The new customer experience challenge: Creating digital and data-led interactions

Today, customer experience (CX) is the new battleground for survival and differentiation. We live in an experience economy where customers value how they engage with brands above all else, both online, and offline.

While most organisations understand the importance of digital transformation in today’s world, it comes with its unique challenges: making customer journeys relevant and successful is highly dependent on how well technology and automation are leveraged to personalise digital journeys without eroding the human element.

What Keeps CXOs Up at Night?

When it comes to customer experience, both service providers and CX practitioners have justified concerns about what creates a poor customer experience. While data is essential for creating the personalized experiences customers demand, many CXOs have questioned whether they are utilising data to the best of their ability. There may be difficulties in connecting data across business silos and managing structured and unstructured data, as well as driving real-time insights from data.

These data issues can create other obstacles as well. Large companies on complex digital transformation journeys are often caught between legacy platforms and the cloud. Others still may find challenges in striking the right balance between AI and humans to ensure that automation is optimised, but that humancentric queries are elevated to humans. Achieving new levels of agility while keeping cost-to-serve under control is a worry across the board.

These are all legitimate concerns, especially given the potential gains to be had from successful digital and data-led customer interactions. Our research shows us that 89% of businesses are expected to compete mainly on customer experience and that there is a 16% price premium that consumers are willing to pay for a better customer experience. We know that there is a 3-5% increased customer retention rate for companies taking a proactive customer experience approach and that companies that put a best-in-class customer experience at their core report a three-time higher operating margins than those with average customer experience.

These numbers go to show that a proactive approach to customer experience can absolutely transform business, ultimately increasing customer retention and decreasing churn.

Creating Positive Digital Interactions

CXOs set out to transform customer experiences, they must also consider the fundamental requirements of how to make digital journeys relevant, personalised and successful for all customers.

Regardless of whether you’re online or face-to-face, understanding your customer’s basic needs upfront is still fundamental. Customers will always want companies to understand and prioritise them, and to provide solutions that fit their lifestyles.

McKinsey’s 2021 Next in Personalisation1 research revealed that 71% of consumers expect companies to deliver personalised interactions, with 76% getting frustrated when this doesn’t happen. The research also showed that personalisation drives performance and better customer outcomes, with fast-growing companies driving 40% more of their revenue from personalisation than their slower-moving counterparts.

In moving on to the digital landscape, it’s important to understand who your customers are as individuals. Companies can’t have processes built and then try to fit them around the customer. However, companies also can’t be all things to all people: putting the customer at the core of the digital journey is crucial, but it must be done strategically and in a scalable, datadriven way.

"As service providers and CX practitioners, we work with many global and FTSE 100 companies and see the CX challenges they face as they embark and progress through digital transformation to pursue best in class customer journeys. One of the key challenges we see is making these journeys relevant and successful for customers. How can organisations prepare themselves for the transition? To do this, companies need to prepare the groundwork to create positive data-led interactions. This will mean moving on from a siloed front and back office, and really committing to deriving real-time insights from data to drive a superior customer service."

Rahul Arora,
EXL SVP and Head of Emerging Business
Unit, UK & Europe

Creating Positive Data-Led Interactions

Today, companies that are digital and truly customer-centric are using data and analytics to truly understand who their customers are, what they want, and what their competitors are doing in the same landscape. They are designing digital journeys by continually leveraging dataled interactions to improve and further personalise the customer experience.

There is no shortage of data available to get a better view of customers and their sentiments. Data can help to better understand how purchases, interactions and behaviours will drive future actions, giving businesses insight to target customers more effectively with the right messages at the right times. Data can also help companies to engage with their customers directly and in a relevant way, rather than trying to take them on a digital journey without understanding their needs.

What many companies are also learning from data is that customers now expect a seamless omnichannel experience, and speed is now more important than ever. Companies are also witnessing that the perception and balance between digital and human-centric interaction are shifting. Whereas a few years ago digital may have been seen as a way to expedite engagement with a human, today data shows that many customers are comfortable with digital experiences that don’t involve any interaction with humans. It’s this sort of unique insight that companies can get from data, and it’s creating new opportunities for personalisation and new touchpoints for success on the customer journey.

