Customer experience technology spending to exceed $600bn by 2022

As companies focus on meeting the expectations of customers and providing a differentiated customer experience, IDC predicts that CX technology spending will achieve a compound annual growth rate of 8.2% over the 2018-2022 forecast period; reaching $641bn in 2022.

IDC defines CX as a functional activity encompassing business processes, strategies, technologies and services that companies use, irrespective of industry, to provide a better experience for their customer and to differentiate themselves from their competitors.

“Customer experience has become a key differentiator for businesses worldwide. New innovation accelerator technologies like artificial intelligence and data analytics are at the forefront in driving the differentiation for businesses to succeed in their customer experience strategic initiatives,” said Craig Simpson, research manager, customer insights and analysis at IDC.

IDC said that the retail industry would spend the most on CX technology in 2019 ($56.7bn) and throughout the forecast. Discrete manufacturing and banking will be the second and third largest industries in 2019.

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Challenges ahead

“The figures from IDC are further evidence of the growing importance that organisations are placing on customer experience (CX). In fact, recent research we conducted found that almost all (98%) of CIOs feel under pressure to deliver the CX expected by both customers and the wider business,” said Sudarshan Dharmapuri, SVP Products, IMImobile. “It’s interesting to note that the use cases that will see the fastest spending growth are AI-driven engagement, omnichannel interaction management and ubiquitous commerce. Especially for large consumer-facing enterprises with fragmented, legacy IT environments, integrating such technologies and new communication channels remains a significant challenge.

“By adopting an enterprise communications platform as a service (CPaaS), organisations can orchestrate customer interactions with various backend systems. This will allow them to automate communication flows and customer journeys that can intelligently trigger and manage customer interactions. Not only will this help improve CX, but it also reduces operational costs, provides key productivity gains and reduces the risk of organisations investing in technologies and projects that don’t deliver. CX today is what CRM was for businesses 20 years ago; in essence, a must invest.”

Investing in proactivity

According to Mike Davies, VP business partners at Quadient, because customers expect more than before, and because regulators have provided them with more power, customer experience technology may be best used for preventing issues arising.

He said: “Businesses are increasingly being punished for poor customer experience. On the one hand, regulators are beginning to take a tougher line, with Ofgem recently banning two electricity providers from taking on new customers due to slow, ineffective customer experience.

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“The spectre of GDPR fines is also looming in the background, with financial penalties already handed out to businesses which miss-handle customer data. On the other hand, customers are increasingly turning their backs on businesses that don’t meet their expectations, and it’s easier than ever for them to do so thanks to regulators’ efforts to make switching easier across industries such as banking and utilities.

“The biggest aspect of customer experience businesses should be investing in is proactivity. Simply put, customers now expect service providers to send them the right information in the right way, at the right time. As an example, when a water company identifies a burst pipe, it could post a targeted update alert straight to customer phones and apps, as well as alerting local customers through social media, to make them aware of the problem as soon as possible.

“This message needs to include not only the current situation but also the options and advice available. For instance, if there is a power cut, can customers travel to an area that has power? Or do they need advice on how to keep warm and safe until power is restored? Providing this kind of service provides real value to customers, which can prove particularly crucial in commoditised markets, making customers much more likely to be loyal over the longer term.”

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Andrew Ross

As a reporter with Information Age, Andrew Ross writes articles for technology leaders; helping them manage business critical issues both for today and in the future