Future Enterprise

The Future of Customers and Consumers: Creating Loyalty through Digital Transformation

The Future of Customers and Consumers creates loyalty through digital transformation, forging partnerships between customers and brands using Empathy@Scale.
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The experience a customer has during a business transaction has become increasingly important in today’s economy. Consumers are looking for a memorable differentiated experience, those differentiated experiences drive loyalty, and companies are seeing that a loyal customer provides a long-term competitive advantage.

Loyal customers spend on average five times more and tell an average of nine people about a positive experience. On the other hand, a bad experience will be shared with 16 people, and it’s more expensive to find new customers than to maintain your loyal buyers.

“The customer is central to any business. Customer-centricity is crucial in driving digital transformation of every business function and the delivery of superior customer experiences.”

The digital transformation is providing enterprises with a unique opportunity to use technology to compete for customers and their loyalty by offering a differentiated experience. Why? Because that’s what it takes for a customer to come back. IDC has found that 73% of consumers say that a differentiated experience is what inspires their loyalty. With copycat products and price-matching websites, the uniqueness of your purchase and the lowest price aren’t at the top of a consumer’s list anymore. The journey a consumer goes through during their purchase is.

According to IDC’s Worldwide Digital Transformation Spending Guide, in 2020 companies are spending $1.4T on digital transformation efforts and citing customer experience (CX) as the top business function to benefit from this spending — and the top reason why they are doing it. Customers are already using new technologies to engage those brands, and others.

Brands are realizing they need to up their CX game not only in technology but with what they do with that technology. The digital transformation can help them understand consumer emotions during the customer journey, showing companies that human emotions like compassion and empathy are driving forces behind purchase. Within 5 years, IDC expects 2/3 of leading consumer brands to employ emotion detection and management technologies to influence customer engagement and purchasing.

The Future of Customers and Consumers

Technology and the digital transformation are changing things for both customer and brand. IDC is calling this the Future of Customers and Consumers. This practice will help tech vendors and brands understand and adapt to his fast-changing space.

Essentially, the Future of Customers and Consumers is characterized by the changing nature of the relationship between customers and brands through a prism of technology. It’s defined as an empathetic relationship between customers and brands built on what the customer wants and how they want to be treated through the technology lens of awareness, engagement, learning and measuring.

IDC has broken this definition and the relationship into three pieces:  

  • Nature of the relationship: It is an empathetic relationship between customers and brands; a cognitive empathetic relationship that is defined as the ability by the brand to recognize and accurately understand the customer’s emotional state and react appropriately.
  • Customer needs: This about what the customer wants and how they want to be treated, which is contextual for the customer. That is why cognitive empathy and empathy at scale becomes so critical to respond to a customer successfully.
  • Technology influence: In any interaction, communication, or engagement through technology, both the technology that the brand employs and the technology that the customer uses, and both the brand interpretation and the customer interpretation of the interaction are colored or changed by that technology.

These three pieces will begin to form a relationship of compassion and empathy between brands and consumers that IDC is calling Empathy@Scale.

Deploying Empathy@Scale to Build Loyalty

Because consumers are going to start to expect a more personalized experience, companies need to focus on what business choices they can make to use Empathy@Scale to inspire the loyalty that will be key to future success.

There are 4 main business outcomes that are driving this change that businesses need to focus on:

  • Predictable Communication. Communication is the foundation for every interaction throughout the customer journey and it must be predictable for both customer and brand. Communication leads to understanding, is multi-channel, and is inclusive.
  • Lifetime Value. The company provides a product or service in exchange for money and that value is directly tied to the experience the customer receives. Companies are employing technology to equalize that experience.
  • Applied Intelligence. Building a portfolio of intelligence about the customer, the market, and the world can be used to customize the experience for the customer. Use data to discover more about customers to provide a unique experience that is personalized appropriately and correctly.
  • Mutual Trust. Customers want to be able to trust a company with their data and companies want long-term relationships built on a trusted partnership with the customer. This can happen through different forms of measurement and business processes that inform and direct the success of their efforts.

For future success, companies must endeavor to be a brand that can partner with future customers on their journeys, and customers must reciprocate with a desire to engage and with loyalty to brands. CX is becoming a critical decision point, and almost 43% of companies IDC surveyed indicate that this is their top goal for the future.

This future success and partnership between customers and brands is nurtured through empathy for consumers at scale across all markets. The reward on both sides is a lifetime of business.

Alan leads IDC's Customer Experience research program as well as supporting IDC's Chief Marketing Officer research efforts. Specific areas of research interest for Alan are the impact that technology changes have on how business and customers engage and interact, the digital transformation of the customer experience, and the impact of algorithms and analytics. Alan has more than 25 years of analyst, management, and technology experience working with private sector firms and public sector organizations. Alan is also an adjunct faculty member at the Naval Postgraduate School in Monterey, CA, for the US Navy, where he lectures on the impact of disruptive technologies. He has been quoted in numerous business and technology publications including, B2B Magazine, Business Week, The Washington Post, the Wall Street Journal, Government Computer News, Fortune Magazine, Congressional Quarterly, Computerworld, CIO Magazine, CIO Today, Government Technology, and French CIO Magazine.