The State Of Customer Engagement: Progress, Work To Be Done And A Delicate Balance

Any regular readers of my posts here on Forbes will probably have realised by now that I am partial to a bit of research and, in particular, research that is part of a time series.

One such piece of research that recently caught my eye was Twilio’s fourth annual State of Customer Engagement Report, released at the end of March.

To conduct the research, Twilio gathered views from more than 4,700 B2C leaders from around the world and across a variety of sectors, views from more than 6,000 global consumers and data from both their own engagement and customer data platforms.

After reviewing the research, here are the three themes that emerged for me:

1. Progress: Investment in digital customer engagement has increased over the last year and is generating significant returns.

• Despite operating in an environment of economic uncertainty, 87% of brands report that they increased their investment in digital customer engagement in 2022. This is up from 72% in 2021.
• Brands that Twilio identified as customer engagement leaders, i.e. those that have the highest level of maturity in their implementation of personalization initiatives, use of first-party data, and the execution of omnichannel customer engagement, saw their investments in digital customer engagement drive increases in revenue by an average of 123%.
• At the other end of the scale, even the brands that Twilio identified as customer engagement beginners saw a 67% increase in revenue from their digital customer engagement investments.

2. Work To Be Done: Customers still want and value personalized experiences. Brands want to deliver these experiences too, but the largest majority of consumers say that brands are still failing to deliver.

• 86% of consumers say that personalized experiences increase their loyalty to brands.
• Conversely, 66% of consumers say they will quit a brand if their experience isn’t personalized. That number rises to 75% among Gen Z consumers.
• Consumers spend, on average, 21% more with brands that deliver a personalized experience compared with those that don’t.
• Nearly half (46%) of brands believe they are doing an excellent job of personalization. However, only 15% of consumers agree. Those numbers were 27% and 7% in 2021, respectively and represent a growing perception gap between brands and their consumers.

3. A Delicate Balance: Data privacy, transparency and security are paramount in the minds of consumers. Brands need to take this into account when developing valuable, trusted and engaged relationships with their customers.

• Almost all (98%) consumers want brands to do more to guarantee the privacy of their data, as well as be more transparent about how their data is used.
• If a consumer’s data privacy and transparency requirements aren’t met, four out of ten report that they will stop buying from a brand.
• Nearly 90% of brands plan to implement first-party/zero-party data in order to protect consumer privacy. However, they have work to do on this front, as only 4 in 10 of them rate their collection of and access to zero-party data as excellent.
• Indeed, over 80% of brands report that they are still reliant on third-party data, and only 60% report that they are prepared for a world where third-party data is not available.
• Striking a delicate balance between security and customer experience is the number one challenge for brands in 2023. Protecting customer data comes a close second.

Now, I don’t know about you, but those three themes generate a mixed bag of feelings in me.

On the one hand, I am heartened by the level of investment that brands are continuing to make in digital customer experience and both the progress that leaders are making and the returns that they are making.

However, on the other hand, the fact that brands are still not meeting customers’ expectations concerning personalisation and that they are also failing to assuage their concerns about data, privacy, and security is disappointing.

These are becoming perennial concerns.

That, in and of itself, is alarming and suggests that many brands are either not paying attention or acting fast enough on these issues.

The problem is that customers are showing signs of becoming increasingly impatient around these issues.

And, as they indicate in the research, their patience won’t last forever.

Those brands that are the first to tackle these issues are likely to be the ones that will win the hearts, minds and support of consumers in the not-too-distant future.