Sapient | Microsoft

EXECUTIVE SURVEY ON CUSTOMER EXPERIENCE, DATA AND INNOVATION

THREE BIG QUESTIONS ON BUSINESS LEADERS’ MINDS:

What is the best strategy for managing data?
How do we connect with our customers in today’s digital world?
How do we use data to deliver better experiences to our customers?

How do we advance customer experiences in the face of economic uncertainty?

With ever-increasing expectations for personalized, exciting, and unique experiences, brands are being asked to deliver innovative customer experiences across all areas of their business. Given these demands, digital transformation, data collection, and creativity are becoming key components of customer experience innovation.

While customer needs and expectations are quickly changing, companies are facing economic pressures, labor challenges, and supply chain shortages that impact their ability to deliver truly personal experiences. Meanwhile, it is even more critical to invest in customer experience to drive loyalty with existing customers while acquiring new customers to grow the business.

Publicis Sapient and Microsoft partnered with Ipsos, one of the world’s largest market research firms, to interview high-level executives working in digital, technology, marketing, and customer experience roles across various industries. The goal was to understand the challenges they are currently facing and to explore the future of customer experience innovation, even amid economic uncertainty.

KEY FINDINGS

Most leaders believe their company is advanced in its digital journey but continue to seek more customer-centered or technologically advanced solutions.
Demonstrating the value of customer experience, learning what kind of data is needed, and the ability to turn data insights into new services, experiences, or products are among the top challenges companies face for customer experience initiatives.
Unifying, organizing, and collecting customer data is key to gathering insights for customer experience. Companies advanced in their digital transformation and with an advanced data platform have an advantage in gathering insights from their data collection to turn into actionable customer experience initiatives.
Artificial intelligence (AI), machine learning, and alternative data sources to third-party cookies are key components for the future of customer experience innovation. Companies with advanced data platforms are better able to capture and structure first-party data and are thus better prepared for a “third-party cookie-less” future.

Value of Customer Experience and the Impact of Digital Transformation on Customer Experience Efforts

DIGITAL TRANSFORMATION AND CUSTOMER EXPERIENCE

According to BCG and other analysts, $800 billion in revenue will shift to companies that get personalization right. Companies of all shapes and sizes agree that storing, collecting, and unifying their data is a top priority. The challenge of achieving this is correlated to their digital transformation stage. Progress in digital transformation is strongly linked to data capabilities.

Seven in ten executives in marketing, digital experience, and customer experience roles rate their company as very or somewhat advanced in their digital transformation journey (71%), with the remaining executives saying they have made some progress but still have a way to go (29%). As for the main drivers of their company’s digital transformation, nine in ten leaders say that initiatives to improve their customer experience are among the main drivers (86%). However, the state of a company’s data platform appears to have a major impact on their assessments of their digital transformation journeys.

58% of companies advanced in their digital transformation have invested in a customer data platform to unify their data (vs. 39% of those who are not advanced in digital transformation).
43% of leaders in companies with advanced digital transformation say that Web 3.0 will be a key component of the future, though the majority of these leaders say Web 3.0 will not be essential for customer experience until over a year to the next three years from now (vs. 24% of those who are not advanced in digital transformation).

PROGRESS IN DIGITAL TRANSFORMATION IS STRONGLY LINKED TO DATA CAPABILITIES

60% of companies that are advanced in their digital transformations report their data platform is advanced and works smoothly (vs. 31% of those who are not advanced in digital transformation).
77% of companies that are advanced in digital transformation say they are proficient at capturing and structuring first-party data (vs. 58% of those who are not advanced in digital transformation).
78% of companies that are advanced in digital transformation say their data is not integrated into one central platform (vs. 93% of those who are not advanced in digital transformation).

Goals and Challenges for Advancing Data Platforms

When it comes to the challenges they expect to face when working towards these customer experience goals, extracting value from data and demonstrating the impact of customer experience on business outcomes are the main themes reported by business leaders.

GOALS FOR CUSTOMER EXPERIENCE INITIATIVES

Overall, the top three customer experience goals business leaders are looking to achieve in the coming years are:

44%: Creating innovative customer experiences that exceed customer expectations
40%: Providing a more personalized experience
38%: Getting real-time insights for improved service, sales, and marketing engagement

TOP THREE CHALLENGES FOR CUSTOMER EXPERIENCE INITIATIVES:

Measuring and demonstrating the impact of customer experience on ROI
Obtaining the right data to make appropriate and timely decisions
Quickly converting insights into updated/new services, experiences, or products

An important consideration for leaders is the impact of the employee experience on the customer experience. Seventy-eight percent of leaders say their company prioritizes their employee experience initiatives as much as their customer experience initiatives. According to leaders, one “bad day” from an employee can derail efforts to improve customer experience. Conversely, about 1 in 14 leaders (7%) believe that the employee experience is not related to the customer experience. Those who are advanced in their digital transformation journeys are significantly more likely to say they prioritize the employee experience as much as the customer experience than those who are not advanced (85% and 61%, respectively).

