New customer expectations are rewriting the digital transformation playbook
As regular readers of my column know, I'm a big fan of research insights. Understanding what motivates today's customers -- whether consumers or business buyers -- is something especially close to my heart, which is why I'm excited about the launch of the third State of the Connected Customer report from Salesforce.
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As with previous editions, this delivers a detailed picture of today's fast-evolving customer mindset. It also includes vital insights -- some of which may not be top-of-mind -- on how to foster customer loyalty, deliver better customer experiences, and improve business results.
Here are the four key takeaways of the report:
- Extraordinary experiences raise the bar for customer engagement: Customers' standards for modern engagement are a far cry from the transactional, one-size-fits-all experiences that were once de facto. Tailored, contextualized engagement across multiple touchpoints is the benchmark, and disruptive business models are further raising the bar. Seventy-three percent of customers say one extraordinary experience raises their expectations of other companies.
- New expectations shift the digital transformation playbook: Innovation is accelerating across industries thanks to emerging technologies like artificial intelligence (AI) and the Internet of Things (IoT). With many consumers and business buyers willing to pay a premium for differentiated, first-to-market products and services that enhance their experiences, the pressure is on for companies to get ahead of the digital curve. Seventy-five percent of customers expect companies to use new technologies to create better experiences.
- Trust becomes more important, yet more elusive: Trust has always been foundational in customer relationships, but it's a more nuanced subject in an era where customers expect transparency, authenticity, and ethics. A lot goes into fostering customer trust, and it's an increasingly formidable challenge. Fifty-four percent of customers say it's harder than ever for companies to earn their trust.
- Corporate values sway buying decisions: The days when businesses were expected to sit on the sidelines of societal issues are over. Today, customers expect companies to not only operate ethically and with their communities' interests at heart, but in a way that advances causes such as equal rights, philanthropy, and sustainability. Seventy-three percent of customers say a company's ethics matter more than they did a year ago.
Here's a finding that grabbed my attention: 73% of customers say that a single extraordinary experience with one company raises their expectations of other companies. This highlights a tricky reality for businesses: today, you are in competition with every other company, regardless of industry.
Customer engagement strategies needs to adjust accordingly. For example, banks that benchmark their capabilities solely against other banks -- a perfectly reasonable approach in earlier times -- are missing the mark today. Every time Amazon raises the stakes in retail by delivering a tailored, contextualized experience for online shoppers, it does so for banking, healthcare, hospitality, and every other sector. Fifty-two percent of customers -- including 56% of consumers -- say companies are generally impersonal.
Companies aren't living up to customers' personalization expectations.
Winning in this environment requires a fundamental shift in mentality -- from the boardroom to customer front-line employees, and everywhere in between. It also signals danger for companies that continue with business as usual.
Customers expect constant innovation
We are now entering an era where a company's ability to provide innovative experiences is as important as the quality of its products. Salesforce found that 84% of customers now consider these factors equally when deciding who to buy from.
This shift is rooted in the technological changes being ushered in by the Fourth Industrial Revolution. As Salesforce's report highlights, the impact of technologies such as artificial intelligence (AI) and the Internet of Things (IoT) is transforming customer expectations about the ways companies should engage. Three-quarters of customers expect companies to use new technologies to create better experiences, and nearly as many (74%) expect companies to do the same by using existing technologies in new ways. B2B companies, in particular, have high standards to live up to.
Leveraging new technologies to improve the customer experience.
In other words, digital transformation -- an imperative once focused primarily on back-office functions -- is becoming increasingly customer-facing. More companies are drawing on the power of intelligent technologies to deliver the levels of personalization, timeliness, and connectivity that customers expect, thereby upping the ante for any businesses in direct competition with them and beyond.
Innovation at scale is becoming critical for a company to survive, let alone thrive. Salesforce found that two-thirds (67%) of customers believe the way a company uses technology indicates how it operates in general. Savvy usage of digital technologies is becoming a proxy for overall quality, whereas a failure to innovate signals antipathy, with 61% of customers saying that a failure to adapt to changing expectations means a company doesn't care about them.
Innovation, connectivity, trust, and values raise the bar for customer engagement.
AI and connected devices now underpin customer expectations
Given that the bedrock of contemporary digital transformation is AI, it's clear that embracing this technology is key for any business that is serious about delivering the elevated experiences customers now expect. Applying insights based on data is only the starting-point when it comes to engaging today's customers. Delivering hyper-personalized engagement at the right moments across devices and channels is dependent on the powerful processing and analytical capabilities that only AI can provide.
Customers today are recognizing the power of AI and the role it can play in their relationships with companies as its impact becomes more apparent in customer service and commerce, among other use cases. Sixty-two percent of customers are open to the use of AI to improve their experiences -- up from 59% just a year ago.
