2022, November 29). Acxiom Forecasts Top Five Customer Experience Trends for 2023. MarTech Cube. https://www.martechcube.com/acxiom-forecasts-top-five-customer-experience-trends-for-2023/
19 Bleu, N. (2022, August 29). 29 Top Chatbot Statistics For 2022: Usage, Demographics, Trends. Blogging Wizard. https://bloggingwizard.com/chatbot-statistics/
20 Zendesk. (2013, January 10). Self-service: do customers want to help themselves? https://www.zendesk.nl/blog/searching-for-self-service/#georedirect
21 Kick-Ass Customer Service. (2020, September 15). Harvard Business Review. https://hbr.org/2017/01/kick-ass-customer-service
22 The State of Self-Service Content Experiences. (n.d.). Zoomin Software. Retrieved November 30, 2022, from https://www.zoominsoftware.com/ebooks-success-stories/the-state-of-self-service-content-experiences
23 How digital self-service benefits your entire business. (2020, June 9). CloudSense. https://blog.cloudsense.com/digital-self-service-benefits
24 Taking a design-led, data-driven approach to experience transformation. (2022). In IBM. IBM Corporation. https://www.ibm.com/downloads/cas/8PN5D6GL
25 Prediction: The future of CX. (2021, July 12). McKinsey & Company. https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/prediction-the-future-of-cx
26 Lowe, C. (2022, August 19). Customer Experience Trends: 12 to Explore in 2023. Insider. https://useinsider.com/customer-experience-trends-to-explore-in-2023/
27 The Key to Happy Customers? Happy Employees. (2019, August 19). Harvard Business Review. https://hbr.org/2019/08/the-key-to-happy-customers-happy-employees
28 The Experience Advantage: Transforming Customer and Employee Experience for the Future of Work. (2022). In Salesforce. Salesforce, Inc. https://www.salesforce.com/form/conf/the-experience-advantage/