Collecting data efficiently is the first step. While some companies may find the ever-increasing volume of customer data challenging, with cloud technologies, it’s now easier than ever before to get an end-to-end view of your data. For example, joining up call centre and transactional data is now easier than ever before.

However, data on its own is only one part of the equation. Companies must be able to leverage it at scale via technologies such as artificial intelligence (AI) and apply analytics to generate data-driven insight.

To maintain a human-centric approach, companies need to remember to ask the right questions and apply the right skill sets to AI and analytics.

Approaching AI Strategically to Better Serve Customers

AI may be able to simplify data and make it easier for businesses to process, analyse and understand. However, as businesses adopt AI to improve and provide better experiences, they must not unconsciously alienate customers by applying too much automation and risk losing the human touch.

To maintain a human-centric approach, companies need to remember to ask the right questions and apply the right skill sets to AI and analytics. Applying a solid data governance strategy as well as practices such as cognitive reasoning may be necessary to avoid bias - and to avoid making incorrect business decisions based on data.

It’s also advisable to ensure that the proliferation of data and AI doesn’t take personalisation a step too far. Most companies select a few key sources of data and align their analytics efforts with them. However, some companies have looked to apply data-driven insights to every part of the customer experience, and the result may be ‘ultra-personalisation,’ which can erode the human experience.

Ultra-personalisation may be suitable for very bespoke services. For other services, customers may be happy with some elements of an experience being personalised, and others left suitably generic.

In comparison, using AI to drive customer segmentation may be a happy medium and a good suggested starting point. Developing data-based segmentation profiles allows companies to group customers with similar profiles, and to interact with them as a group at scale.

"Getting a 360-degree view of each of your customers is absolutely possible. If you pull in behavioural data, all social media interactions, all Trustpilot and app store reviews and all conversations, you can build powerful centralised model to drive better insight across your organisation. It will show what a customer’s sentiment and emotions are about the product, service and the digital journey. You can build a single customer view that can help you not just get to know your customers better and to create more personalised customer journeys, but to help reduce churn."

Nick MacFarlane,
Head of Customer Experience
Optimisation, Cazoo

People: The Greatest Asset in Driving CX Transformation

There is a concrete link between the effort and resource companies put into their employee experience (EX) and how these map to and drive excellence in CX. Without a good EX, it is difficult to provide a good CX.

As CXOs engage with customer service teams to plan their digital and dataled CX plans, many have adopted new technologies and workforce models to meet the needs of their teams in a pandemic-shaped working world.

However, going beyond technology, we’re seeing that the most successful customer service teams have a strong purpose and customer service proposition. There is excellent cultural alignment, communication and engagement between management and employees, and between employees and customers. Engaging employees in the development and vision and continual improvement of CX is proving extremely poignant, as is keeping lines of dialogue open amongst teams. This has become especially critical during a time when talent retention and acquisition are more complex than ever before.

"When it comes to creating an engine for data-led insight, companies should assess their capabilities and look at what their core competencies are, and what they need to develop or create partnerships to achieve. The number of niche areas and competencies that are required to generate good customer experiences - be that CX skills, data skills, development skills - can be overwhelming, and it’s not always realistic that one organisation can do that on its own. Beyond that, digital transformation doesn’t just end - it’s not just a multiyear project. It’s a machine that needs to keep going, scalably and sustainably. A true data mindset means changing the organisation to a truly agile way of working where you’re always transforming."

Matthew Egan,
Former Director, British Gas Services & Solutions

Customer Success in a Digital, Data-Led World

In a post-pandemic and increasingly digital world, a strong digital CX is everything. Companies have been faced with a threefold challenge of creating strong digital, data-led CX approaches that engage both customers as well as their employees. They are navigating the practical uses of AI and other technologies while keeping a human-centric approach to customer service forefront of mind. In making careful decisions about where to focus core competencies and where to partner for expertise, we are set to see continued success in today’s customer service landscape as companies recognise CX as a strong differentiator for business.

Visit our page on CONNECx to learn more about how EXL is solving real-world CX problems using AI and machine learning.

1 Next in Personalisation : right-or-wrong-is-multiplying