About two in three decision-makers (68%) say they feel equipped to measure customer experience success or associate customer experience success with the bottom line. Leaders with advanced data platforms are more likely to feel they can measure success than those who are less advanced.

Leaders identified one of their top challenges as being unable to provide personalized experiences to customers, alluding to data and personnel issues. Here’s what they said:

“We are in a service industry where the employee turnover is high. In order to provide personalized experiences we need more robust employee training or automated systems (for employees to use) based on customer needs and wants.”
— Senior Vice President of Marketing, Travel/Hospitality Industry
“Data not unified, different stacks not talking to each other, lack of segmentation.”
— Chief Digital Officer, Retail Industry
“Data lake challenges, as well as fragmented data across the organization, and inconsistent or poor tagging.”
— Vice President of Customer Experience/Satisfaction/Service, Financial Services Industry

Among those who do not feel equipped to measure customer experience success with the bottom line, verbatim responses centered on issues with measurement and gathering insights from data:

“We have a very difficult time correlating and quantifying the improvement in customer experience to our bottom line. In our hearts and minds, we know that the improvement we’re driving in customer experience positively impacts our profit but we need help determining how to identify and quantify that impact.”
— Vice President of Customer Experience/Satisfaction/Service, Financial Services Industry
“The biggest problem is the lack of data, tools and insight we have to accurately measure the success (or lack thereof) in our customer experience.”
— Chief Product Officer, Financial Services Industry
“Many customer experience initiatives are not a 1:1 driver of sales or conversion. A leap of faith is required to believe customer experience drives longer-term retention or conversion.”
— Chief Product Officer, Retail Industry
“Multiple customer touchpoints with the company across the order-to-cash continuum impact customer experience. What we measure for customer experience are siloed for each of these touchpoints (not across) and do not tie to realized sales.”
— Vice President of Marketing, Health and Life Sciences Industry
“We have not spent the time to work out exactly what we should measure, even though we have the capabilities. We are working on this now, including looking to see if we can monetize some of these insights.”
— Vice President of Technology, Technology Industry

Goals and Challenges By Role Type

Goals and challenges for customer experience initiatives in the next year vary by the C-suite department and the state of data platform advancement. C-suite leaders who work in the customer experience, satisfaction, or service departments in their companies are more likely to list improving customer loyalty (40%) and improving customer service (36%) among their top goals for the year than are C-suite leaders working in the digital or technology departments (21% and 22%, respectively). Conversely, leaders working in the digital and technology areas are more focused on unifying data collection to easily assess customer opportunities than other executives (33% and 24%, respectively).

The top customer experience challenges also vary by leader type. Leaders working in the digital and technology departments of their company are more likely to report data not being stored in an efficient or useful way as a top challenge than those working directly in the customer experience or satisfaction or service departments (45% and 19%, respectively). Leaders in charge of customer experience or satisfaction more often report issues with converting data insights into new services, products, or experiences as a main challenge (47%) than others (35%).

Impact of Advanced Data Platforms

DATA MANAGEMENT IS CRITICAL TO THE FUTURE OF CUSTOMER EXPERIENCE

Leaders realize the importance of data for their business goals. Proficiency in capturing, structuring, and organizing customer data allows decision-makers to quickly gather insight into consumer preferences and behaviors and turn those insights into new experiences, products, or services for their customers. This level of data management requires an advanced data platform—one that works smoothly and efficiently, and allows for data to be easily captured and unified. Overall, about half of business leaders (48%) surveyed say they do not have an advanced data platform. These leaders are seeing the benefits in their customer experience and digital transformation efforts.

COMPANIES WITH AN ADVANCED DATA PLATFORM ARE:

83% more likely to say they are advanced in their digital transformation journeys
80% more likely to feel equipped to measure customer experience success or associate customer experience with the bottom line
29% less likely to report data stored in an inefficient and unusable way is a challenge for their customer experience initiatives
77% more likely to be proficient at capturing first-party data
66% less likely to have a concrete strategy in place for a “cookie-less” future

Companies with an advanced data platform can focus less on needing real-time customer insights and instead list their top three goals for customer experience in the next year as:

Creating unique and innovative customer experiences to exceed customer expectations
Providing a more personalized experience for customers
Improving customer loyalty

Leaders in this space who say they have an advanced data platform are significantly more likely to say they are advanced in their digital transformation than those without an advanced platform.

83% of those with an advanced data platform say they are advanced in their digital transformation (vs. 57% of those without an advanced platform)

Data Challenges Impact Customer Experience

One in three business leaders report a top challenge for their customer experience initiatives is that data is not stored in an efficient and useful way, with 29% saying a main business goal for the coming year is to better unify data collection to easily assess customer opportunities. Unsurprisingly, those without an advanced data platform are more likely to report data storage as a top challenge than those with one (40% and 29%, respectively).

While 72% of business leaders say their companies are proficient at capturing and structuring first-party data, the majority also report that data at their company is scattered across multiple sources and not integrated into one central customer data platform. Two-thirds of leaders believe their current data platform is limited or out of date to deliver improvements to their customer experience.

