Poor customer experiences are threatening brand loyalty, with nearly one-third (31%) of consumers opting to take their business elsewhere after a dissatisfactory interaction last year. New research today from Genesys, a global cloud leader in experience orchestration, also reveals the No. 1 challenge for organizations is keeping up with rising consumer expectations — putting their bottom line at risk as they struggle to deliver relationship-building experiences. In the third edition of this Genesys global benchmarking study, The State of Customer Experience examines how consumer preferences for personalized, empathetic experiences, rapidly increasing digital channel use, and declining satisfaction with automated interactions create mounting pressure for organizations worldwide.
Bad Experiences Kill Customer Loyalty
Expectations about what makes a great customer experience (CX) are rising faster than most organizations can keep up with — and consumers aren’t afraid to walk away when their needs aren’t met.
- The majority of consumers (86%) believe a company is only as good as its service — a staggering 16-percentage points increase from 2021. But only 13% of businesses have the tools and technology in place to deliver the experiences people want today.
- Less than half (43%) of consumers have felt highly valued after a call, while a quarter of consumers have lost their temper; some (12%) had experiences so bad that they were driven to tears.
- These bad experiences are worse than frustrating — they’re loyalty killers: 77% of consumers will switch brands after five or fewer negative interactions with a brand’s customer service.
“Consumers today have little tolerance for fragmented, inefficient and transactional interactions, which they’re demonstrating by leaving for the competition,” said Barbara Holzapfel, Chief Marketing Officer at Genesys. “The most innovative organizations are proactively addressing these rapidly changing expectations by redefining what’s possible using digital technologies and artificial intelligence (AI). For organizations, this study underscores the importance of strengthening customer and employee relationships by orchestrating personalized, empathetic experiences at scale.”
Earn Loyalty by Understanding Customer Generational Dynamics and Personalization Preferences
For organizations to meet the increasing expectations of consumers, it’s imperative to understand the preferences and motivations that are driving their behaviors.
- The experience and values-driven generations: Gen Z and millennials’ loyalty is won and lost in the experience. These generations are quick to stop doing business with a company after a poor customer experience: 34% of Gen Z consumers switched brands last year, compared to just 25% of baby boomers. But those younger consumers are even quicker to become brand ambassadors for companies that provide excellent customer service: 43% — an increase of 13 percentage points from 2021 — will recommend to their network, compared to less than 33% of baby boomers.
- Strategic personalization drives loyalty and revenue: Marketing deals are less important to consumers (16%) than receiving a personalized experience for services when they need them on the channel they want (62%). Organizations that get it right have the potential to unlock new revenue opportunities: More than 80% of consumers say they would purchase additional items from companies that consistently personalize the customer service experience — an increase of 10 percentage points from 2017.
- Response time and issue resolution efficacy: More than 50% of those surveyed ranked fast responses and having their issue solved during the first interaction as the most valuable elements of customer experience.
- Dropped calls and dead-end automation: In contrast, consumers reported dropped calls as the most frustrating thing that can happen while engaging with customer service, followed closely by the inability to reach a live agent from a chatbot or reaching a dead-end from a phone menu.
CX Excellence Requires Seamless Experiences and an Investment in Employees
Across industries, many companies are rethinking their approach to customer service—with plans to increase their related budgets by 25% in 2023. Key spending priorities focus on enabling end-to-end experience orchestration to improve engagement across channels, systems and departments. In addition, businesses are recognizing the intrinsic connection between their customers and employees. According to nearly half of CX leaders surveyed (47%), the No. 1 CX priority is investing in technology or connecting systems that improve the employee experience. Key focus areas over the next one to two years include simplifying the employee user experience and helping them better respond to customer needs with enhanced knowledge management capabilities.
As organizations invest, consumer preferences and attitudes should play a key role in determining which technologies and tools to use:
- Better chatbot and employee connections start with knowledge: While chatbot use for customer service is on the rise, so is consumer frustration. Only 21% of consumers were highly satisfied with a chatbot, citing not being able to reach a live agent from a chatbot and having to repeat a conversation they had with a bot to an agent as their top frustrations. For organizations to reap the potential of bots, they’ll need to focus on creating a more seamless flow of the right information across channels and interactions, making it easier and faster for customers to accomplish their goals.
- Connected customer experiences are key: According to CX Leaders, the biggest challenge to delivering seamless experiences is the lack of carryover of customer context from one channel to another (44%). To resolve this, most organizations recognize they need stronger capabilities to coordinate every consumer touchpoint: the top two strategic priorities for organizations include implementing an integrated CX platform (71%) and connecting technology and data for omnichannel experiences (50%).
- Voice is no longer the leading channel: With digital channel use accelerating, email has overtaken voice for the first-time as the most common method to reach customer service (72% using email vs. 68% using voice). However, given the typically slower response times of this channel and consumer preferences for speed, it’s not their most preferred channel. When given a choice, consumers still prefer a call, with voice interactions as the primary choice of communication overall. However, preference for this channel falls quickly based on customer age (52% of baby boomers prefer voice vs. just 19% of Gen Z), requiring organizations to evolve their customer engagement model for this digital generation.
Integrated CX Is an Industry-Agnostic Priority
The report also revealed key industry challenges and plans, including:
- Financial services – The financial services industry is trailing when it comes to omnichannel strategy. Only 26% offer multiple channels for customer interactions and have integrated technologies and connected data. Additionally, nearly half (46%) either have no plans or have yet to make meaningful plans in this space. However, nearly 60% cite implementing a customer experience platform that integrates systems as a priority initiative.
- Public sector – The public sector sees the most potential in cloud infrastructure, rating its benefits higher overall than any other industry. The top three advantages included: better access to data across channels (57%); ability to add new capabilities, features and channels more quickly (56%); and enabling remote or hybrid working (52%). More than two-thirds (69%) indicate implementing a customer experience platform that integrates systems as a top priority
- Healthcare – To support their strategic priorities, more than two-thirds (69%) of healthcare organizations plan to implement a CX platform that integrates systems within the next one to two years. This effort will be aided by an average planned increase of 24% to their customer service budgets in 2023.
- Retail – Retailers are the furthest along in their omnichannel strategy, with more than half (52%) offering multiple channels for customer interactions. Despite being technologically ahead of other industries, retailers have slipped in customer satisfaction by two percentage points in two years and project the highest annual employee turnover rate of 40%. Retailers appear to understand the opportunity to deliver stronger personalization and engagement, with 76% planning to implement a single experience platform that integrates systems within the next one to two years to support their strategic priorities.
The State of Customer Experience report from Genesys reinforces that for organizations to succeed today, they must take a people-centric, unified approach to customer and employee experiences. Organizations that leverage digital and AI technology to deliver the power of personalization and empathy in every experience will stay ahead of competitors by building loyalty while managing business costs.
Research methodology: In November 2022, Genesys worked with an independent research firm to survey 5,517 consumers and 646 CX decision-makers (“CX Leaders”) in 18 countries worldwide. Among the business respondents, industries represented were banking, government, healthcare, insurance, manufacturing, professional services, retail, technology and telecommunications.