AI has gone mainstream, but reservations remain.
Salesforce also found that connected devices have cemented their place in customers' daily lives. Three-quarters of today's customer base -- including 82% of millennials and Gen-Z -- use examples of connected devices (powered by the IoT) such as fitness trackers, modern vehicle infotainment systems, smart thermostats, and more. More than half of customers (53%) -- including 61% of millennials/Gen-Z -- want more connections between their devices.
A prime example of how both AI and connected devices are becoming more commonplace in everyday life is voice technology. The likes of Apple Siri, Amazon Alexa, and Google Home represent an entirely new method of engagement, and a major opportunity for companies to tap into. Forty-two percent of customers go as far as to say that they'd rather talk to their device than type into it.
A look at common use cases for voice assistants (for example, predicting what music a person wants to listen to, based on what they've listened to before) can give companies inspiration on how to use the technology to innovate for customer engagement.
Voice assistant users who have done the following.
If you are a B2B company and believe voice technology's potential does not apply to you, think again. Sixty-three percent of business buyers think voice assistants will play as big a role in their lives as smartphones already do. Thirty-eight percent of people who use a voice assistant do so during their working day.
Connecting the entire customer journey is critical
If you run a successful enterprise, you probably have a mobile friendly and adaptive home page, eye-catching marketing creative, and quality products. But in an era when experience is everything, that's not enough to acquire customers -- let alone keep them.
Today, just personalizing a single customer experience doesn't go far enough. Experiences across the entire customer journey -- from the first ad served to post-sales customer service interactions -- need to be connected and contextualized. Sixty-nine percent of customers expect connected experiences (that is, where their preferences are known across touch-points and any required information can be quickly accessed). Yet most customers find their experiences to be disconnected.
Customers expect consistent interactions across departments.
Connecting existing systems and customer data allows companies to draw on a continuous stream of business insights that are vital for elevating customer engagement. Conversely, disconnected or siloed data and systems thwart any such abilities. Much work remains to be done on this front: The average enterprise has 900 different applications, only 29% of which are estimated to be integrated.
Further complicating the matter is customers' multi-channel, multi-device behavior that makes customer journeys anything but linear. This trend seems set to intensify, thanks to millennial and Gen Z customers' fondness for using different means of engagement to start and complete transactions.
Customer channel preferences vary.
New business models are allowing brands to engage consumers directly
It's not just technology that is shifting standards of engagements. Sixty-five percent of respondents say new business models are changing their expectations of companies. A prime example of this phenomenon is the direct-to-consumer (D2C) model currently disrupting the consumer goods sector.
Traditionally, most consumer goods companies focused on B2B engagement with retailers, but the rise of D2C-based enterprises is challenging them to transform their go-to-market strategies and digital infrastructure to cater directly to end users. Iconic brand Adidas is a great example of how digital transformation can help companies succeed in this area. Just a few years ago, it relied almost exclusively on retailer relationships. Now, Adidas is planning to double its online sales by 2020.
Brand versus retailer experience -- both must be of equal quality.
To stay competitive, consumer goods companies must look beyond the traditional supply chain and product development models and invest in the capabilities that will allow them to lead with experience and seamless distribution. Seventy-six percent of consumers expect the same level of engagement when buying from a brand as when buying from a retailer.
According to the report, companies aren't just expected to be available anytime -- they're also expected to be available anywhere. Multi-channel behavior is a fact of everyday life . Forty percent of customers won't do business with a company if they can't use their preferred channels. Fifty-five percent of customers -- including 68% of millennials/Gen Zers -- prefer digital channels over traditional ones.
Preferred channels span online and offline worlds,
Digitally transforming to meet the needs of connected customers
Overall, this year's "State of the Connected Customer"report shows how the customer experience has become just as important as the products or services they seek to purchase. With the unprecedented opportunity offered by data integration, AI, and connected devices, today's ultra-connected customers expect tailored, contextualized engagement as a matter of course.
What also matters more than ever is trust. Customers are even more selective than they once were in which brands they trust. Fifty-four percent of customers say it's harder than ever for a company to earn their trust. A company's trustworthiness is inextricably tied to its bottom line. Eighty-nine percent of customers are more loyal to companies they trust, and 65% have stopped buying from companies that did something they consider distrustful.
Earning customer trust is a multifaceted pursuit.
Every digital transformation playbook must begin and end with the customer in mind. Long lasting relationships are built on trust, innovation and a commitment to customer success.
As a result, more businesses are reorienting their digital transformation efforts towards the customer. Seeking to improve the customer experience, they're building a core set of capabilities around personalization, connectivity, and speed. That way, they can also deliver meaningful products and services to their customers -- and not only survive but thrive.
Uncover more insights here from the new Salesforce "State of the Connected Customer" report.