The most often reported barriers to collecting data are poor integration between technology systems, issues with government privacy policies or regulations, and a lack of resources to unify data.

Importantly, leaders at companies that are advanced in their digital transformation are more likely to have invested in a customer data platform to unify their data.

58% of leaders rely on custom-built in-house technology to unify their data
53% of leaders invested in a customer data platform
42% of leaders rely on third parties to help
23% of leaders have no scalable or unified approach to their data management and are actively trying to solve this challenge

Personalization in a Cookieless World

To make personalization a reality, most companies today rely on third-party cookies. Yet, with major web browsers already eliminating third-party cookies and the changes happening from a legal, regulatory, and privacy perspective, companies must determine how to protect privacy while still delivering the personalized experiences that consumers want.

34% of leaders who have an advanced data platform say they have a concrete strategy in place to address the phasing out of third-party cookies

Yet, despite the imminent phasing out of third-party cookies, just one in four leaders say they currently have a concrete strategy in place to address this new challenge. This is disconcerting, considering a cookieless future is here now. To deliver the same personalized experiences in a cookieless future, companies will be required to effectively capture and structure first-party data. When asked to detail their strategy for replacing third-party cookies, many emphasized this need to maximize first-party data:

“From an analytics perspective, we are using Adobe’s consented suite to track performance at a high level. One strategy is to get the maximum percentage of customers to authenticate—about 40% do today—in which case we can tailor extensively. We have stood up a dedicated team under one of our stronger directors in IT to work on personalization signal data capture via clickstream—predictive expectations based on how they are using the website, pathing, etc.”
— Vice President of Digital, Technology Industry
“Consistent use of first-party data that are enriched with a broad set of behavioral, transactional, and psychographic data from both online and offline touchpoints. Further enhanced with second-party partners (such as retailers and publishers), and then activated in flexible ways with fully integrated cross-platform IDs (such as Liveramp, TTD/UID2.0, Neustar, etc.)”
— Senior Vice President of Digital, Media and Entertainment Industry
“We continue using first-party cookies, and we use enhanced conversions for the web to increase observable data and the quality of the conversion model. We also look at hashed customer data.”
— Vice President of Customer Experience/Satisfaction/Service, Technology Industry

Prioritizing Customer Experiences

The horizon of customer experience innovation is bright. The industry is just beginning to scratch the surface for how technology can shape and deliver awe-inspiring experiences. When it comes to their approach to future customer experience, 81% of executives are looking to create new customer-experience-centered services, products, or business models to unlock new revenue, instead of just focusing on addressing direct customer feedback. According to leaders, key components of customer experience initiatives in the coming year include:

82%: Artificial intelligence and machine learning
58%: Omni-channel service experiences
40%: Alternative data sources to third-party cookies

LOOKING TOWARDS THE FUTURE

When asked to explain in their own words what they are most excited and most concerned about regarding the future of customer experience innovations, business leaders focused on the insight and exciting new experiences new technologies like AI and machine learning can provide, while expressing concerns about the speed of digital and technological advancement.

“Most excited about the fully connected cross-channel experiences that can be planned and enabled. Most concerned about maintaining a consistent consumer dialogue when relying on various partners (retail media, commercial, delivery) and how customers assess the brand’s role and accountability in all those interaction points.”
— Senior Vice President of Digital, Media and Entertainment Industry
“Excited about how we as an organization are thinking about the customer and their experience in everything we do. [The] concern is [a] legacy mindset of few leaders impacting the speed of digital transformation.”
— Chief Technology Officer, Technology Industry
“Organizations who will now focus more on customer experience/satisfaction over top line revenue or profit. In the end, better customer experience will drive more revenue and profit in the long run.”
— Vice President of Customer Experience/Satisfaction/Service, Technology Industry
“Cloud services, third-party solutions, and advancement of AI/ML (I believe all three of these are progressing together) that I hope we can leapfrog some of our internal data infrastructure constraints and get to real insights that impact our customers’ experience.”
— Chief Product Officer, Technology Industry
“Most worried that as experiences go mobile first, existing legacy infrastructure will be even more broken and data collected there will be increasingly wrong, creating almost a bullwhip effect/force multiplier beyond being behind.”
— Vice President of Marketing, Technology Industry
“Excited about the physical and digital world finally becoming meaningfully closer and can be action-oriented. Worried about the economic downside impacting the pace of customer experience transformation.”
— Chief Product Officer, Technology Industry

ABOUT THE STUDY

This research was conducted by Publicis Sapient and Microsoft in partnership with Ipsos, a global leader in market research. The study was fielded in January 2023 and surveyed 600 senior executives in the United States, United Kingdom, Germany, and Australia. Respondents were from companies with at least 500 employees and held roles in digital, technology, marketing, and customer experience departments. The survey was conducted online.

For more information about this study, please contact:

JOHN WESTON
john.weston@publicissapient.com
OSKAR NILSSON
nilsson.oskar@microsoft.com

For more information about Ipsos, please visit ipsos.com
For more information about Microsoft, please visit Microsoft.com
For more information about Publicis Sapient, please visit psandmicrosoft.com