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The noise surrounding today’s surging inflation in the US and how it is comparable to the one in the 1970s is reaching a crescendo. More worrisome, though, is how this could translate into companies taking the short-sighted route of cutting corners in Customer Experience (CX) to drive savings.
Contrary to apprehensions of customers curtailing spending, McKinsey research shows that in the initial months of 2022, buyers in the U.S. continued to spend amid high inflation. Even as inflation rose to almost 8.5%, customers spent 18% more in March 2022 than they did two years prior. Remarkably, this was 12% more than what consumers were anticipated to spend based on pre-COVID patterns.
As history tells us, CX frontrunners have tended to show their mettle during crises and recessionary periods. We don’t need to go any further back than 2008 to remind ourselves of how CX leaders responded to that financial crisis, rebounding in an emphatic manner and registering a growth rate three times as high in the long run.
Value and trust are at the fore
Value is integral to customer experience, more so in an inflationary situation where consumers are likely to think twice before loosening their purse strings. Show them value, create the right experience and companies stand a chance to earn more of their consumers’ spending dollars. PwC says that the price premium of a great customer experience can be as high as 16% on products and services. Not to mention the positive impact on loyalty.
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In a challenging economic landscape, trust is a particularly important commodity for consumers. PwC’s 2022 Consumer Intelligence Series Survey on Trust highlights that trust is the new currency for business. The survey finds that 91% of customers would purchase from a company that earned their trust. Not surprisingly, 71% would purchase less if a brand lost their trust. Interestingly, though 87% of executives think consumers have a high degree of trust in them, only 30% of consumers say that they do.
How can brands improve trust, especially when there is pressure to cut costs?
Leveraging hyper-personalization to build customer trust and loyalty
When a global hotel chain noticed receding customer interest in its flagship marketing program, it realized it was time to move on from its demographics-based customer segmentation program. What followed was the creation of a metrics-based, data-driven hyper-personalization framework that tailored offers in line with individualized preferences, generating more than $450 million in incremental revenue.
When consumers are tightening their purse strings, it’s imperative that brand outreach to them has personalization, context and timeliness written all over it. The traditional way of segmenting by age, gender and location just doesn’t have the nuance or granularity that is needed to build one-on-one customer relationships.
Hyper-personalization, on the other hand, leverages data as the fundamental engine to meticulously understand customers’ behaviors and preferences, and drive meaningful conversations. This, in turn, helps enterprises create products, services and content that meet specific needs.
Integrating and mining large amounts of data, a lot of it unstructured, across social media, purchase history, mobile browsing and connected devices are key to driving hyper-personalization. The likes of Stitch Fix, Naked Wines and a few other retailers are shining examples of how hyper-personalization, when done correctly, can deliver the right outcomes.
Using AI-led predictive analytics to fuel hyper-personalization
Predictive analytics enables companies to get ahead of the customer — anticipating their needs, and optimizing production and supply chain around these evolving demands. Leveraging real-time data and Artificial Intelligence (AI) / Machine Learning (ML) in conjunction with advanced analytics can help enterprises determine the future demands of customers based on existing and past data patterns.
A great example is Amazon, which uses predictive analytics on its home page to anticipate customers’ wants, thus making the process of locating products much simpler for consumers.
Predictive analytics can help enterprises empower agents and adopt a unified omnichannel voice. Let’s take the example of a digital native company that was losing the opportunity to effectively cross-sell and upsell due to a lack of customer insights. It deployed an ML-led predictive analytics model to intelligently streamline its lead conversion process. More importantly, the model helped establish a sales and service culture wherein agents could drive meaning and context into customer conversations.
Working towards a sustainable, purpose-driven CX
Perhaps the biggest predicament facing organizations today is how they pursue profitability while being accountable global citizens. Studies show that environmental, social and corporate governance (ESG) is a key factor that impacts customers’ association with brands. This has assumed even more importance in the wake of the rise of millennials and Gen Z who are particularly purpose-conscious.
While brands are bringing environment-friendly practices into their business and operations, these need to be embedded into their customer outreach as well. Companies that can evoke a sense of purpose through their customer experiences will create lasting loyalty.
During times of financial uncertainty, consumers particularly demand personalization. They also expect to be able to trust the companies that they spend their hard-earned dollars with. Rather than cutting back on CX, companies need to augment their efforts — albeit in a focused manner — to deliver the right customer experience.
Jitender Mohan is head of customer interaction services at WNS
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