I believe 2024 will be a big year for CX in big part because customer loyalty is desperately needed for many brands out there.
At the same time new technology is opening up a lot of new opportunities to improve CX.
Below I review the 4 key trends I am personally most excited about.
Customer Retention and WoM Acquisition Investments
The era of next-to-zero interest is over and this means that money is more “expensive” for everyone, businesses and consumers alike.
This has two direct implications:
- Consumers are squeezed financially and are more likely to switch companies in search of a better deal
- Most companies can no longer raise cheap capital to spend fortunes on advertisement and discounts to lure consumers in. Paid customer acquisition cannot be done on the scale that we saw in the previous decade.
Shareholders will still however expect growth from companies and, given that the paid advertisement channel is now somewhat off limits, the next best thing to do is get the most out of your existing customer base.
I thus predict that B2C companies will double down on investments into whatever drives customer loyalty and word of mouth growth.
This is a huge opportunity for CX to become the catalyst for this growth if CX initiatives can be tied to financial outcomes such as customer retention and new customer acquisition through existing customers referring their friends and family.
More Teams Using Customer Insights
This trend will be in part driven by the above point about the scramble for customer loyalty and word of mouth referrals.
Most companies will initially struggle to figure out which initiatives will drive outcomes like customer retention or average spend per customer.
Different teams from Marketing to Product will be trying to figure this out and in the process they will inevitably need customer insights.
The need for customer insight will come in two guises: day to day operations and longer term strategic planning. Day to day operations customer insights will for example include Retail Store level dashboards where store managers can quickly identify and remedy any issues in their stores.
Longer term strategic planning Insights will help leadership, product and marketing teams develop the product roadmap, shape brand positioning and messaging.
I already see a number of companies putting CX Transformation as a key objective for 2024 at Board level and one of the key components of that is to empower teams throughout the organization with customer insights.
Phygital Becomes Mainstream
The Covid-19 pandemic turbocharged digital transformation programmes across the world with a lot of commerce moving to have at least some online presence.
This however was not a one way door and we see many online-only retail businesses opening physical retail spaces because the very presence of physical stores brings an uplift in online sales: an extensive report by ICSC found that opening a store boosts online sales in the trade area surrounding that store by an average of 6.9% in the immediate weeks following the store’s opening.
For emerging DTC brands, the benefits are even higher — the correlating halo effect for online sales is 13.9% when opening a new store.
We see this trend firsthand with a number of our partners including Lulus and Reformation opening retail locations to boost their brand and sales.
What is fascinating though is these are not run of the mill retail spaces but experiences which amplify the brands purpose and position their products in the best light possible.
For example, Reformation in their new stores blends both in store and online shopping allowing shoppers to select the items they want to try on through an ipad and those items shortly become available in a fitting room that is reserved for you.
There is also an iPad in the room itself so you can order a different size or item to try without leaving!
I predict that more and more eCommerce brands will open physical retail stores in 2024.
The primary purpose of these stores would not actually be the revenue from in-store sales as much as the boost to brand awareness and positive brand perception with the bulk of subsequent sales uplift still coming from online.
GenAI Fixes Chatbots
I know what you are thinking - not another blog post praising how GenAI will change the world!
The way I see it is GenAI is massively overhyped right now but in customer experience it does have an important and quite immediate role to play, namely finally fixing chatbots.
If you used a chat support channel in the last few years the chances are you would have been greeted by a chatbot that does not understand a thing that you are asking and the experience very quickly boils down to writing “connect to human immediately!!”.
The reason chatbots are so notoriously frustrating to deal with is because they are mostly rule based and from over a decade of working with text analytics I can first hand testify how hard it is to accurately understand human writing or speech through a rule based approach.
Generative AI is the first technology I can have seen that I believe has a chance to fix this because Large Language Models are much better at understanding context than any rule based approach.
The implication of this is Chatbots that are much more likely to understand the query from the first try and give a relevant answer.
From a CX perspective this should mean less waiting to be connected to an agent and a step towards a truly “always on, instant response, first time resolution” customer service.
So what do all these trends mean for CX?
In my opinion the companies that are prepared to take advantage of these trends in 2024 will be the ones that will reap the benefits in 2025 and beyond.
Crucially, what is crystal clear to me is that the companies that are not collecting and analyzing customer feedback to stay on top of any other emerging trends in the behaviour and needs of their customers will quickly be left by the wayside.
The good news is that the best time to start better understanding your customers is today.