Why now is the time to strengthen CX

The noise surrounding the current rising inflation in the US and how it compares to that of the 1970s is reaching a crescendo. More worrisome, though, is how this could translate to companies taking the short-sighted route of shortening the customer experience (CX) to realize savings.

Contrary to the fears of customers limiting their spending, McKinsey Study shows that in the first months of 2022, buyers in the US continued to spend amid high inflation. Even as inflation rose to nearly 8.5%, customers spent 18% more in March 2022 than two years earlier. Remarkably, this was 12% more than what consumers expected to spend based on pre-COVID patterns.

As history tells us, CX frontrunners tend to show their mettle during crises and recession periods. We don’t need to go back beyond 2008 to remind ourselves how CX leaders responded to that financial crisis, emphatically rebounding and recording a growth rate three times as high long-term.

Value and trust are paramount

Value is an integral part of the customer experience, especially in an inflationary situation where consumers are likely to think twice before unbuckling their wallets. Show them value, create the right experience, and businesses stand a chance to earn more from their consumers’ spending. PwC says the price premium of a great customer experience can be as much as 16% for products and services. Not to mention the positive impact on loyalty.

In a challenging economic landscape, trust is a particularly important asset for consumers. PwCs 2022 Consumer Intelligence Series Survey on Trust stresses that trust is the new currency for business. The research shows that 91% of customers would buy from a company that earned their trust. Not surprisingly, if a brand lost trust, 71% would buy less. Interestingly, while 87% of executives believe consumers have a high degree of trust in them, only 30% of consumers say they do.

How can brands build trust, especially when there is pressure to cut costs?

Leveraging hyper-personalization to build customer trust and loyalty

When a global hotel chain noticed that customer interest in its flagship marketing program was declining, it realized it was time to move away from its demographic-based customer segmentation program. What followed was the creation of a statistics-based, data-driven hyper-personalization framework that tailors offers according to individualized preferences, generating more than $450 million in incremental revenue.

When consumers are straining their wallets, it is imperative that the brand reach for them includes personalization, context and timeliness. The traditional way of segmenting by age, gender, and location just doesn’t have the nuance or granularity needed to build one-to-one customer relationships.

Hyperpersonalization, on the other hand, uses data as the fundamental engine to accurately understand customer behavior and preferences and spark meaningful conversations. This, in turn, helps businesses create products, services, and content that meet specific needs.

Integrating and mining large amounts of data, much of it unstructured, via social media, purchase history, mobile browsing and connected devices is the key to hyper-personalization. Companies like Stitch Fix, Naked Wines and a few other retailers are shining examples of how hyper-personalization, when done right, can produce the right results.

Using AI-led predictive analytics to drive hyper-personalization

Predictive analytics enable companies to stay ahead of the customer by anticipating their needs and optimizing production and supply chain around these changing demands. By leveraging real-time data and artificial intelligence (AI)/machine learning (ML) combined with advanced analytics, enterprises can determine future customer requirements based on existing and past data patterns.

A prime example is Amazon, which uses predictive analytics on its homepage to anticipate customer needs, making the process of locating products much easier for consumers.

Predictive analytics can help companies empower agents and adopt a unified omnichannel voice. Let’s take the example of a digital native company that lost its ability to cross-sell and upsell effectively due to a lack of customer insights. It implemented an ML-led predictive analytics model to intelligently streamline the lead conversion process. More importantly, the model helped establish a sales and service culture where agents could add meaning and context to customer conversations.

Working towards a sustainable, purposeful CX

Perhaps the greatest predicament facing organizations today is how they pursue profitability while being responsible global citizens. Studies show that environmental, social and corporate governance (ESG) is a key factor influencing customers’ association with brands. This has become even more important in the wake of the rise of millennials and Gen Z who are particularly goal-oriented.

While brands are introducing eco-friendly practices into their businesses and operations, these must also be embedded in their customer reach. Companies that can evoke a sense of purpose through their customer experiences will create lasting loyalty.

In times of financial uncertainty, consumers mainly demand personalization. They also expect to be able to trust the companies they spend their hard-earned dollars on. Rather than cutting back on CX, companies should increase their efforts—albeit in a targeted way—to deliver the right customer experience.

Jitender Mohan is Head of Customer Interaction Services at WNS